<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-K
(Mark one)
[X] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended September 30, 1995
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ________
Commission File No. 1-10492
EPITOPE, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-0779127
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
8505 S.W. Creekside Place
Beaverton, Oregon 97008
(Address of principal executive offices) (Zip code)
(503) 641-6115
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, no par value American Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of voting stock held by non-affiliates
of the registrant, as of November 30, 1995: $142,590,903
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of November 30, 1995 Common Stock, no par value:
12,490,945
Documents Incorporated by Reference:
Definitive Proxy Statement for 1995 Annual Shareholders' Meeting Part III
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Table of Contents
PART I
ITEM 1. Business
ITEM 2. Properties
ITEM 3. Legal Proceedings
ITEM 4. Submission of Matters to a Vote of Security Holders
PART II
ITEM 5. Market for the Registrant's Common Stock
and Related Stockholder Matters
ITEM 6. Selected Financial Data
ITEM 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
ITEM 8. Financial Statements and Supplementary Data
ITEM 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure
PART III
ITEM 10. Directors and Executive Officers of the Registrant
ITEM 11. Executive Compensation
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
ITEM 13. Certain Relationships and Related Transactions
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
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PART I
Item 1. Business.
Epitope, Inc. (the "Company"), is an Oregon corporation incorporated in
1981 that utilizes biotechnology to develop diagnostic tests and related
devices for the detection of the Human Immunodeficiency Virus ("HIV"), the
principal cause of Acquired Immune Deficiency Syndrome ("AIDS"), and other
medical conditions and indications, and, through its agricultural
biotechnology subsidiary Agritope, Inc. ("Agritope"), superior new plant
varieties.
The table below shows, for each of the last three fiscal years, the
percentage of the Company's total revenue contributed by each of its principal
products and by grants and contracts. In June 1995, the Company disposed of
the operations involving sale of packaged fresh flowers and grape plants. See
Note 3 to Consolidated Financial Statements.
<TABLE>
<CAPTION>
Fiscal Year 1995 1994 1993
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Percentage of Revenues from:
OraSure . . . . . . . . . . . . . 20% 18% 33%
HIV Confirmatory Tests. . . . . . 36% 35% 42%
Packaged Fresh Flowers. . . . . . 39% 45% 15%
Grape Plants. . . . . . . . . . . 2% 1% 1%
Grants and Contracts. . . . . . . 3% 1% 9%
</TABLE>
For data concerning the Company's revenues (including sales to other
geographic areas), operating profit or loss, and identifiable assets
attributable to the Company's industry segments, see Note 12 to Consolidated
Financial Statements contained in this Annual Report on Form 10-K.
An active research and development program is an essential element of
the Company's business. Approximately one-third of the Company's Beaverton,
Oregon, facilities is devoted solely to research and development activity.
The Company's research and development efforts are concentrated in the areas
of diagnostic tests for HIV infection and other medical conditions and
indications, and new, agronomically superior varieties of plants. The Company
incurred research and development expenses for fiscal 1995, 1994 and 1993,
respectively, of $6.8 million, $6.1 million, and $7.0 million. Research and
development expenses include the costs to prepare for, conduct, and compile
the results of clinical studies and obtain other information to support
applications for product licenses and marketing approval.
EPITOPE MEDICAL PRODUCTS
The Company develops and markets medical diagnostic products through its
Epitope Medical Products Division ("Epitope Medical Products"). Products
manufactured by Epitope Medical Products include an oral specimen collection
device, OraSure{<reg-trade-mark>}, designed to allow diagnostic tests for HIV
infection and other medical conditions and indications to be conducted without
drawing a blood sample, and Epitope Medical Products' HIV-1 Western blot
serum-based confirmatory test kit, EPIblot{<reg-trade-mark>}. The OraSure
collection device, was approved by the Food and Drug Administration ("FDA") on
December 23, 1994, for commercial distribution in the United States ("U.S.")
for use in HIV-1 screening. The Company believes that the OraSure device is
the only oral specimen collection device to undergo FDA-reviewed clinical
trials for use in HIV-1 testing.
Current Diagnostic Products
Background. The World Health Organization and the Centers for Disease
Control and Prevention have estimated that, as of June 30, 1995, as many as
twenty million people worldwide are infected with HIV, and that 4.5 million of
those cases have progressed to AIDS. Infection in the United States and
Western Europe is estimated at more than 1.5 million, with over 500,000 people
having progressed to AIDS. These agencies further expect that more than 50
percent of those Western Europeans and Americans currently infected, but
displaying no symptoms of AIDS, will have clinical signs of AIDS by the year
2000. While many millions of dollars have been spent on AIDS research, it has
become apparent that effective therapeutic drugs, cures or vaccines for AIDS
and HIV infection may not be available in the near future. To respond to the
rapid spread and high mortality rate of the disease, the Company has focused
its efforts on developing tests for the diagnosis of HIV infection and safer,
painless methods of collecting specimens for testing.
Infection by HIV causes the formation of specific antibodies. Current
testing techniques begin with a screening test that can detect these
antibodies. If the screening test is positive, a more expensive and
sophisticated confirmatory test is generally conducted in the U.S. Most
laboratories use a Western blot test to confirm positive screening test
results.
Prior to the FDA's approval of the Company's OraSure device and a
related screening test, all HIV tests licensed by the FDA involved analysis of
a blood sample to detect the presence of HIV antibodies. While the available
blood tests have a high degree of accuracy, they involve the use of syringes,
needles or lancets, and therefore are unpleasant for many individuals and pose
potential hazards to health care professionals. Blood-based tests may also
not be feasible for certain individuals (e.g., intravenous drug users), in
dentists' and other professional offices where a blood sample would not
otherwise be drawn, and in non-office settings where blood drawing is
difficult or impracticable.
OraSure Oral Specimen Collection Device. Responding to the hazards and
limitations of collecting samples for blood-based tests, the Company has
developed its OraSure specimen collection device which collects oral fluid
instead of blood. The patented OraSure collection device contains a
combination of salts and preservatives to enhance the collection and
stabilization of antibodies originating from the oral mucosae.
OraSure specimen collection is simple. The OraSure device includes a
small absorbent pad on a "lollipop" stick. The pad is placed between the
subject's cheek and gum for two minutes. The pad is then put into a specimen
vial containing a preservative solution and the sample is sent to a laboratory
for testing. Use of the device is expected in many cases to eliminate the
cost of having a specimen collected by a phlebotomist or other health care
professional trained to take blood samples. Because the device uses a non-
invasive, needle-free collection method, the Company believes that the device
will be more acceptable to individuals being tested than blood-based specimen
collection.
In January 1991, the Company began manufacturing and distributing the
OraSure collection device for laboratory use in testing applicants for
insurance policies. The Company believed that distribution for this use did
not require prior notification to or approval by the FDA. However, the
Company halted distribution of the OraSure device in June 1991 when it
received notice from the FDA that such distribution required prior FDA
approval. In September 1991, with FDA concurrence, the Company began shipping
OraSure to insurance companies in the United States for use in testing
insurance applicants for cotinine, a nicotine derivative. In early 1995,
following the December 1994 FDA approval of the commercial distribution of the
device, the Company resumed distribution of the OraSure device to the
insurance industry in the United States for use in testing insurance
applicants for HIV-1 infection. The Company also intends to sell the device
in this country for use in HIV screening in physician offices, emergency
rooms, correctional institutions, sexually transmitted disease clinics and
other appropriate settings. See "Business--Epitope Medical Products--
Marketing." As of September 30, 1995, the Company had firm orders totaling
$488,000 calling for delivery of OraSure devices within 90 days. There were
no firm orders for such devices as of September 30, 1994, other than orders
which were contingent upon FDA approval of the device for HIV testing in the
U.S.
Several companies manufacture and market devices for the collection of
saliva or other oral fluids. However, no such devices, other than OraSure,
have yet been approved by the FDA for HIV testing, and the Company believes
that at this time no such devices are undergoing FDA-reviewed clinical trials
for the purpose of obtaining FDA approval for testing for HIV infection.
HIV-1 Western Blot Serum-based Kits. The Company's Western blot HIV-1
test kit, EPIblot, is used to confirm the positive results of initial blood-
based screening tests for HIV-1 infection. EPIblot test kits are sold in
several formats to clinical laboratories, hospitals, and clinics. The kits
contain materials to perform up to 20 tests. Two other U.S. companies
manufacture FDA-approved Western blot confirmatory HIV tests and an Austrian
company manufactures an FDA-approved immunofluorescent confirmatory HIV test.
See "Business--Epitope Medical Products--Competition." As of the end of
fiscal 1995, the Company had firm orders for EPIblot totaling $329,000
scheduled for delivery in the first quarter of fiscal 1996, as compared to
firm orders of $479,000 as of September 30, 1994 for delivery in the first
quarter of fiscal 1995.
Products Under Development
OraSure. OraSure specimens may be useful for the diagnosis of a variety
of other infectious diseases, such as hepatitis and childhood diseases. Use
of OraSure specimens may also allow physicians to diagnose diseases more
readily in children without subjecting them to the discomfort of drawing a
blood sample. Prior to FDA approval of the device for commercial distribution
for use in screening for HIV-1 infection, OraSure was marketed in the U.S. to
test for cotinine. OraSure may have applications relating to other substances
and drugs, including the detection of the presence of drugs of abuse including
cocaine, for which a 510(k) submission is currently undergoing FDA review.
See "Business--Epitope Medical Products--Government Regulation--OraSure
Collection Device."
Physicians may also find the OraSure device useful for monitoring levels
and adjusting medication dosages of therapeutic drugs, such as the asthma
medication theophylline. Theophylline is toxic at levels only slightly above
the level at which it is effective, requiring frequent blood samples to
monitor drug concentration. Commercial distribution of the OraSure device to
collect specimens for such uses will require FDA approval. See "Business--
Epitope Medical Products--Government Regulation."
HIV-1 Western Blot Oral Specimen-based Kits. The Company has modified
its Western blot HIV-1 serum-based test kit for use in the confirmation of the
positive results of initial screening tests for HIV-1 infection using oral
specimens obtained with the OraSure device. Approval for the commercial
distribution and use of the modified test must be obtained from the FDA. In
June 1995, the Company filed a Premarket Approval application for use of the
modified test with the OraSure device.
OraQuick<reg-trade-mark> System. Tests for HIV infection currently must
be conducted in a laboratory setting and take from 2 to 18 hours to complete,
although two blood-based tests are available in a more rapid format.
Anticipating that a potential market may develop for oral specimen-based HIV
testing in settings other than laboratories, the Company is engaged in the
development of the OraQuick system, a test system utilizing an adaptation of
the OraSure device, which will provide test results in approximately
ten minutes. The Company has substantially completed initial research on a
prototype version of the OraQuick system for HIV testing. The Company is also
engaged in various stages of research and development for other potential
applications of the system.
The Company will market the OraQuick system in the United States only
after receiving FDA approval, and outside the United States only after
receiving necessary FDA export and foreign government approvals. Preliminary
clinical trials for the OraQuick system were conducted in July and August 1993
and were partially funded by a grant awarded to the Company.
Marketing
The Company has historically marketed most of its products by
collaborating with pharmaceutical and diagnostic companies and distributors.
Epitope Medical Products seeks marketing partners who have expertise and
distribution abilities appropriate for the product to be marketed. The
Company employs a Vice President of Sales and Marketing who heads a medical
products marketing team of three other employees. These employees spend the
bulk of their time maintaining and establishing relationships with current and
potential marketing partners.
The Consumer Healthcare division of SmithKline Beecham, plc (SB) has an
exclusive agreement to market the Company's oral specimen collection device
worldwide, except in several foreign countries and to the insurance industry
in the U.S., Canada and Japan. SB commenced sales under the agreement in
October 1995. SB will fund further development of other diagnostic products
and technology by the Company and, with respect to SB markets, assume
responsibility for funding advertising, promotion, sales and distribution
expenses, together with the cost of obtaining and maintaining regulatory
approvals in its markets. A portion of SB's regulatory costs will be credited
against royalties. Epitope will fund the regulatory costs of obtaining
approval for over-the-counter use of OraSure for HIV diagnosis.
In 1995, SB made an initial license fee payment of $1 million to the
Company. SB also placed $5 million in escrow for future payment to the
Company, of which $1 million will be disbursed to the Company to reimburse
future research project work and $4 million will be paid as an additional
license fee upon FDA approval of a pending request to amend the labeling of
the Company's oral specimen collection device to indicate a two-year shelf
life. If the requested amendment for extended dating is not approved by
February 21, 1996, then royalty payments due from SB to the Company may be
offset against the initial $1 million license fee until such time as the
amendment is approved.
The Company has also entered into four agreements for the use and
distribution of the OraSure collection device in the United States insurance
industry. The agreements are with LabOne, Inc. (formerly Home Office
Reference Laboratory, Inc.), the leading provider of laboratory testing
services to the insurance industry, and three other major U.S. insurance
testing laboratories.
FDA approval of the OraSure device for HIV-1 screening means that the
approved product may be freely exported without further U.S. government
approvals, although foreign government import approvals will in many cases
still be required. Foreign shipments of the OraSure device for certain other
indications may be made only after FDA export approval and any required
foreign government import approvals are obtained. The Company has entered
into marketing agreements with various foreign and domestic distributors for
the OraSure collection device in the eight countries within the Epitope
territory under terms of the SB agreement. The Company has sold OraSure in
Canada, the United Kingdom, Spain, Australia, Indonesia, and Thailand.
The Company owns a 60 percent interest in Epitope KK, a Japanese limited
liability company formed as a joint venture with Sigma Seiki, Ltd., a
privately held Japanese manufacturer of medical devices and equipment. In
1994, the Company decided to terminate its joint venture in China, Beijing
Epitope Biotech Corporation, Ltd., a Chinese company owned equally with China
National Biological Products Company, a unit of the Chinese Health Ministry.
In 1994, the Company renewed its supply and distribution agreements with
Organon Teknika Corporation ("Organon Teknika"), a member of the Pharma
Division of Akzo, NV. The supply agreement provides that Organon Teknika will
continue to supply the HIV-1 antigen used to manufacture EPIblot and the
distribution agreement grants Organon Teknika the exclusive right to purchase
EPIblot test kits from the Company and to market them worldwide. Akzo, NV is
an international chemical and pharmaceutical manufacturer based in Arnhem, The
Netherlands.
Competition
There are many companies engaged in medical and biotechnology research
and product development activities. The Company's competitors include
specialized biotechnology firms as well as pharmaceutical companies with
biotechnology divisions and medical diagnostic companies, many of which have
considerably greater financial, technical, and marketing resources than the
Company. Competition may intensify as technological advances are made and
become more widely known and as products reach the market in greater numbers.
Cambridge Biotech Corporation and BioRad Laboratories, Inc., manufacture
Western blot HIV confirmatory tests, and Waldheim Pharmazeutika manufactures
immunofluorescent HIV confirmatory tests, distributed in the United States by
Viral Testing Systems, Inc., that compete with the Company's EPIblot HIV-1
Western blot serum-based confirmatory test kits.
Several other companies market or have announced plans to market oral-
specimen collection devices and tests. The Company expects the number of
devices competing with its OraSure device to increase as the benefits of oral
specimen-based testing become more widely accepted. The Company expects that
FDA approval of the OraSure device will also encourage potential competitors
to develop oral diagnostic products. However, no such devices have yet been
approved by the FDA for HIV testing. The Company believes that at this time
no such devices are undergoing FDA-reviewed clinical trials for the purpose of
obtaining FDA approval for HIV testing. See "Business--Epitope Medical
Products--Government Regulation."
Government Regulation
General. Many of the Company's proposed and existing diagnostic
products are subject to regulation by the FDA, other federal, state, and local
agencies, and comparable bodies in foreign countries. Such regulation governs
almost all aspects of development and marketing, including the introduction,
advertising, promotion, manufacturing practices, labeling, distribution, and
record keeping for the products. In the United States, different types of
diagnostic products are regulated differently by the FDA, as discussed below.
As part of the FDA clearance process, the Company often must demonstrate that
its products are both safe and effective for a particular indication or
application.
Drugs and Biological Products. Generally, drugs and biological products
require FDA approval before marketing. The steps required before a drug or
biological product may be marketed in the United States include:
(1) preclinical laboratory and animal tests; (2) submission of an application
for an investigational new drug or biological product, which must become
effective before human clinical trials may commence; (3) human clinical
trials; (4) submission of a Product License Application ("PLA") for the
biological product or a New Drug Application ("NDA") for most other new drug
products; and (5) approval of the PLA or NDA.
Preclinical safety and initial efficacy testing is usually undertaken in
animals. Results of such preclinical and other laboratory tests are submitted
to the FDA before human clinical trials can begin. Clinical trials are
typically conducted in three phases. Phase I uses human subjects to determine
safety and tolerance. Phase II uses a limited patient population to determine
effectiveness and dosage and to identify side effects. Compounds found
effective and safe in Phase II are further tested in Phase III with an
expanded patient population at geographically dispersed clinical study sites.
Each phase may last from one to two years or more.
Most products are not approved because of the failure to demonstrate
safety, effectiveness, or both. The FDA may suspend clinical trials at any
time if it is felt that subjects or patients are being exposed to an
unacceptable health risk. Obtaining FDA approval requires substantial time
and effort. There can be no assurance that any approval will be granted to
the Company on a timely basis, if at all. As part of the approval process,
the FDA may require the Company to initiate post-approval marketing studies.
Post-approval marketing studies are underway as required as part of the FDA's
approval of the OraSure device.
Medical Devices. All medical devices are classified either in Class I,
Class II, or Class III. Class I devices are subject only to general control
provisions of the Federal Food, Drug, and Cosmetic Act, as amended (the "FDC
Act"). These provisions include requirements that a device not be adulterated
or misbranded. Class II devices are those for which general controls are
insufficient to provide a reasonable assurance of safety and efficacy and for
which a "generic" performance standard or other special controls are
appropriate. Devices that do not meet the criteria for Class I or II are
placed in Class III. Class I and II devices, those Class III devices
initially marketed prior to passage of the Medical Device Amendments of 1976
("MDA") for which premarket approval applications ("PMAs") are not yet
required, and devices substantially equivalent to such devices, may be
marketed upon FDA clearance of a section 510(k) notification (a "510(k)
Notice"). Other Class III devices may be commercially marketed only after FDA
approval of a PMA. Generally, the process of obtaining FDA approval of a PMA
is similar to that for obtaining approval of a biological or other drug
product.
Based upon the information provided in a 510(k) Notice regarding the
device's intended use and technological features, the FDA will determine
whether the device is "substantially equivalent" to a predicate device, i.e.,
a device legally marketed which did not require a PMA. If a device is found
to be substantially equivalent to a predicate device, it may be freely
marketed in the United States so long as the device is otherwise in compliance
with the FDC Act. If it is not so found, it will be considered a Class III
device requiring a PMA. Substantial equivalence means that the FDA has found
that the device has the same intended use as the predicate device, and either
has the same technological characteristics or has different characteristics,
but there is information in the 510(k) Notice that shows the device is as safe
and effective as the predicate and does not present different questions of
safety and effectiveness.
OraSure Collection Device. The OraSure collection device for
applications involving the detection of HIV is regulated by the FDA as a Class
III medical device requiring a PMA. In May 1991, the Company completed
clinical trials for use of the OraSure device in HIV-1 screening and submitted
a PMA to the FDA. The PMA was approved by FDA in December 1994. Until the
pending PMA for the OraSure Western blot is approved, a definitive HIV-
positive diagnosis will require that a blood sample be drawn.
In February 1995, the Company submitted a 510(k) Notice for use of
OraSure for cocaine testing. The submission is currently undergoing FDA
review. See "Business--Epitope Medical Products--Products Under Development--
OraSure." In the meantime, the FDA has advised the Company that OraSure may be
used for cocaine testing for the purposes of life insurance risk assessment
while the 510(k) is undergoing final review.
Western Blot Test Kits. The Company's HIV-1 Western blot serum-based
confirmatory test kits are used to confirm whether individuals are infected
with HIV-1. They are regulated by the FDA as biological products, unlike most
other diagnostic tests which are regulated as medical devices. In March 1991,
the FDA approved the EPIblot HIV-1 serum-based confirmatory test kit for
commercial distribution. A PMA seeking permission to market an oral specimen-
based HIV-1 confirmatory test kit was submitted to the FDA in June 1995. In
December 1995, the FDA issued an approvable letter advising the Company that
the agency would issue an approval order with regard to such PMA after
additional information had been submitted, reviewed and deemed acceptable, and
upon successful completion of a facilities inspection. See "Business--Epitope
Medical Products--Products Under Development--HIV-1 Western Blot Oral
Specimen-based Kits." An independent institutional review board recently
concluded that the use of an OraSure Western blot confirmatory test on a
research basis in the area of life insurance risk assessment represented a
non-significant risk under current regulations provided that serum-based
confirmation was used for diagnostic purposes.
Manufacturing Regulations. Every company that manufactures drugs,
biological products, or medical devices distributed in the United States is
subject to inspections by the FDA and must comply with the FDA's Current Good
Manufacturing Practices regulations. These regulations govern, among other
matters, manufacture, testing, release, packaging, distribution, and
documentation.
Other. The Company is also subject to regulation by the Occupational
Safety and Health Administration and may be subject to regulation by the U.S.
Environmental Protection Agency ("EPA") under the Toxic Substances Control Act
("TSCA"), the Resource Conservation and Recovery Act, and other legislation.
The Company is also subject to foreign regulations governing, for example,
human clinical trials and marketing with respect to products distributed
outside of the United States. Approval processes vary from country to
country, and the length of time required for approval or to obtain other
clearances may in some cases be longer than that required for U.S.
governmental approvals. The extent of potentially adverse governmental
regulation affecting the Company that might arise from future legislative or
administrative action cannot be predicted.
Supplies
The HIV-1 antigen needed to manufacture the Company's EPIblot HIV
confirmatory test kits is available from only a limited number of sources.
Organon Teknika, the exclusive distributor of the test kits, is required to
supply the Company's requirements for antigen for the term of its distribution
agreement with the Company, which ends in March 1997. If for any reason
Organon Teknika should no longer be able to supply the Company's antigen
needs, management believes the Company would be able to obtain or produce its
own supply of antigen at a competitive cost. The Company has obtained a
license from the National Technical Information Service which is required for
the production of the HIV-1 antigen currently used in the Company's EPIblot
test kits.
Other materials used by the Company in its manufacturing and research
and development operations are widely available from a variety of sources.
AGRITOPE, INC.
Agritope, the Company's agricultural biotechnology subsidiary, has made
progress toward genetic engineering of plants to control ripening and other
processes. Agritope performs research and development with primary emphasis
on improving the post-harvest shelf life of plants through genetic
engineering. Agritope also has agreed to provide research support for the
grape plant program and fresh flower and floral preservative programs of two
former business units.
Products Under Development
Agritope has devoted substantial efforts to the genetic control of
ethylene production in plants. Ethylene is a plant hormone present in all
higher plants that causes fruits and vegetables to ripen, leaves to wilt, and
flowers to fade. Unlike other plant hormones, ethylene is a gas and therefore
affects surrounding plants as well as the plant that produces it.
Technologies currently in use to control ethylene include controlled
atmosphere storage, chemical treatments, and irradiation. These technologies
are expensive and in some cases toxic, and can adversely affect flavor,
texture, and firmness.
Agritope is engaged in genetic engineering projects intended to develop
new plant varieties in which ethylene production will be controlled. Agritope
has identified a single gene which, after insertion into a plant, reduces
ethylene production. Agritope has been granted a patent in the United States
for the use of this gene and has a number of U.S. and foreign applications
pending with respect to the technology. Agritope believes this gene can be
inserted into virtually all higher plants and will have extensive commercial
applications. Products that could be developed by successfully controlling
ethylene production include fruits and vegetables with prolonged post-harvest
storage life; fruits, vegetables, and flowers resistant to physical injury;
fruits and vegetables that ripen synchronously; and flowers with an extended
bloom life.
Agritope conducted demonstration trials in winter 1994 and spring 1995
of a proprietary cherry tomato and large-fruited fresh market tomato varieties
that contain the gene that inhibits production of ethylene. The trials, which
were conducted in Florida and California, further demonstrated the ability of
Agritope's technology to inhibit ethylene production.
Agritope has conducted research pursuant to an agreement with Rogers
N.K., a unit of Sandoz Seeds Ltd., for the evaluation of Agritope's ethylene
control technology in several of Rogers' full-size tomato varieties. Agritope
has also entered into a collaboration agreement with Calgene, Inc. Agritope
is also continuing independent research and development in this technology.
Sakata Seed America ("Sakata"), a major hybrid seed supplier, provided
Agritope with funds in prior years to develop broccoli and cauliflower plants
having an extended post-harvest storage life. Agritope has provided Sakata
with transgenic cauliflower plants and broccoli to be tested for the
production of hybrid seeds. However, it is impossible to predict when, if
ever, the hybrid seeds could be produced for commercial distribution or
whether plants produced from the seeds will have commercially valuable
characteristics. See "Business--Agritope, Inc.--Government Regulation."
Sweetbriar Development, Inc. ("Sweetbriar") has entered into a license
agreement with Agritope under which the parties will collaborate to develop
longer-lasting raspberries utilizing Agritope's proprietary ethylene control
technology and selected breeding lines developed by Sweetbriar. Sweetbriar
will partially fund Agritope's work under the agreement.
Marketing
Sakata will market any broccoli or cauliflower seeds produced by
Agritope's ethylene control project and will pay the Company a royalty on
seeds sold. Raspberries developed under the Sweetbriar agreement will be
marketed by Sweetbriar's parent Driscoll Strawberry Associates; Sweetbriar
will pay Agritope royalties based on the aggregate sales value of such
transgenic raspberries. As additional plant varieties, such as tomatoes, are
developed, Agritope expects to establish appropriate strategic alliances to
market and distribute its products.
Competition
The Company believes that many companies, including companies with
significantly greater financial resources, such as Calgene, Monsanto Co.,
Zeneca Seeds, and DNA Plant Technology Corporation, may be engaged in the
development of mechanisms to control the ripening of agricultural products.
The Plant Gene Expression Center, a joint venture of the U.S. Department of
Agriculture and the University of California, Berkeley, announced in October
1991 the development of a genetically manipulated tomato that can be stored
for two to three months without spoiling. Calgene has been engaged in genetic
engineering work to delay tomato softening and commenced marketing the
genetically modified tomatoes in May 1994.
Government Regulation
Agritope is devoting substantial effort to the development of
"genetically engineered" plants using recombinant DNA methods. Many of
Agritope's proposed agricultural products are subject to regulation by both
the United States Department of Agriculture ("USDA") and the FDA and may be
subject to regulation by the EPA and other federal, state, local and foreign
authorities. The extent of regulation depends upon the intended uses of such
products, how they are derived, and how applicable statutes and regulations
are interpreted to apply to new genetic technologies and products thereof.
The regulatory approaches of the USDA, FDA, EPA and other agencies are still
evolving with respect to products of modern biotechnology, such as those
derived from the use of recombinant DNA methods. No assurances exist that any
regulatory approvals, exemptions, permits or other clearances, if required,
can be obtained in a timely manner, if at all, either for research or
commercial activities.
Agritope has field-tested various plants that are genetically altered by
use of recombinant DNA techniques. Tomato plants where ethylene production is
controlled to delay ripening have been field-tested since 1992. These field
trials have been authorized by the Animal and Plant Health Inspection Service
("APHIS") of the USDA. APHIS is responsible for reviewing both research and
development work and commercialization of plants derived by recombinant DNA
techniques that may pose plant pest risks. Some states also require
authorization of field trials. To date, Agritope has not conducted any field
tests in such states, although it may do so in the near future.
Commercialization of delayed-ripening fruits developed through the use of
recombinant DNA techniques, in contrast to research and development
activities, will require a determination of non-regulated status by APHIS. In
November 1995, Agritope submitted a petition requesting such a determination
from APHIS with respect to a variety of tomatoes containing its ethylene
control gene.
The FDA regulates foods (including food ingredients) under the FDC Act.
On May 29, 1992, the FDA issued a policy statement with respect to new food
plant varieties or products thereof that provides guidance for developers to
determine whether their new plant varieties are as safe as the traditional
counterpart varieties. The FDA expects developers of whole foods derived from
the use of recombinant DNA techniques to consult with the FDA prior to
commercial marketing in order to assure that such foods are safe for public
consumption. Agritope initiated consultation with the FDA in 1994 and will
continue to consult with the FDA in 1996 regarding the commercialization of
delayed-ripening tomatoes. A number of companies have successfully proceeded
through the FDA consultation process, although the time period for doing so
can vary significantly.
Under the food additive provisions of the FDC Act, new food additives,
which may include plants and plant products, require FDA clearances before
marketing. The FDA has regulated as a food additive the enzyme product of the
kan r (APH(3') Il) marker gene in tomatoes, cotton, and oilseed rape plants.
Marker genes help identify the presence of desirable genes, such as the gene
that inhibits the production of ethylene in Agritope's delayed-ripening
tomatoes. Use of the kan r marker gene in plants other than tomatoes, cotton,
and oilseed rape, such as raspberry plants, may require additional food
additive clearances from the FDA. Other aspects of Agritope's use of
recombinant DNA methods to genetically engineer food plants may require FDA
food additive clearances before commercialization. The costs and time
required to obtain such clearances could be significant.
The EPA requires registration of pesticides under the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA") and issues tolerance
regulations for residues of pesticides in foods under the FDC Act. The EPA
has proposed regulations dealing with "plant pesticides" and has asked for
comment on whether that term should include plant hormones, such as ethylene,
should be exempted from FIFRA. The EPA could also regulate plant products
under TSCA. The EPA has published proposed regulations under TSCA which,
depending on their final form, could require further regulatory approvals
before Agritope commercializes some of its plant technologies.
Federal and state labeling requirements pertaining to the
commercialization of Agritope's products of modern biotechnology are still
evolving. In April 1993, the FDA issued a request for data and information
pertaining to the labeling of food derived from new plant varieties, including
those plants produced by recombinant DNA methods. This request seeks
information on various labeling issues, such as whether food products of
modern biotechnological methods should be specifically labeled in some way.
The FDA is not expected to require special labeling for recombinant DNA-
derived foods, although so-called "negative labeling" for food products that
do not result from the use of modern genetic techniques could denote, for
example, that food products are not derived from the use of genetic
engineering. Even if the FDA does not mandate special labeling, various
states may pass legislation to require such labeling. If special labeling is
permissible, if other labeling relating to the use of recombinant DNA is
ultimately required by the FDA, other federal agencies, or certain states, or
if "negative labeling" becomes prevalent, the commercialization of Agritope's
products may be adversely affected. Some consumers may choose to buy only
products that are not the result of new "genetic engineering" methods.
VINIFERA, INC.
Agritope has developed proprietary methods for propagating superior
varieties of grapevines in commercial quantities. Vinifera, Inc. ("Vinifera")
was formed in 1993 as a wholly owned subsidiary of Agritope, to commercialize
this technology. In June 1995, Agritope agreed to sell its equity interest in
Vinifera to VF Holdings, Inc. ("VF"), an affiliate of a Swiss investment
group. VF agreed to pay a purchase price of $5.9 million and up to $5 million
in earnout payments based on gross profits of Vinifera. VF also agreed to
contribute $4 million of operating funds to Vinifera. Agritope has also
agreed (1) to conduct research and diagnostic testing services for Vinifera,
(2) to lease its Woodburn, Oregon, farm and greenhouse facilities to Vinifera
for an interim period of at least one year until Vinifera relocates its
operations nearer to its U.S. customer base in Northern California and (3) to
provide administrative support services for a one-year transition period. VF
has contributed over $600,000 to fund Vinifera cash requirements for
operations since June 1995 when Agritope discontinued such funding, but has
not made any other payments to Agritope or Vinifera. See Note 3 to
Consolidated Financial Statements.
AGRIMAX FLORAL PRODUCTS, INC.
Agrimax, a Minnesota corporation, was acquired in 1992 by Agritope to
distribute fresh cut flowers and proprietary floral preservatives. After
commencement of marketing from a plant in the Minneapolis-St. Paul area,
Agrimax increased its production capacity and product lines and extended its
delivery areas to serve the eastern U.S. from a second, larger facility in
Charlotte, North Carolina.
In May 1995, Agrimax transferred control of its Charlotte facility to
Universal American Flowers, Inc., a privately held importer of high quality
fresh flowers engaged in distribution to customers in the eastern U.S. from
facilities in Tampa, Florida and Hammond, Louisiana. As of October 27, 1995,
Agrimax merged the Charlotte fresh flower operation with those of UAF in
return for an equity interest of approximately 18% in the merged entity, UAF,
L.P. In addition to tangible operating assets, Agrimax transferred to UAF,
L.P., the rights to use its proprietary floral preservative as well as the
Fresche Blossoms<reg-trade-mark>, Everguard<reg-trade-mark> and Fresche
Blossoms Express<trademark> trademarks. The St. Paul, Minnesota, facility of
Agrimax ceased operations in June 1995. A Minneapolis investor has entered
into a letter of intent to purchase the St. Paul assets. See Note 3 to
Consolidated Financial Statements.
GRANTS AND CONTRACTS
The Company participates in United States Small Business Innovation
Research ("SBIR") programs sponsored by either the Department of Health and
Human Services or the Department of Agriculture. The SBIR programs have two
phases. Phase I covers a six-month project period and a total award not to
exceed $55,000. Phase II covers a two-year project period and a total award
not to exceed $500,000. Agritope was awarded a Phase I grant of $50,000 in
1994 and a Phase II grant of $200,000 in 1995 for development of diagnostic
tests for the detection of grapevine leafroll virus.
The Company has also received funds in the past from the National
Institute of Allergy and Infectious Diseases ("NIAID") for work in developing
a rapid test to detect HIV antibodies in oral fluid specimens and from the
National Cancer Institute ("NCI") to fund research for the treatment of cancer
by exploiting a deficiency of certain compounds in cancer cells. Agritope has
been awarded grant support in the past from the USDA, Oregon Strawberry
Commission, and Oregon Raspberry and Blackberry Commission for antifungal
biocontrol research.
The Company intends to continue to participate in the SBIR programs as
it deems appropriate. The Company regularly makes applications for new
grants, but there is no assurance that grant support will be continued.
PATENTS AND PROPRIETARY INFORMATION
The Company has obtained patents in the United States and certain
foreign countries for the OraSure and OraQuick devices and related technology.
The Company has applied for additional patents, both in the United States and
in certain foreign countries, on the OraSure collection device and a number of
other technologies and products. In 1995, Agritope received a U.S. patent
relating to its ethylene control gene. Agritope has also applied for
additional U.S. and foreign patent protection for its ethylene control
technology. The Company anticipates filing patent applications for protection
on future products and technology. United States patents have a maximum term
of 20 years from the date an application is filed or 17 years from issuance,
whichever is longer.
Much of the technology developed by the Company is subject to trade
secret protection. To reduce the risk of loss of trade secret protection
through disclosure, the Company requires its employees and consultants to
enter into confidentiality agreements. Trade secret protection can continue
indefinitely so long as the protected information is not disclosed on an
unrestricted basis to third parties.
The Company believes that patent and trade secret protection is
important to its business. However, the issuance of a patent or existence of
trade secret protection does not in itself ensure the Company's success.
Competitors may be able to produce products competing with a patented Company
product without infringing on the Company's patent rights. Issuance of a
patent in one country generally does not prevent manufacture or sale of the
patented product in other countries. The issuance of a patent to the Company
or to a licensor is not conclusive as to validity or as to the enforceable
scope of the patent. The validity or enforceability of a patent can be
challenged by litigation after its issuance, and, if the outcome of such
litigation is adverse to the owner of the patent, the owner's rights could be
diminished or withdrawn. Trade secret protection does not prevent independent
discovery and exploitation of the secret product or technique.
PERSONNEL
At September 30, 1995, the Company and its subsidiaries had 89 full-time
employees, including 31 persons in research and product development, 23 in
administration and marketing, 28 in manufacturing and production, and 7 in
regulatory affairs and quality assurance. During fiscal 1994, the Company
implemented a strategic plan to focus efforts on its core medical products and
agricultural business units and to match personnel resources with current
requirements. Employment was reduced by the divestiture of two business units
and by a reduction in work force at the remaining business units. See Notes 2
and 3 to Consolidated Financial Statements. The Company considers its
relations with its employees to be excellent. None of its employees are
represented by labor unions.
The Company employs 9 persons holding Ph.D. or M.D. degrees with
specialties in the following disciplines: analytical chemistry, bacteriology
and public health, biochemistry, biophysics, hematology and internal medicine,
immunology, molecular biology, organic chemistry, plant biology and plant
pathology. From time to time, the Company also engages the services of
scientists as consultants to augment the skills of its scientific staff.
Scientific Advisory Board. The Company also utilizes the services of a
Scientific Advisory Board. The Scientific Advisory Board meets periodically
to review the Company's research and development efforts and to apprise the
Company of scientific developments pertinent to the Company's business. The
Scientific Advisory Board is comprised of chair Eugene W. Nester, Ph.D.,
Professor and Chair, Department of Microbiology, University of Washington;
Roger N. Beachy, Ph.D., Member, Scripps Family Chair, and Head, Division of
Plant Biology, The Scripps Research Institute, and Co-Director of
International Laboratory for Tropical Agricultural Biotechnology; Peter R.
Bristow, Ph.D., Associate Plant Pathologist, Washington State University; J.
Richard George, Ph.D., Vice President of Scientific Affairs of Epitope Medical
Products; Lesley M. Hallick, Ph.D., Vice President for Academic Affairs,
Oregon Health Sciences University; Daniel Malamud, Ph.D., Professor and Chair,
Department of Biochemistry, University of Pennsylvania School of Dental
Medicine; and James I. Mullins, Ph.D., Professor of Microbiology and Medicine,
University of Washington.
Item 2. Properties.
Epitope Medical Products. The Company leases approximately 52,000
square feet of office, manufacturing, and laboratory space in Beaverton,
Oregon, under three leases that terminate January 31, 2000. Each lease calls
for fixed monthly payments over its term. The Company also entered into a
five-year lease, effective October 1, 1991, for 2,265 square feet of warehouse
space used to store inventory and equipment.
Agritope. Agritope owns a 15-acre farm which it has agreed to lease to
its former Vinifera unit through June 1996 for use in connection with
Vinifera's grapevine micropropagation operations. Greenhouse capacity at the
farm currently totals 60,000 square feet. Agritope also uses a portion of the
Company's office space in Beaverton, Oregon.
Agrimax. Agrimax entered into a six-year lease, effective January 1,
1994, for 76,000 square feet of space for administrative and production use in
Charlotte, North Carolina. The Charlotte facility has been subleased to an
affiliate, UAF, LP in which Agrimax has an 18% equity interest. In August
1994, Agrimax entered into a five-year lease covering 25,000 square feet of
space for administrative and production use in St. Paul, Minnesota. Agrimax
has entered into a letter of intent with a private investor who has proposed
to sublease the facility and operate a successor to the fresh flower business
which Agrimax formerly conducted at that location. See Note 3 to Consolidated
Financial Statements.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this Report.
PART II
Item 5. Market for the Registrant's Common Stock
and Related Stockholder Matters.
The Company's Common Stock is listed for trading on the American Stock
Exchange ("AMEX") under the symbol EPT. High and low sales prices reported by
AMEX during the periods indicated are shown below.
<TABLE>
<CAPTION>
Year ended September 30 1995 1994
- -------------------------------------------------------------------------------
Sales price per share High Low High Low
<S> <C> <C> <C> <C>
First Quarter $ 26 $ 18-1/2 $ 24-1/4 $ 19-5/8
Second Quarter 21-7/8 13-5/8 21-5/8 13-1/4
Third Quarter 18-3/8 13-5/8 19-3/8 13-3/8
Fourth Quarter 18 13-3/4 22 15-3/8
</TABLE>
On November 30, 1995, there were 1,203 holders of record of the Common
Stock, and the closing price of the Common Stock was $11-3/4. The Company has
never paid any cash dividends, and the Board of Directors does not anticipate
paying cash dividends in the foreseeable future. The Company intends to
retain any future earnings to provide funds for the operation and expansion of
its business.
Item 6. Selected Financial Data.
The following balance sheet data at September 30, 1995 and 1994 and the
operating results for the years ended September 30, 1995, 1994 and 1993 have
been derived from audited consolidated financial statements and notes thereto
appearing elsewhere in this Annual Report on Form 10-K. The balance sheet
data at September 30, 1993, 1992 and 1991 and operating results for the years
ended September 30, 1992 and 1991 have been derived from audited financial
statements not required to be included in this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
COMPARATIVE FINANICAL DATA
(In thousands, except net loss per share)
<S> <C> <C> <C> <C> <C>
Year ended September 30 1995 1994 1993 1992 1991
- -------------------------------------------------------------------------------------------
Operating results
Revenues. . . . . . . . . . . . . $ 4,965 $ 4,819 $ 3,283 $ 3,043 $ 3,809
Operating costs and expenses. . . 24,383 20,593 16,707 11,102 9,423
Other income (expense), net . . . 922 141 (1,305) 293 234
Net loss. . . . . . . . . . . . . (18,496) (15,633) (14,729) (7,765) (5,380)
Net loss per share. . . . . . . . (1.56) (1.56) (1.67) (.90) (.70)
Shares used in per share
calculations . . . . . . . . . . 11,886 10,050 8,828 8,628 7,631
Balance sheet data
Working capital . . . . . . . . . $ 20,532 $ 17,184 $ 8,703 $ 9,623 $ 10,822
Total assets. . . . . . . . . . . 30,134 24,555 14,145 14,130 14,236
Long-term debt. . . . . . . . . . 22 38 57 - -
Convertible notes, due 1997 . . . 3,620 4,070 4,630 5,495 -
Accumulated deficit . . . . . . . (71,585) (53,090) (37,457) (22,728) (14,962)
Shareholders' equity. . . . . . . 22,347 18,470 7,970 7,660 13,384
</TABLE>
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Results of Operations
Revenues increased 3% in the year ended September 30, 1995 to $ 4.97 million.
Revenues increased 47% in 1994 and increased 8% in 1993 from the prior fiscal
years. Product sales accounted for 97% of revenues in 1995, 99% in 1994 and
92% in 1993.
EPIblot, the Company's Western blot HIV confirmatory test, produced 1995
revenues of $1.8 million, representing a 7% increase over the prior fiscal
year, following an increase of 22% and an increase of 10% in 1994 and 1993,
respectively. Sales volumes for EPIblot increased in 1995 and 1994 due to
further penetration of the U.S. market and in 1993 due to intensified sales
efforts in response to contract incentives.
OraSure, the Company's oral specimen collection device, accounted for revenues
of $981,000 in 1995, an increase of 11% from 1994; revenues in 1994
represented a decrease of 19% from levels attained in 1993. Prior to 1995,
sales of OraSure were limited by the Food and Drug Administration ("FDA") to
use for testing for cotinine, a nicotine derivative, in the U.S. and for pre-
insurance testing for HIV in foreign countries approved for export by the FDA.
The FDA approved the Company's Premarket Approval application ("PMA") for
permission to market the device for use in the U.S. for screening for
antibodies to the AIDS virus in December 1994. Shipments of OraSure for HIV
screening of insurance applicants commenced in March 1995.
Sales of Fresche Blossoms<reg-trade-mark> packaged fresh cut flowers by the
Company's Agrimax Floral Products, Inc. subsidiary ("Agrimax") for 1995
amounted to $1.9 million during the first seven months of the year. Sales of
flowers amounted to $2.1 million and $482,000 in 1994 and 1993, respectively.
In May 1995, Agrimax combined its Charlotte, North Carolina operations with an
affiliate of Universal American Flowers, Inc. ("UAF") of Tampa, Florida and
suspended operation of its Minnesota facility. The Company subsequently
merged its fresh flower operations with those of UAF in return for an equity
interest in the merged entity of approximately 18%. (See Note 3 to
Consolidated Financial Statements.)
VitroGraft<reg-trade-mark> grape plants which are resistant to phylloxera, a
plant louse that has infested U.S. vineyards, accounted for revenues of
$84,000 through June 1995, when the Company agreed to sell its 100% equity
interest in Vinifera, Inc. ("Vinifera") to a Swiss investment group. (See
Note 3 to Consolidated Financial Statements.)
Gross margins on product sales were negative for 1995 and 1994, as compared to
positive gross margins (7%) in 1993. Margins for 1995 and 1994 were adversely
affected by excess costs and inefficiencies encountered at the Agrimax unit
which was operated at less than full capacity. Margin percentages for EPIblot
were positive in 1995, 1994 and 1993. OraSure margins for 1995 and 1994 were
negative due to charges for obsolete inventory accumulated prior to the
December 1994 FDA approval of OraSure for use in HIV screening. OraSure
achieved positive gross margins in 1993 due to the favorable effect of
contracted outsourcing of manufacturing.
Research and development costs of $6.8 million were incurred in 1995,
representing an increase of 13% as compared to a decrease of 14% in 1994 and
an increase of 38% in 1993. Medical products research costs totaled $4.6
million in 1995, a 25% increase, primarily for oral diagnostics products,
which compares to a decrease of 12% and an increase of 18% in 1994 and 1993,
respectively. The Company's agricultural subsidiaries incurred research and
development costs of $2.2 million in 1995, a decrease of 7% from 1994.
Research and development expenses in the Company's agricultural subsidiaries
in 1994 were $2.4 million, down 17% from 1993 principally due to decreased
development costs with regard to Agrimax Fresche Blossoms fresh cut flowers.
Agricultural research project costs of $2.9 million in 1993 were almost double
the amount incurred in 1992, as the Company increased its grape plant
micropropagation activities, accelerated its genetic engineering research
efforts to extend post-harvest shelf life of plants and vegetables, with
emphasis on tomatoes, strawberries and raspberries, and developed improved
floral preservatives and the packaging system for the Fresche Blossoms line of
packaged fresh cut flowers.
Selling, general and administrative expenses were $11.2 million in 1995, as
compared to $7.8 million in 1994 and $6.9 million in 1993. Increases in 1995
were attributable to three major factors: (1) development of a larger
infrastructure to support operations after FDA approval of OraSure, (2)
divestiture of Vinifera and Agrimax operations and (3) restructuring at year
end. 1995 expenses include charges of $607,000 for employee severance
payments and other expenses related to the corporate restructuring program and
$500,000 for disposition of the Company's Agrimax and Vinifera operations.
(See Notes 2 and 3 to Consolidated Financial Statements.) Positions
eliminated in the restructuring represent an annualized cost savings of
approximately $2 million. General and administrative expenses increased
$826,000 during 1994 primarily due to the establishment of the second Agrimax
fresh flower packaging operation in North Carolina. Vinifera's general and
administrative expenses decreased $201,000 primarily due to lower outside
consulting costs during 1994 as compared to 1993. Corporate administration
general and administrative expenses increased $180,000 to $3.6 million during
1994 resulting from increased premiums for directors and officers liability
insurance as well as increased media consulting and investor relations
expenses. In 1993, medical products sales and marketing expenses increased
$559,000 as the Company expanded marketing activities to international
markets. Vinifera was formed in 1993 as a wholly owned subsidiary to conduct
the Company's grapevine technology business. In preparation for marketing its
products as an independently financed entity, Vinifera incurred increased
expenses totaling $956,000. Vinifera expanded promotional activities in the
vineyard industry, formed a grape industry advisory board, engaged investment
bankers to assist in a private placement of securities, and hired a new chief
executive officer. Also, in 1993, Agrimax incurred $686,000 in additional
sales and marketing expenses and $611,000 in additional general and
administrative expenses in connection with establishing its first fresh flower
packaging operation in Minnesota.
Other income (expense) in 1995 and 1994 consisted primarily of interest income
on temporary investments of excess funds, less interest expense on Agritope
long-term debt. In 1993, other income (expense) included a non-cash charge of
$1.4 million for settlement of a class action securities suit. (See Note 6 to
Consolidated Financial Statements.)
Liquidity and Capital Resources
Cash, cash equivalents and marketable securities on hand as of year-end
totaled $21.3 million in 1995 and $16.6 million in 1994. At September 30,
1995, the Company had working capital of $20.5 million, as compared to $17.2
million at September 30, 1994.
Proceeds from the issuance of equity securities represent the primary source
of funds for meeting the Company's requirements for operations, working
capital and business expansion. During 1995, the Company received proceeds of
$21.0 million from the exercise of warrants and options to purchase common
stock. The Company also reduced cash requirements for operations with the
divestiture of two agricultural business units. (See Note 3 to Consolidated
Financial Statements.) With respect to its remaining agricultural business,
Agritope, the Company is in the early stages of considering an initial public
offering, a spin-off to shareholders, partnerships with strategic partners and
similar financing alternatives.
Investment in nonconsolidated subsidiaries includes the book value of the
investment in Agrimax operating assets. Agrimax holds an equity interest of
approximately 18% in UAF, L.P., a fresh flower distribution concern which
operates the business formerly conducted at Charlotte, North Carolina. (See
Note 3 to Consolidated Financial Statements.) Other accounts receivable
include a $400,000 working capital loan which was extended to the newly formed
flower business to fund initial working capital requirements. The line was
paid in full in November 1995.
Salaries, benefits and other accrued liabilities as of September 30, 1995,
include a $500,000 accrual related to the disposition of Vinifera and Agrimax
and $475,000 for unpaid expenses incurred in connection with the Company's
reduction in work force. (See Notes 2 and 3 to Consolidated Financial
Statements.)
Item 8. Financial Statements and Supplementary Data.
Information with respect to this Item is (i) set forth below and (ii)
contained in the Company's Consolidated Financial Statements included in
Item 14 of this Annual Report on Form 10-K. The following table presents
summarized quarterly results of operations for each of the fiscal quarters in
the Company's fiscal years ended September 30, 1995 and 1994. These quarterly
results are unaudited, but, in the opinion of management, have been prepared
on the same basis as the Company's audited financial information and include
all adjustments (consisting only of normal recurring adjustments) necessary
for a fair presentation of the information set forth therein. The data should
be read in conjunction with the Company's Consolidated Financial Statements
and related notes included in Item 14 of this Annual Report on Form 10-K.
<TABLE>
<CAPTION>
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
(In thousands, except net loss per share)
First Second Third Fourth
Year ended September 30, 1995 Quarter Quarter Quarter Quarter Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues........................ $ 1,135 $ 1,675 $ 1,569 $ 586 $ 4,965
Operating costs and expenses.... 5,571 6,721 6,025 6,066 24,383
Other income (expense), net..... 134 214 308 266 922
Net loss........................ (4,302) (4,832) (4,148) (5,214) (18,496)
Net loss per share.............. (.39) (.41) (.34) (.42) (1.56)
First Second Third Fourth
Year ended September 30, 1994 Quarter Quarter Quarter Quarter Total
- ---------------------------------------------------------------------------------------------
Revenues........................ $ 872 $ 1,987 $ 1,359 $ 601 $ 4,819
Operating costs and expenses.... 3,826 6,344 5,246 5,177 20,593
Other income (expense), net..... 6 (10) 86 59 141
Net loss........................ (2,948) (4,367) (3,801) (4,517) (15,633)
Net loss per share.............. (.32) (.46) (.36) (.42) (1.56)
</TABLE>
Item 9. Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure.
None.
PART III
The Company has omitted from Part III the information that will appear
in the Company's definitive proxy statement for its annual meeting of
shareholders to be held on February 20, 1996 (the "Proxy Statement"), which
will be filed within 120 days after the end of the Company's fiscal year
pursuant to Regulation 14A.
Item 10. Directors and Executive Officers of the Registrant.
The information required by this Item is incorporated by reference to
the information under the captions "Election of Directors" and "Executive
Officers" in the Proxy Statement.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference to
the information under the caption "Executive Compensation" in the Proxy
Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this Item is incorporated by reference to
the information under the caption "Principal Shareholders" in the Proxy
Statement.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item is incorporated by reference to
the information under the caption "Certain Transactions" in the Proxy
Statement.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)(1) and (a)(2) Consolidated Financial Statements and Schedules.
Report of Independent Accountants
Consolidated Balance Sheets at September 30, 1995 and 1994
Consolidated Statements of Operations for years ended September 30, 1995,
1994, and 1993
Consolidated Statements of Changes in Shareholders' Equity for years ended
September 30, 1995, 1994, and 1993
Consolidated Statements of Cash Flows for years ended September 30, 1995,
1994, and 1993
Notes to Consolidated Financial Statements
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of Epitope, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of changes in shareholders' equity, and
of cash flows present fairly, in all material respects, the financial position
of Epitope, Inc. and its subsidiaries at September 30, 1995 and 1994, and the
results of their operations and their cash flows for each of the three years
in the period ended September 30, 1995, in conformity with generally accepted
accounting principles. These financial statements are the responsibility of
the Company's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Portland, Oregon
October 30, 1995
<PAGE>
Consolidated Balance Sheets
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents (Note 2)..................... $ 4,259,897 $11,024,997
Marketable securities (Note 2)......................... 17,080,246 5,603,414
Trade accounts receivable, net (Note 2)................ 367,487 348,312
Other accounts receivable.............................. 1,376,543 373,668
Inventories (Note 2)................................... 1,433,746 1,668,772
Prepaid expenses....................................... 159,463 141,855
--------------------------
Total current assets................................... 24,677,382 19,161,018
Property and equipment, net (Notes 2 and 4)............ 2,544,772 4,430,695
Patents and proprietary technology, net (Note 2)....... 555,767 411,238
Investment in nonconsolidated subsidiaries (Note 3).... 2,117,343 -
Other assets and deposits (Note 5)..................... 238,758 552,302
--------------------------
$30,134,022 $24,555,253
Liabilities and Shareholders' Equity
Current liabilities
Current portion of installment notes payable........... $ 17,758 $ 17,758
Accounts payable....................................... 945,395 522,085
Salaries, benefits and other accrued liabilities
(Notes 2 and 9)...................................... 3,182,516 1,437,142
--------------------------
Total current liabilities.............................. 4,145,669 1,976,985
Long-term portion of installment notes payable......... 21,749 37,886
Convertible notes, due 1997 (Note 5)................... 3,620,003 4,070,000
Commitments and contingencies (Notes 6, 8, 9, 10 and 11) - -
Shareholders' equity (Note 6)
Preferred stock, no par value - 1,000,000 shares authorized;
no shares issued or outstanding........................ - -
Common stock, no par value - 30,000,000 shares
authorized; 12,485,130 and 10,926,551 shares issued and
outstanding, respectively.............................. 93,931,947 71,559,900
Accumulated deficit..................................... (71,585,346) (53,089,518)
--------------------------
22,346,601 18,470,382
--------------------------
$30,134,022 $24,555,253
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Operations
FOR THE YEAR ENDED SEPTEMBER 30 1995 1994 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenues
Product sales.............................. $ 4,822,168 $ 4,760,540 $ 3,003,235
Grants and contracts....................... 143,042 58,202 279,905
--------------------------------------------
4,965,210 4,818,742 3,283,140
Costs and expenses
Product costs.............................. 6,398,687 6,716,468 2,791,784
Research and development costs............. 6,822,239 6,050,206 7,021,227
Selling, general and administrative expenses 11,162,358 7,826,115 6,894,447
--------------------------------------------
24,383,284 20,592,789 16,707,458
Loss from Operations (19,418,074) (15,774,047) (13,424,318)
Other income (expense), net................ 922,246 141,459 (1,305,031)
--------------------------------------------
Net loss................................... $(18,495,828) $(15,632,588) $(14,729,349)
Net loss per share......................... $ (1.56) $ (1.56) $ (1.67)
Weighted average number of shares
outstanding................................ 11,886,234 10,050,129 8,827,710
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Shareholders' Equity
Common Stock Accumulated
Shares Dollars deficit Total
--------------------------------------------------------
<S> <C> <C> <C> <C>
Balances at September 30, 1992 8,712,533 $30,387,728 $(22,727,581) $ 7,660,147
Common stock issued upon
exercise of options. . . . . . . . 36,173 368,545 - 368,545
Common stock issued as compensation. 11,298 189,281 - 189,281
Compensation expense for stock
option grants. . . . . . . . . . . - 1,004,714 - 1,004,714
Common stock issued upon
exercise of warrants . . . . . . . 287,060 3,818,143 - 3,818,143
Common stock issued upon
exchange of convertible notes. . . 44,858 864,945 - 864,945
Warrants to purchase common stock. . - 9,388,750 - 9,388,750
Warrants to be issued in class
action settlement. . . . . . . . . - 1,500,000 - 1,500,000
Equity issuance costs. . . . . . . . - (2,094,807) - (2,094,807)
Net loss for the year. . . . . . . . - - (14,729,349) (14,729,349)
--------------------------------------------------------
Balances at September 30, 1993 . . . 9,091,922 45,427,299 (37,456,930) 7,970,369
Common stock issued upon
exercise of options. . . . . . . . 52,488 636,293 - 636,293
Common stock issued as
compensation . . . . . . . . . . . 19,678 368,778 - 368,778
Compensation expense for
stock option grants. . . . . . . . - 1,167,272 - 1,167,272
Common stock issued upon
exercise of warrants . . . . . . . 618,291 9,718,259 - 9,718,259
Common stock issued upon
exchange of convertible notes. . . 28,672 559,964 - 559,964
Common stock issued in
private placement. . . . . . . . . 1,115,500 17,057,563 - 17,057,563
Equity issuance costs. . . . . . . . - (3,375,528) - (3,375,528)
Net loss for the year. . . . . . . . - - (15,632,588) (15,632,588)
--------------------------------------------------------
Balances at September 30, 1994 . . . 10,926,551 71,559,900 (53,089,518) 18,470,382
Common stock issued upon
exercise of options. . . . . . . . 183,525 2,145,673 - 2,145,673
Common stock issued as
compensation . . . . . . . . . . . 16,013 266,800 - 266,800
Compensation expense for
stock option grants. . . . . . . . - 1,374,710 - 1,374,710
Common stock issued upon
exercise of warrants . . . . . . . 1,336,000 18,892,750 - 18,892,750
Common stock issued upon
exchange of convertible notes. . . 23,041 449,991 - 449,991
Equity issuance costs. . . . . . . . - (757,877) - (757,877)
Net loss for the year. . . . . . . . - - (18,495,828) (18,495,828)
--------------------------------------------------------
Balances at September 30, 1995 . . . 12,485,130 $93,931,947 $(71,585,346) $ 22,346,601
The accompanying notes are an integral part of these statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
FOR THE YEAR ENDED SEPTEMBER 30 1995 1994 1993
------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss....................................... $(18,495,828) $(15,632,588) $(14,729,349)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................... 1,458,675 1,156,211 1,092,235
(Gain) loss on disposition of property.......... 819 75,671 (2,442)
Warrants issued in lawsuit settlement........... - - 1,500,000
Warrants issued in exchange for technology
transfer....................................... - - 270,000
Decrease (increase) in accounts receivable and
other receivables............................. (1,022,050) (321,035) 67,667
Increase in inventories......................... (286,903) (658,207) (143,322)
Decrease (increase) in prepaid expenses......... (17,608) 80,319 (105,241)
Decrease (increase) in other assets and deposits (33,521) 335 (4,435)
Increase in accounts payable and accrued
liabilities.................................... 2,168,684 397,332 494,683
Common stock issued as compensation for services 266,800 368,778 189,281
Compensation expense for stock option grants and
deferred salary increases...................... 1,374,710 1,259,273 1,004,714
-----------------------------------------
Net cash used in operating activities........... (14,586,222) (13,273,911) (10,366,209)
Cash flows from investing activities
Investment in marketable securities............. (16,194,994) (5,603,414) -
Proceeds from sale of marketable securities..... 4,718,162 - 6,511,307
Additions to property and equipment............. (1,350,850) (2,590,751) (1,190,783)
Proceeds from sale of property.................. 14,343 1,000 2,500
Expenditures for patents and proprietary
technology..................................... (305,135) (185,670) (145,606)
Investment in affiliated companies.............. 652,698 64,938 (250,000)
-----------------------------------------
Net cash (used in) provided by investing
activities..................................... (12,465,776) (8,313,897) 4,927,418
Cash flows from financing activities
Installment purchase obligation................. - - 76,368
Principal payments under installment purchase and
capital lease obligations...................... (16,137) (20,724) (2,010)
Proceeds from issuance of common stock.......... 21,060,912 24,387,702 4,186,688
Cost of common stock issuance................... (757,877) (310,849) -
Proceeds from issuance of warrants to purchase
common stock.................................... - - 8,312,500
Cost of warrant issuance........................ - - (1,194,198)
Proceeds from issuance of long-term debt........ - - -
Cost of debt issuance........................... - - (17,526)
-----------------------------------------
Net cash provided by financing activities....... 20,286,898 24,056,129 11,361,822
Net increase (decrease) in cash and cash
equivalents.................................... (6,765,100) 2,468,321 5,923,031
Cash and cash equivalents at beginning of year.. 11,024,997 8,556,676 2,633,645
-----------------------------------------
Cash and cash equivalents at end of year........ $ 4,259,897 $ 11,024,997 $ 8,556,676
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
Notes to Consolidated Financial Statements
Note 1 The Company
Epitope, Inc. (the Company or Epitope) is an Oregon corporation utilizing
biotechnology to develop and market medical diagnostic products and, through
its agricultural unit, superior new plants and related products.
Note 2 Summary of Significant Accounting Policies
CONSOLIDATION. The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
CASH AND CASH EQUIVALENTS; MARKETABLE SECURITIES. For purposes of the
consolidated balance sheets and statements of cash flows, the Company
considers all highly liquid investments with maturities at time of purchase of
three months or less to be cash equivalents. At September 30, 1995,
marketable securities consisted of commercial paper and U.S. Treasury
securities with an original maturity period greater than three months. The
Company's policy is to invest its excess cash in securities that maximize (a)
safety of principal, (b) liquidity for operating needs, and (c) after-tax
yields.
Effective October 1, 1994, the Company adopted Financial Accounting Standards
Board Statement No. 115 (SFAS 115), Accounting for Certain Investments in Debt
and Equity Securities. Pursuant to SFAS 115, the Company has categorized all
of its investments as available-for-sale securities and, accordingly,
unrealized gains and losses on such investments, if material, will be carried
as a separate component of shareholders' equity. Such unrealized gains and
losses were immaterial as of September 30, 1995.
INVENTORIES. Inventories are recorded at the lower of standard cost (which
approximates actual cost on a first-in, first-out basis) or market. Inventory
components are summarized as follows:
<TABLE>
<CAPTION>
September 30 1995 1994
- ------------------------------------------------------------------------
<S> <C> <C>
Raw materials. . . . . . . . $ 657,568 $ 721,199
Work-in-process. . . . . . . 379,470 595,597
Finished goods . . . . . . . 295,032 293,674
Supplies . . . . . . . . . . 101,676 58,302
--------------------------------------------
$ 1,433,746 $ 1,668,772
</TABLE>
DEPRECIATION AND CAPITALIZATION POLICIES. Property and equipment are stated
at cost less accumulated depreciation. Expenditures for repairs and
maintenance are charged to operating expense as incurred. Such expenditures
amounted to $129,526, $72,836 and $81,433 for the years ended September 30,
1995, 1994 and 1993, respectively. Expenditures for renewals and betterments
are capitalized.
Depreciation and amortization of property and equipment are calculated
primarily under the straight-line method over the estimated lives of the
related assets (three to seven years). Leasehold improvements are amortized
over the shorter of estimated useful lives or the terms of related leases.
When assets are sold or otherwise disposed, cost and related accumulated
depreciation or amortization are removed from the accounts and any resulting
gain or loss is included in operations.
PATENTS AND PROPRIETARY TECHNOLOGY. Direct costs associated with patent
submissions are capitalized and amortized over their minimum estimated
economic useful lives, generally five years. Amortization expense of such
costs was $154,277, $114,826 and $88,911 for the years ended September 30,
1995, 1994 and 1993, respectively, and accumulated amortization was $486,466
and $332,189 at September 30, 1995 and 1994, respectively.
REVENUE RECOGNITION. Product revenues are generally derived from the sale of
products and are recognized as revenue when the related products are shipped.
Grant and contract revenues include funds received under research and
development agreements with various entities. Such revenues are recognized in
accordance with contract terms.
Accounts receivable are stated net of an allowance for doubtful accounts of
$72,044 and $51,696 at September 30, 1995 and 1994, respectively.
RESEARCH AND DEVELOPMENT. Research and development expenditures are comprised
of those costs associated with the Company's own ongoing research and
development activities including the costs to prepare for, obtain and compile
clinical studies and other information to support product license
applications. Expenditures for research and development also include costs
incurred under contracts to develop certain products, including those
contracts resulting in grant and contract revenues. All research and
development costs are expensed as incurred.
ADVERTISING COSTS. The Company expenses all advertising and promotion costs
as incurred. During the years ended September 30, 1995, 1994 and 1993,
respectively, the Company expended $294,796, $210,661 and $212,071 for
advertising and product promotion.
INCOME TAXES. The Company accounts for certain revenue and expense items
differently for income tax purposes than for financial reporting purposes.
These differences arise principally from methods used in accounting for stock
options and depreciation rates.
NET LOSS PER SHARE. Net loss per share is computed using the weighted average
number of shares of common stock outstanding during the period. Unexercised
stock options and warrants are excluded from such computations because their
effect on net loss per share would be anti-dilutive.
SUPPLEMENTAL CASH FLOW INFORMATION. Non-cash financing and investing
activities not included in the consolidated statements of cash flows are
summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Conversion of notes to equity (Note 5). . . . . $ 427,496 $ 600,231 $ 959,304
Discount on private placement of common stock . . - 3,024,413 -
Fair value of warrants issued to placement agent. - - 806,250
Investment in nonconsolidated subsidiary. . . . . 2,584,979 - -
</TABLE>
SUPPLEMENTAL PROFIT AND LOSS INFORMATION. In September 1995, management
announced a company-wide reduction in work force whereby 48 employees were
terminated. The Company charged $607,000 to results of operations for
severance payments and related expenses for this program. As of September 30,
1995, $475,000 of these charges remain accrued and are included in the
accompanying consolidated balance sheets under the caption "Salaries, benefits
and other accrued liabilities."
Note 3 Investment in Nonconsolidated Subsidiaries
In June 1995, the Company's wholly owned subsidiary, Agritope, Inc.
(Agritope), agreed to sell its equity interest in its grape plant propagation
unit, Vinifera, Inc. (Vinifera), to VF Holdings, Inc. (VF) an affiliate of a
Swiss investment group. VF agreed to pay a purchase price of $5.9 million and
an additional $5.0 million in earnout payments based on subsequent gross
profits of Vinifera. VF also agreed to contribute a total of $4.0 million of
operating funds to Vinifera. Agritope agreed to (1) conduct research and
perform diagnostic testing services for Vinifera, (2) lease its Woodburn,
Oregon, greenhouse facilities to Vinifera for at least one year until Vinifera
relocates its operations and (3) provide administrative support services for a
one-year transition period. VF has contributed over $600,000 to Vinifera to
fund operations subsequent to June 1995, but has not made any other payments
to Agritope or Vinifera. Accordingly, the accompanying financial statements
do not reflect any gain on disposition of Vinifera. Such gain will be
recognized on the installment method of accounting as payments are received.
Agritope discontinued funding of Vinifera operations in June 1995 upon
execution of the agreements with VF.
In May 1995, Agritope's wholly owned subsidiary, Agrimax Floral Products, Inc.
(Agrimax), ceased operations as an independent entity. UAF, LP (UAF), in
which Agrimax has an 18% interest, was formed to combine the Agrimax
operations in Charlotte, North Carolina, with those of Universal American
Flowers, Inc. in Tampa, Florida and Hammond, Louisiana. In connection with
the UAF transaction, Agrimax contributed inventory, operating assets and the
right to use its proprietory floral preservative and certain trademarks. A
Minneapolis investment firm has entered into a letter of intent to purchase
the remaining Agrimax business unit located in St. Paul, Minnesota.
The investment in Vinifera and Agrimax is included, at cost, in the
accompanying consolidated balance sheet as of September 30, 1995, under the
caption "Investment in nonconsolidated subsidiaries." For the years ended
September 30, 1995, 1994 and 1993, respectively, the accompanying financial
statements include revenues of $2.0 million, $2.2 million and $0.5 million,
and operating losses of $3.8 million, $6.4 million and $3.4 million
attributable to the Agrimax and Vinifera business units. The accompanying
statement of operations for the year ended September 30, 1995, includes the
results of operations of Agrimax and Vinifera through May and also includes a
charge of $500,000 attributable to the disposition of Agrimax and Vinifera
which is included in the accompanying consolidated balance sheets as of
September 30, 1995 under the caption "Salaries, benefits and other accrued
liabilities."
Note 4 Property and Equipment
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30 1995 1994
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Land. . . . . . . . . . . . . . . . . . . . . . . $ 30,020 $ 30,020
Buildings and improvements. . . . . . . . . . . . 717,508 722,811
Research and development laboratory equipment . . 1,094,971 995,467
Manufacturing equipment . . . . . . . . . . . . . 1,296,416 1,422,602
Office furniture and equipment. . . . . . . . . . 2,137,235 2,175,762
Leasehold improvements. . . . . . . . . . . . . . 1,108,622 2,156,400
Construction in progress. . . . . . . . . . . . . 105,611 318,274
---------------------------------------
6,490,383 7,821,336
Less accumulated depreciation and amortization. . (3,945,611) (3,390,641)
---------------------------------------
$ 2,544,772 $ 4,430,695
</TABLE>
Note 5 Long-Term Debt
On June 30, 1992, Agritope completed a private placement with several European
institutional investors pursuant to which $5,495,000 of convertible notes were
issued. The notes are unsecured, mature on June 30, 1997 and bear interest at
the rate of 4% per annum which is payable on each June 30 and December 31
until all outstanding principal and interest on the notes have been paid in
full. The notes are convertible into common stock of the Company at a
conversion price of $19.53 per share. In the event of an initial public
offering of Agritope common stock, the notes would be automatically converted
to shares of Agritope common stock at 90% of the public offering price.
During the years ended September 30, 1995 and 1994, respectively, investors
exchanged $449,991 and $559,964 principal amount of convertible notes for the
Company's common stock at an average price of $19.53 per share. In
conjunction with the exchanges, unamortized debt issuance costs of $22,495 and
$40,267 related to such notes were recognized as equity issuance costs during
1995 and 1994, respectively. Debt issuance costs are included in other assets
and are being amortized over the five-year life of the notes. Amortization
expense of debt issuance costs for the years ended September 30, 1995, 1994
and 1993, respectively, totaled $96,136, $91,715 and $121,000, leaving an
unamortized balance of $197,077 and $315,708 at September 30, 1995 and 1994,
respectively.
Note 6 Shareholders' Equity
AUTHORIZED CAPITAL STOCK. The Company's amended articles of incorporation
authorize 1,000,000 shares of preferred stock and 30,000,000 shares of common
stock. The Company's Board of Directors has authority to determine
preferences, limitations and relative rights of the preferred stock.
COMMON STOCK RESERVED FOR FUTURE ISSUANCE. As of September 30, 1995, the
following shares of the Company's common stock were reserved for future
issuance, as more fully described below:
<TABLE>
<CAPTION>
PURPOSE SHARES
<S> <C>
Outstanding warrants. . . . . . . . . . . . . . . 2,046,990
Outstanding stock options . . . . . . . . . . . . 3,636,103
Employee Stock Purchase Plan subscriptions. . . . 37,455
Conversion of notes (Note 5). . . . . . . . . . . 185,356
-----------------
5,905,904
</TABLE>
COMMON STOCK WARRANTS. As of September 30, 1995, the following warrants to
purchase shares of common stock were outstanding:
<TABLE>
<CAPTION>
DATE OF ISSUANCE Shares Price Expiration Date
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
September 26, 1991. . . . . 171,500 $16.00 September 25, 1996
December 23, 1992 . . . . . 1,022,390 16.00 September 30, 1996
July 20, 1993 . . . . . . . 375,000 20.00 March 31, 1997
August 1, 1993. . . . . . . 200,000 18.50 March 31, 1997
October 17, 1994. . . . . . 50,000 18.50 March 31, 1997
November 22, 1994 . . . . . 228,100 18.50 March 31, 1997
--------------
2,046,990
</TABLE>
In March 1995, the Company modified the terms of the warrants issued in
December 1992 and July and August 1993. The warrants had an initial
expiration date of April 22, 1995, based on Food and Drug Administration
approval of the Company's OraSure collection device for HIV screening in
December 1994.
The Company extended the periods during which the warrants could be exercised
to the dates shown in the table above. The purchase price of the December
1992 warrants was increased to $16.00 per share effective April 23, 1995, and
will be further increased to $18.50 per share on January 1, 1996. The
purchase price of the August 1993 warrants was increased to $18.50 per share
effective April 23, 1995. Under the modified terms, Common Stock purchased
upon exercise of a warrant must be held for at least 60 days.
In March 1993, the Company entered into a stipulation of settlement with
respect to a civil class action suit. Under terms of the settlement, which
received final court approval of the U.S. District Court of Oregon on June 14,
1993, the Company agreed to establish a cash settlement fund, which was funded
by the Company's insurance carrier, and to issue warrants to purchase 700,000
shares of common stock at a price of $17-1/8 per share to eligible members of
the class and their legal counsel. A charge of $1,400,000 for the
settlement, representing the fair market value of the warrants less insurance
proceeds, is included in the accompanying consolidated statements of
operations for the year ended September 30, 1993 under the caption "Other
income (expense), net." The settlement warrants were issued as of November
24, 1993 and had an original expiration date of March 11, 1994. In March
1994, the U.S. District Court of Oregon approved extension of the expiration
date by 60 days to May 10, 1994. Upon exercise of certain settlement
warrants, the Company issued 248,191 shares of common stock for proceeds of
$4,249,809. The remaining warrants expired unexercised.
STOCK AWARD PLANS. The Company's 1991 Stock Award Plan (the 1991 Plan) was
approved by the shareholders during 1991, replacing the Company's Incentive
Stock Option Plan (ISOP). The 1991 Plan provides for stock-based awards to
employees, outside directors and members of scientific advisory committees or
other consultants. Awards which may be granted under the 1991 Plan include
qualified incentive stock options, nonqualified stock options, stock
appreciation rights, restricted awards, performance awards and other stock-
based awards.
Under the terms of the 1991 Plan, qualified incentive stock options on shares
of common stock may be granted to eligible employees, including officers, of
the Company at an exercise price not less than the fair market value of the
stock on the date of grant. The maximum term during which any option may be
exercised is ten years from the date of grant. To date, options have been
granted with four-year vesting schedules.
Options issued to employees under the Incentive Stock Option Plan (ISOP) were
issued at prices not less than the fair market value of a share of common
stock on the date of grant. The options are exercisable after one year from
the date of grant at the rate of 25% per year cumulatively and expire ten
years from the date of grant.
The Agritope, Inc. 1992 Stock Award Plan (the 1992 Plan) was adopted by
Agritope and approved by the Company in 1992. The 1992 Plan, which has
provisions similar to those of the Company's 1991 Plan, authorizes issuance of
2,000,000 shares of Agritope common stock. Until Agritope is no longer a
wholly owned subsidiary of the Company, shares issued pursuant to exercise of
options under the 1992 Plan will be converted into shares of the Company's
common stock based on the ratio of the fair market value of the Company's
common stock to the fair market value of Agritope common stock on the date of
the grant.
The 1991 Plan and 1992 Plan also provide that nonqualified options may be
granted at a price not less than 75% of the fair market value of a share of
common stock on the date of grant. The option term and vesting schedule of
such awards may either be unlimited or have a specified period in which to
vest and be exercised. For the discounted nonqualified options issued, the
Company amortizes, on a straight-line basis over the vesting period of the
options, the difference between the exercise price and the fair market value
of a share of stock on the date of grant. Such amortization expense for the
years ended September 30, 1995, 1994 and 1993, respectively, was $1,374,710,
$1,167,272 and $1,004,714. As of September 30, 1995, 330,880 shares of
Epitope common stock remain available for grant under the Company's stock
award plans.
<PAGE>
Options granted and outstanding under the Company's stock option plans are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994 1993
Shares Price Shares Price Shares Price
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at
beginning of period . . 3,483,432 $ 1.09-$24.94 3,052,653 $1.09-$24.94 2,299,350 $ 1.09-$24.94
Granted. . . . . . . . . 802,050 14.94-18.88 589,850 14.38-22.94 826,604 16.38-22.13
Exercised. . . . . . . . (183,525) 1.84-22.50 (52,488) 12.43-22.50 (36,173) 5.25-17.94
Canceled. . . . . . . . (465,854) 7.38-22.94 (106,583) 8.50-22.94 (37,128) 7.38-22.50
---------- ---------- ----------
Outstanding at
end of period . . . . . 3,636,103 1.09-24.94 3,483,432 1.09-24.94 3,052,653 1.09-24.94
Exercisable. . . . . . . 2,002,925 1.09-24.94 1,557,505 1.09-24.94 871,204 1.09-24.94
</TABLE>
Pursuant to the 1991 Plan, 3,680, 11,741, and 666 shares of common stock were
also awarded to consultants and members of the Company's scientific advisory
committees during 1995, 1994 and 1993, respectively.
EMPLOYEE STOCK PURCHASE PLANS. In 1991, the shareholders approved the
Company's adoption of the 1991 Employee Stock Purchase Plan (1991 ESPP)
covering a maximum of 100,000 shares of common stock for subscription over two
offering periods. The purchase price for stock purchased under the 1991 ESPP
for each of the two 24-month subscription periods was the lesser of 85% of the
fair market value of a share of common stock at the commencement of the
subscription period or the fair market value at the close of each subscription
period. An employee may also elect to withdraw at any time during the
subscription period and receive the amounts paid plus interest at the rate of
6%. During August 1993, 7,760 shares, at a purchase price of $15.67 per
share, were issued to employees for the first 1991 ESPP purchase period which
closed July 31, 1993. During April 1994, 676 shares, at a purchase price of
$14.00 per share, were issued to employees for the second 1991 ESPP purchase
period which closed March 31, 1994.
The 1993 Employee Stock Purchase Plan (1993 ESPP), as amended and restated
effective February 1, 1993, covers a maximum of 250,000 shares of common stock
for subscription over established offering periods. The Company's Board of
Directors was granted authority to determine the number of offering periods,
the number of shares offered, and the length of each period, provided that no
more than three offering periods (other than Special Offering Subscriptions as
described below) may be set during each fiscal year of the Company. Other
provisions of the 1993 ESPP are similar to the 1991 ESPP. As of September 30,
1995, 29,572 shares of common stock were subscribed for during three offerings
under the 1993 ESPP. Shares subscribed for under these 1993 ESPP offerings
may be purchased over 24 months and have initial subscription prices of
$15.36, $11.90 and $12.33 per share, respectively.
The 1993 ESPP was amended to allow the Company, at its discretion, to provide
Special Offering Subscriptions whereby an employee's annual increase in
compensation could be deferred for a one-year period. At the end of the one-
year period, the employee can elect to receive the deferred compensation
amount in the form of cash or shares of the Company's common stock. The
purchase price for stock issued under a Special Offering Subscription is the
lesser of 85% of the fair market value of a share of common stock on the first
day of the calendar month the employee's increase was effective or the fair
market value at the close of the one-year subscription period. During 1995
and 1994, respectively, 5,569 and 2,314 Special Offering Subscription shares
were issued to employees at an average price of $15.26 and $15.24 per share.
As of September 30, 1995, 7,883 shares of common stock were subscribed for
under outstanding 1993 ESPP Special Offering Subscriptions.
<PAGE>
Note 7 Income Taxes
As of September 30, 1995, the Company had net operating loss carryforwards of
approximately $68.5 million and $65.9 million, respectively, to offset federal
and state taxable income. Such carryforwards will expire from 1997 to 2010 if
not used by the Company to reduce income taxes payable in future periods.
Approximately $4.7 million of the Company's net operating loss carryforwards
were generated as a result of deductions related to the exercise of stock
options. When utilized, such carryforwards, as tax effected, will be
reflected in the Company's financial statements as an increase in
shareholders' equity rather than a reduction of the provision for income
taxes.
As of September 30, 1995 the Company had total gross deferred tax assets of
approximately $29.5 million, consisting primarily of $26.1 million of net
operating loss carryforwards, $1.1 million of research and development tax
credit carryforwards and $1.6 million of accrued deferred compensation costs.
No benefit for these assets has been reflected in the accompanying
consolidated financial statements as they do not satisfy the recognition
criteria set forth in Statement of Financial Accounting Standards No. 109
(SFAS 109). Accordingly, a valuation allowance of $29.5 million, representing
a $7.5 million increase since September 30, 1994, has been recorded.
The expected tax benefit of approximately $6.5 million for the year ended
September 30, 1995 is increased by approximately $900,000 and $100,000 for the
effect of state and local taxes (net of federal impact) and research and
experimentation credits, respectively, and is reduced by the $7.5 million
increase in the valuation allowance.
Note 8 Research and Development Arrangements
In February 1995, the Company entered into a Development, License and Supply
Agreement with SmithKline Beecham, plc (SB) pursuant to which the Company will
conduct research and development projects funded by SB. Agritope also
performed research work in 1995 with respect to raspberries which was
partially funded by Sweetbriar Development, Inc. under a License Agreement
dated October 18, 1994 and with respect to grapevine disease diagnostics
funded by a Phase I grant from the U.S. Department of Agriculture under the
Small Business Innovation Research Program.
During 1994, the Company participated in a National Cancer Institute program
whereby the Company received funding for research toward the treatment of
cancer. The Company received funds in 1993 and 1992 from the National
Institute of Allergy and Infectious Diseases for work in developing a rapid
test to detect AIDS antibodies on oral samples. Agritope has also received
grant support from the U.S. Department of Agriculture, Oregon Strawberry
Commission, and Oregon Raspberry & Blackberry Commission for antifungal
biocontrol research.
Revenues from research and development arrangements are included in the
accompanying consolidated statements of operations under the caption "Grants
and Contracts."
Note 9 Distribution and Supply Contracts
The Company has entered into several contractual arrangements, including those
discussed in the following paragraphs, for distribution of certain of its
products to customers.
The Company continues to maintain supply and distribution agreements with
Organon Teknika Corporation (Organon Teknika), whereby Organon Teknika
supplies the Company's antigen requirements and exclusively distributes the
Company's EPIblot HIV confirmatory tests (EPIblot) on a worldwide basis. As
of April 1, 1994, the Company renewed the agreements which have an initial
termination date of March 31, 1997 (with successive one-year renewal periods
thereafter) and include pricing incentives based on volumes purchased and
penalties for failure to purchase specified minimum quarterly volumes. For
the years ended September 30, 1995, 1994 and 1993, respectively, revenues
generated from sales of EPIblot to Organon Teknika were $1,808,431, $1,688,200
and $1,382,200, including export sales of $72,369, $320,700 and $316,877.
LabOne, Inc. (previously Home Office Reference Laboratory, Inc.) purchases
oral specimen devices from the Company for use in insurance testing in return
for non-exclusive distribution rights in the United States and Canada under an
agreement which expires on March 13, 2000, with an automatic five-year
renewal, unless either party notifies the other of intent to renew at least
180 days prior to the initial expiration date. For the years ended September
30, 1995, 1994 and 1993, respectively, revenue generated from product sales to
LabOne, Inc. was $525,628, $477,186 and $907,446 including export sales of
$58,500, $110,933 and $497,033.
SB has an exclusive agreement to market the Company's oral specimen collection
device worldwide, except in several foreign countries and to the insurance
industry in the U.S., Canada and Japan. SB commenced sales under the
agreement in October 1995.
In 1995, SB made an initial license fee payment of $1 million to the Company.
SB also placed $5 million in escrow for future payment to the Company, of
which $1 million will be disbursed to the Company to reimburse future research
project work and $4 million will be paid as an additional license fee upon FDA
approval of a pending request to amend the labeling of the Company's oral
specimen collection device to indicate a two-year shelf life. If the
requested amendment for extended dating is not approved by February 21, 1996,
then royalty payments due from SB to the Company may be offset against the
initial $1 million license fee until such time as the amendment is approved.
Accordingly, the initial $1 million license fee is included as deferred
revenue under the caption "Salaries, benefits and other accrued liabilities"
in the accompanying consolidated balance sheets as of September 30, 1995. The
escrowed funds are not reflected in the Company's financial statements.
Note 10 Commitments
The Company leases office, manufacturing, warehouse and laboratory facilities
under operating lease agreements which require minimum annual payments as
follows:
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30
----------------------------------------------------
<S> <C>
1996. . . . . . . . . . . . . . . $ 534,143
1997. . . . . . . . . . . . . . . 521,196
1998. . . . . . . . . . . . . . . 521,196
1999. . . . . . . . . . . . . . . 509,896
2000. . . . . . . . . . . . . . . 128,532
-----------
$ 2,214,963
</TABLE>
Under the agreements for the lease of its office and laboratory facilities,
the Company is obligated to the lessor for its share of certain expenses
related to the use, operation, maintenance and insurance of the property.
These expenses, payable monthly in addition to the base rent, are not included
in the amounts shown above. Rent expense aggregated $749,530, $616,750 and
$523,079 for the years ended September 30, 1995, 1994 and 1993, respectively.
The Company is also contingently liable for the lease of property which has
been subleased to UAF, L.P. in the following amounts:
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30
-----------------------------------------------------------
<S> <C>
1996. . . . . . . . . . . . . . . . . . $ 173,400
1997. . . . . . . . . . . . . . . . . . 193,353
1998. . . . . . . . . . . . . . . . . . 205,704
1999. . . . . . . . . . . . . . . . . . 222,804
----------
$ 795,261
</TABLE>
Note 11 Profit Sharing and Savings Plan
The Company established a profit sharing and deferred salary savings plan in
1986 and restated the plan in 1991. All employees are eligible to participate
in the plan. In addition, the plan permits certain voluntary employee
contributions to be excluded from the employees' current taxable income under
the provisions of Internal Revenue Code Section 401(k) and the regulations
thereunder. Effective October 1, 1991, the Company replaced a discretionary
profit sharing provision with a matching contribution (either in cash, shares
of Epitope common stock, or partly in both forms) equal to 50% of an
employee's basic contribution, not to exceed 2.5% of an employee's
compensation. The Board of Directors has the authority to increase or
decrease the 50% match at any time. During 1995, 1994 and 1993, respectively,
the Company contributed $97,631 (5,562 shares totaling $97,607 and the
remainder in cash), $79,981 (4,632 shares totaling $79,807 and the remainder
in cash), and $53,762 (2,722 shares totaling $52,825 and the remainder in
cash) to the plan. As of September 30, 1995, 14,217 shares are outstanding
under the plan.
<PAGE>
Note 12 Segment Reporting
The Company's products are included in the medical products and agricultural
products industry segments. (See Note 1 for a description of the Company's
business.) The Company's products are sold principally in the United States,
Canada, and Europe geographic areas. Operating loss represents revenues less
operating expenses. In computing operating loss, allocated corporate
administration expenses have been included; however, other income and expense
items such as interest expense, miscellaneous income, and other charges have
not been added or deducted. Other assets primarily represent cash and cash
equivalents, marketable securities, and prepaid insurance.
<TABLE>
<CAPTION>
Industry Identifiable
Segments Revenues Operating Loss Assets
In thousands 1995 1994 1993 1995 1994 1993 1995 1994 1993
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Medical
products.... $2,855 $2,605 $2,759 $(11,608) $(6,284) $(6,617) $3,768 $3,464 $3,211
Agricultural
products.... 2,110 2,214 524 (7,810) (9,490) (6,807) 3,923 4,050 2,091
-----------------------------------------------------------------------------
$4,965 $4,819 $3,283 (19,418) (15,774) (13,424) 7,691 7,514 5,302
Other income
(expense), net
and other
assets..... 922 141 (1,305) 22,443 17,041 8,843
-----------------------------------------------------
Net loss and
total assets.. $(18,496) $(15,633) $(14,729) $30,134 $24,555 $14,145
Industry Capital Depreciation/
Segments Expenditures Amortization
In thousands 1995 1994 1993 1995 1994 1993
- --------------------------------------------------------------------
Medical
products.... $1,112 $ 462 $ 511 $ 833 $ 651 $ 584
Agricultural
products.... 239 2,129 680 626 505 508
-----------------------------------------------------
$1,351 $2,591 $1,191 $1,459 $1,156 $1,092
Geographic Identifiable
Areas Revenues Operating Loss Assets
In thousands 1995 1994 1993 1995 1994 1993 1995 1994 1993
- --------------------------------------------------------------------------------------------
United
States.... $4,739 $4,276 $2,399 $(19,418) $(15,774) $(13,424) $7,691 $7,514 $5,302
Canada..... 78 111 497 -- -- -- -- -- --
Europe..... 72 329 326 -- -- -- -- -- --
Other...... 76 103 61 -- -- -- -- -- --
-----------------------------------------------------------------------------
$4,965 $4,819 $3,283 $(19,418) $(15,774) $(13,424) $7,691 $7,514 $5,302
</TABLE>
No schedules are included with the foregoing Consolidated Financial Statements
because the required information is inapplicable or is presented in the
Consolidated Financial Statements or related notes thereto.
(a)(3) Exhibits.
See Index to Exhibits following the signature pages of this
report.
(b) Reports on Form 8-K. During the quarter ended September 30,
1995, the Company filed Current Reports on Form 8-K dated June 1, 1995
regarding the divestiture of Vinifera, Inc. and certain operations of Agrimax
Floral Products, Inc.; September 16, 1995 regarding changes in directors of
Vinifera, Inc. and failure of VF Holdings, Inc. to make certain payments to
Agritope, Inc.; and September 28, 1995 regarding a restructuring of the
Company.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on December 26, 1995.
EPITOPE, INC.
By/S/ADOLPH J. FERRO, PH.D.
Adolph J. Ferro, Ph.D.
President & Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed on December 26, 1995, by the following persons on
behalf of the Registrant and in the capacities indicated.
SIGNATURE TITLE
/S/ ADOLPH J. FERRO, PH.D. President, Chief Executive Officer
Adolph J. Ferro, Ph.D. and Director
(Principal Executive Officer)
/S/ GILBERT N. MILLER Executive Vice President and
Gilbert N. Miller Chief Financial Officer
(Principal Financial Officer)
/S/ TERRY J. PAULSEN Accounting Manager
Terry J. Paulsen (Principal Accounting Officer)
*W. CHARLES ARMSTRONG Director
W. Charles Armstrong
*RICHARD K. DONAHUE Director
Richard K. Donahue
*ANDREW S. GOLDSTEIN Director
Andrew S. Goldstein
*MARGARET H. JORDAN Director
Margaret H. Jordan
*R. DOUGLAS NORBY Director
R. Douglas Norby
*MICHAEL J. PAXTON Director
Michael J. Paxton
*ROGER L. PRINGLE Director
Roger L. Pringle
*G. PATRICK SHEAFFER Director
G. Patrick Sheaffer
By*/S/ ADOLPH J. FERRO, PH.D.
Adolph J. Ferro, Ph.D.
(Attorney-in-Fact)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
2.1 Stock Purchase Agreement among Vinifera, Inc., Agritope, Inc.,
Epitope, Inc., and VF Holding, Inc., dated May 31, 1995.
Incorporated by reference to Exhibit 2.1 to the Registrant's Current
Report on Form 8-K dated June 1, 1995.
2.2 Operating and Transition Agreement dated as of May 1, 1995, among
Agrimax Floral Products, Inc., William C. McClure, Gary W. Butler,
Dorothea J. Owens, Timothy C. Finn, John W. Suber, and Anthony J.
Wright. Incorporated by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated June 1, 1995.
2.3 Agreement and Plan of Reorganization dated as of October 27, 1995, by
and among Fresche Blossoms L.L.C., UAF, L.P., Agrimax Floral
Products, Inc., Universal American Flowers, Inc., William C. McClure,
Gary W. Butler, Dorothea J. Owens, Timothy C. Finn, John W. Suber,
Jr., Anthony J. Wright, Doug Bauer, and Roxanne E. Bakula.
3.1 Restated Articles of Incorporation, as amended, of Registrant.
Incorporated by reference to Exhibit 3.1 to the Registrant's Current
Report on Form 8-K dated May 29, 1991.
3.2 Restated Bylaws of Registrant. Incorporated by reference to Exhibit
3.2 to the Registrant's Annual Report on Form 10-K for the year ended
September 30, 1993.
4.1 Stock Purchase Agreement dated November 9, 1990, between certain
investors and Registrant. Copies of the agreements with individual
investors shall be filed with the Commission upon request pursuant to
Instruction 2 of Item 601 of Regulation S-K ("Item 601, Instruction
2"). Incorporated by reference to Exhibit 4.2 to the Registrant's
Annual Report on Form 10-K for the year ended September 30, 1994 (the
"1994 10-K").
4.2 Unit Purchase Agreement dated September 1991 between certain
investors and Registrant. Copies of the agreements with individual
investors shall be filed with the Commission upon request pursuant to
Item 601, Instruction 2. Incorporated by reference to Exhibits 4.1
and 4.2 to the Registrant's Current Report on Form 8-K dated
September 17, 1991.
4.3 Note Purchase Agreement dated June 10, 1992, among Agritope, Inc.,
Registrant, and certain investors. Copies of the agreements with
individual investors shall be filed with the Commission upon request
pursuant to Item 601, Instruction 2. Incorporated by reference to
Exhibit 4.2 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarterly period ended June 30, 1992.
4.4 Warrant Purchase Agreement dated as of November 25, 1992, between
certain investors and Registrant. Copies of the agreements with
individual investors shall be filed with the Commission upon request
pursuant to Item 601, Instruction 2. Incorporated by reference to
Exhibit 4.5 to the Registrant's Annual Report on Form 10-K for the
year ended September 30, 1992 (the "1992 10-K").
4.5 1993 Technology Transfer Warrant Issuance Agreement dated as of June
15, 1993, between certain investors and Registrant. Copies of the
agreements with individual investors shall be filed with the
Commission upon request pursuant to Item 601, Instruction 2.
Incorporated by reference to Exhibit 4.3 to the Registrant's
Registration Statement on Form S-3 (No. 33-68510) ("Registration
Statement No. 33-68510").
4.6 Form of Letter dated August 1, 1993, from Registrant regarding
modification of the terms of the 1993 Technology Transfer Warrants.
Incorporated by reference to Exhibit 4.5 to Registration Statement
No. 33-68510.
4.7 1993 Warrant Purchase Agreement dated as of July 6, 1993, between
certain investors and Registrant. Copies of the agreements with
individual investors shall be filed with the Commission upon request
pursuant to Item 601, Instruction 2. Incorporated by reference to
Exhibit 4.6 to Registration Statement No. 33-68510.
4.8 Forms of Notice to Warrantholders and Agreement Regarding Extension
of Expiration Date. Incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K dated March 29, 1995.
10.1 Incentive Stock Option Plan of Registrant, as amended. Incorporated
by reference to Exhibit 10.1 to the 1994 10-K.
10.2 Amended and Restated Epitope, Inc., 1991 Stock Award Plan.
Incorporated by reference to Exhibit 10.2 to the 1994 10-K.
10.3 Agritope, Inc., 1992 Stock Award Plan. Incorporated by reference to
Exhibit 10.3 to the 1992 10-K.
10.4 Form of Nonqualified Stock Option Agreement to be issued to certain
officers and directors of Registrant pursuant to Agritope, Inc., 1992
Stock Award Plan. Incorporated by reference to Exhibit 10.4 to the
1992 10-K.
10.5 Lease dated July 17, 1990, among Registrant, Koll Woodside
Associates, a California general partnership, and Petula Associates,
Ltd., an Iowa corporation. Incorporated by reference to Exhibit 10.5
to the 1994 10-K.
10.6 Fourth Amendment dated May 20, 1994, to Lease dated July 17, 1990,
among Registrant, Koll Woodside Associates, a California general
partnership, and Petula Associates, Ltd., an Iowa corporation.
Incorporated by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the fiscal quarterly period ended
June 30, 1994 ("June 1994 10-Q").
10.7 Business Park Lease dated May 5, 1994, among Registrant, Koll
Woodside Associates, a California general partnership, and Petula
Associates, Ltd., an Iowa corporation. Incorporated by reference to
Exhibit 10.2 to the June 1994 10-Q.
10.8 Business Park Lease dated as of December 16, 1994, among Registrant,
Petula Associates Ltd., an Iowa corporation, and Koll Portland
Associates, a California general partnership. Incorporated by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarterly period ended December 31, 1994.
10.9 Lease Agreement dated as of October 15, 1993, between Kathryne L.
Brown and Agrimax Floral Products, Inc. Incorporated by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for
the fiscal quarterly period ended December 31, 1993 ("December 1993
10-Q").
10.10 Building Lease dated as of October 1, 1993, between Hermes Land
Company and Agrimax Floral Products, Inc. Incorporated by reference
to Exhibit 10.2 to the December 1993 10-Q.
10.11 Office/Warehouse Lease dated as of August 25, 1994, between Tonka Bay
Associates as agent for M Corp. of Illinois and Agrimax Floral
Products, Inc. Incorporated by reference to Exhibit 10.10 to the
1994 10-K.
10.12 Agreement dated November 23, 1987, between Registrant and Dr. Lyle
Brown. Incorporated by reference to Exhibit 4.2 to the Registrant's
Registration Statement on Form S-1 (No. 33-18722) (the "1988 S-1").
10.13 Agreement dated December 9, 1987, between Registrant and Adolph
Ferro, Ph.D. Incorporated by reference to Exhibit 4.3 to the 1988
S-1.
10.14 Agreement dated October 3, 1989, between Sakata Seed America, Inc.
and Agritope, Inc. Incorporated by reference to Exhibit 10.13 to the
1994 10-K.
10.15 Distribution Agreement dated as of April 1, 1994, between Registrant
and Organon Teknika Corporation. Incorporated by reference to
Exhibit 10.3 to the June 1994 10-Q.
10.16 Supply Agreement dated as of April 1, 1994, between Registrant and
Organon Teknika Corporation. Incorporated by reference to Exhibit
10.4 to the June 1994 10-Q.
10.17 Amended and Restated Employment Agreement dated January 8, 1991
between Andrew S. Goldstein and Registrant. Incorporated by
reference to Exhibit 10.28 to the Registrant's Annual Report on
Form 10-K for the year ended September 30, 1991 (the "1991 10-K").
10.18 Amended and Restated Employment Agreement dated January 9, 1991,
between Adolph J. Ferro, Ph.D., and Registrant. Incorporated by
reference to Exhibit 10.29 to the 1991 10-K.
10.19 Employment Agreement dated January 28, 1990, between Gilbert N.
Miller and Registrant. Incorporated by reference to Exhibit 10.19 to
the 1994 10-K.
10.20 Employment Agreement dated July 1, 1990, between John H. Fitchen,
M.D. and Registrant. Incorporated by reference to Exhibit 10.20 to
the 1994 10-K.
10.21 Employment Agreement dated November 18, 1991, between Elaine J.
Dubesa and Registrant. Incorporated by reference to Exhibit 10.20 to
the 1992 10-K.
10.22 Employment Agreement dated June 1, 1992, between Kevin Crowley and
Registrant. Incorporated by reference to Exhibit 10.21 to the 1992
10-K.
10.23 Employment Agreement dated July 15, 1995, between Byron A.
Allen, Jr., and Registrant.
10.24 Employment Agreement dated August 31, 1993, between Charles E.
Bergeron and Registrant.
10.25 Promissory Note dated August 29, 1995, made by Charles E. Bergeron to
Registrant, and related Mortgage Deed dated December 22, 1995.
10.26 Development, License and Supply Agreement between Registrant and
SmithKline Beecham plc dated February 24, 1995, as amended. Portions
of this agreement have been granted confidential treatment.
Incorporated by reference to Exhibit 10.1 to Amendment No. 2 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal quarterly
period ended June 30, 1995.
<PAGE>
21. The Registrant's subsidiaries are Agritope, Inc., an Oregon
corporation, and Agrimax Floral Products, Inc., a Minnesota
corporation. The Registrant also owns a 60 percent interest in
Epitope KK, a Japanese limited liability company, and a 50 percent
interest in Beijing Epitope Biotech Co., Ltd., a Chinese corporation.
On June 1, 1995, Agritope, Inc., agreed to sell its equity interest
in Vinifera, Inc., for which it has not yet received scheduled
payments.
23. Consents of Price Waterhouse LLP.
24. Powers of Attorney.
27. Financial Data Schedules.
<PAGE>
EXHIBIT 2.3
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
FRESCHE BLOSSOMS L.L.C.,
a Delaware limited liability company
UAF, L.P.,
a Delaware Limited Partnership
AGRIMAX FLORAL PRODUCTS, INC.,
a Minnesota corporation
UNIVERSAL AMERICAN FLOWERS, INC.,
a Florida corporation
AND
Certain Other Persons Named in the Agreement
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Page
1.1 Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Agreement of Limited Partnership of
the Partnership. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 AgriMax Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 AgriMax Equipment Bill of Sale. . . . . . . . . . . . . . . . . . . . 2
1.5 AgriMax Facilities. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 AgriMax Intellectual Property . . . . . . . . . . . . . . . . . . . . 2
1.7 AgriMax Intellectual Property Assignment. . . . . . . . . . . . . . . 2
1.8 Assignment of Company Interests . . . . . . . . . . . . . . . . . . . 2
1.9 Certificate of Limited Partnership of the Partnership . . . . . . . . 2
1.10 Closing and Closing Date. . . . . . . . . . . . . . . . . . . . . . . 2
1.11 Competing Business. . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.12 Constituent Entities. . . . . . . . . . . . . . . . . . . . . . . . . 2
1.13 Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.14 Encumbrance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.15 Financing Document. . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.16 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.17 Indemnitees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.18 Main Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.19 Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.20 NewCorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.21 Non-Member Managers . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.22 Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.23 Percentage Interest . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.24 Restricted Stock Purchase Agreement . . . . . . . . . . . . . . . . . 3
1.25 Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.26 Sublease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.27 Surviving Entity. . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.28 UAF Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.29 UAF Bill of Sale, Assignment, Assumption and
General Conveyance. . . . . . . . . . . . . . . . . . . . . . . . . 3
1.30 UAF Members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.31 UAF Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.32 UAF Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
TRANSFER OF INTERESTS OF UAF MEMBERS IN COMPANY TO UAF
Page
2.1 Transfer of Interests of UAF Members . . . . . . . . . . . . . . . . . 4
2.2 Acceptance of UAF as Substitute Member of the Company. . . . . . . . . 4
ARTICLE III
CONVEYANCE AND ASSIGNMENT OF CERTAIN ASSETS TO PARTNERSHIP
3.1 Formation of Partnership . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Conveyance and Assignment of AgriMax Equipment
and AgriMax Intellectual Property to Partnership . . . . . . . . . . 4
3.3 Conveyance and Assignment of Certain UAF
Assets to Partnership. . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Transfer Taxes and Fees. . . . . . . . . . . . . . . . . . . . . . . . 5
3.5 Activities of UAF Following Closing. . . . . . . . . . . . . . . . . . 5
3.6 Agreements Relating to Competition With Partnership . . . . . . . . . 5
ARTICLE IV
MERGER OF THE COMPANY INTO THE PARTNERSHIP
4.1 Merger and Effective Time. . . . . . . . . . . . . . . . . . . . . . . 6
4.2 Certificate of Limited Partnership of Surviving Entity . . . . . . . . 6
4.3 Agreement of Limited Partnership of Surviving Entity . . . . . . . . . 6
4.4 Partners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 Capital Accounts of and Percentage Interest in the Partnership . . . . 7
ARTICLE V
OTHER MATTERS
5.1 Sale of UAF Common Stock to Bauer and Bakula . . . . . . . . . . . . . 7
5.2 Appointment of AgriMax Representative to
Board of Directors of UAF. . . . . . . . . . . . . . . . . . . . . . 8
5.3 Financing Assistance . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.4 Effect on Operating Agreement. . . . . . . . . . . . . . . . . . . . . 9
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Page
6.1 Representations and Warranties of UAF . . . . . . . . . . . . . . . .10
6.2 Representations and Warranties of AgriMax . . . . . . . . . . . . . .12
6.3 Representations and Warranties of UAF Members
and Non-Member Managers. . . . . . . . . . . . . . . . . . . . . . .14
ARTICLE VII
CLOSING; EFFECTIVE DATE
7.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
7.2 Simultaneous Transactions . . . . . . . . . . . . . . . . . . . . . .15
7.3 Post-Closing Actions. . . . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE VIII
INDEMNIFICATION BY AGRIMAX
8.1 Indemnification by AgriMax. . . . . . . . . . . . . . . . . . . . . .15
ARTICLE IX
GENERAL PROVISIONS
9.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
9.2 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
9.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
9.4 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.7 No Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.8 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
9.9 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
9.10 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . .19
9.11 Absence of Third-Party Beneficiary Rights . . . . . . . . . . . . . .19
9.12 Mutual Drafting . . . . . . . . . . . . . . . . . . . . . . . . . . .19
9.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
SIGNATURE PAGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
Exhibits
Exhibit 2.1 - Assignment of Company Interests
Exhibit 3.2(a) - AgriMax Equipment Bill of Sale
Exhibit 3.2(b) - AgriMax Intellectual Property Assignment
Exhibit 3.3 - UAF Bill of Sale, Assignment, Assumption
and General Conveyance
Exhibit 5.1 - Restricted Stock Purchase Agreement
Schedules
Schedule 3.1 - List of Additional AgriMax Equipment
Schedule 3.2(a) - Encumbrances Pertaining to AgriMax Equipment
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
This Agreement and Plan of Reorganization is entered into as of the 27th
day of October, 1995, by and among Fresche Blossoms L.L.C., a Delaware limited
liability company (the "Company"), UAF, L.P., a Delaware limited partnership
(the "Partnership"), AgriMax Floral Products, Inc., a Minnesota corporation
("AgriMax"), Universal American Flowers, Inc., a Florida corporation ("UAF"),
William C. McClure ("McClure"), Gary W. Butler ("Butler"), Dorothea J. Owens
("Owens"), Timothy C. Finn ("Finn"), John W. Suber, Jr. ("Suber"), Anthony J.
Wright ("Wright"), Doug Bauer ("Bauer") and Roxanne E. Bakula ("Bakula").
WITNESSETH:
WHEREAS, the Company was formed pursuant to an Operating and Transition
Agreement dated as of May 1, 1995 (the "Operating Agreement") for the purpose,
among other things, of operating a floral products business consisting of the
combination of assets and resources described in the Operating Agreement;
WHEREAS, the Operating Agreement provided procedures pursuant to which
the members of the Company could determine whether or not the combination of
assets and resources described in the Operating Agreement was desirable and
whether or not the operations of the Company should be combined with the
operations of UAF;
WHEREAS, the parties deem such combination desirable but further desire
to effect such combination on terms different from the terms provided for in
the Operating Agreement; and
WHEREAS, this Agreement sets forth the terms on which the parties desire
to effect such combination.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
In addition to terms defined above or in subsequent sections of this
Agreement, certain capitalized terms used herein have the respective meanings
assigned below.
1.1 "Agreement" means this Agreement and Plan of Reorganization, as it
may be amended or supplemented from time to time.
1.2 "Agreement of Limited Partnership of the Partnership" means the
agreement described in Section 3.1, as may be amended or supplemented from
time to time.
1.3 "AgriMax Equipment" means all equipment listed on Schedule 1.6 of
the Operating Agreement which was located at the AgriMax Facilities and used
by AgriMax in its packaged fresh flower and floral preservative distribution
business as of May 1, 1995 and all other equipment listed on "Schedule 1.3"
attached hereto which is located at the AgriMax Facilities as of the date
hereof.
1.4 "AgriMax Equipment Bill of Sale" means a bill of sale
substantially in the form attached hereto as "Exhibit 3.2(a)".
1.5 "AgriMax Facilities" means the buildings, offices, warehouses,
improvements and other real property leased by AgriMax at 3821 Barringer
Drive, Charlotte, North Carolina.
1.6 "AgriMax Intellectual Property" means the trademarks Fresche
Blossoms(R), Everguard(R), and Fresche Blossoms Express (TM), the formula for
the Everguard preservative, any AgriMax trade secrets existing on May 1, 1995
and all permits, licenses and franchises used by AgriMax in its packaged fresh
flower and floral preservative distribution business as of May 1, 1995, to the
extent transferable.
1.7 "AgriMax Intellectual Property Assignment" means an assignment in
substantially the form attached hereto as "Exhibit 3.2(b)".
1.8 "Assignment of Company Interests" means an assignment in
substantially the form attached hereto as "Exhibit 2.1".
1.9 "Certificate of Limited Partnership of the Partnership" means the
certificate described in Section 3.1.
1.10 "Closing" and "Closing Date" mean the time and date, as set forth
in Section 6.1 hereof, on which this Agreement and the related agreements and
instruments referred to herein are executed and delivered by the respective
parties hereto and thereto, and the Merger and the related transactions are
consummated.
1.11 "Competing Business" means any business that is principally
engaged in business activities that are in material competition with business
activities in which the Partnership, NewCorp or any successor entity is
engaged.
1.12 "Constituent Entities" has the meaning set forth in Section 4.1.
1.13 "Effective Time" has the meaning set forth in Section 4.1.
1.14 "Encumbrance" means any mortgage, claim, charge, lien,
encumbrance, easement, limitation, restriction, commitment, or security
interest, except statutory liens securing taxes, assessments, and payments not
yet due, and liens incurred in the ordinary course of business (including
liens in favor of mechanics or materialmen).
1.15 "Financing Documents" has the meaning set forth in Section 6.1(g).
1.16 "Financial Statements" mean the audited balance sheets of UAF at
June 30, 1994 and at June 30, 1995, and audited statements of income and cash
flows for the twelve-month period ended June 30, 1994 and the twelve-month
period ended June 30, 1995, prepared in accordance with generally accepted
accounting principles, consistently applied.
1.17 "Indemnitees" has the meaning set forth in Article XIII.
1.18 "Main Lease" has the meaning set forth in Section 6.2(h).
1.19 "Merger" means the merger of the Company into the Partnership as
set forth in Section 4.1.
1.20 "NewCorp" has the meaning set forth in the Agreement of Limited
Partnership of the Partnership.
1.21 "Non-Member Managers" means Bauer and Bakula.
1.22 "Operating Agreement" means the Operating and Transition Agreement
dated as of May 1, 1995, among AgriMax, McClure, Butler, Owens, Finn, Suber
and Wright, as it may be amended or supplemented from time to time.
1.23 "Percentage Interest" has the meaning set forth in the Agreement
of Limited Partnership of the Partnership.
1.24 "Restricted Stock Purchase Agreement" means an agreement in
substantially the form attached hereto as "Exhibit 5.1".
1.25 "Shares" has the meaning set forth in Section 6.1(f).
1.26 "Sublease" means the Sublease Agreement dated effective as of May
1, 1995 between AgriMax and the Company covering the AgriMax Facilities.
1.27 "Surviving Entity" has the meaning set forth in Section 4.1.
1.28 "UAF Assets" means all of the properties, rights and interests of
UAF to be conveyed to the Partnership as set forth in the UAF Bill of Sale,
Assignment, Assumption and General Conveyance.
1.29 "UAF Bill of Sale, Assignment, Assumption and General Conveyance"
means an agreement in substantially the form attached hereto as "Exhibit 3.3".
1.30 "UAF Members" mean McClure, Butler, Owens, Finn, Suber and Wright.
1.31 "UAF Common Stock" means shares of the common stock, par value
$1.00 per share, of UAF.
1.32 "UAF Value" means a dollar amount equal to eight (8) times UAF's
income before interest, taxes, depreciation and amortization for the 12-month
period ended June 30, 1995, calculated based on the Financial Statements for
such period in accordance with generally accepted accounting principles
consistently applied.
ARTICLE II
TRANSFER OF INTERESTS OF UAF MEMBERS IN COMPANY TO UAF
2.1 Transfer of Interests of UAF Members. Immediately prior to the
Merger, each of the UAF Members shall assign and transfer such UAF Member's
interests in the Company to UAF by executing and delivering an Assignment of
Company Interests in substantially the form attached hereto as "Exhibit 2.1".
The UAF Members shall receive no direct consideration for such assignment and
transfer, and the UAF Members acknowledge that the consideration for such
assignment and transfer shall be the increased value, if any, of the UAF
Common Stock held by the UAF Members resulting from the transactions
contemplated by this Agreement.
2.2 Acceptance of UAF as Substitute Member of the Company. Upon the
assignment and transfer described in Section 2.1, UAF shall execute and
deliver a counterpart signature page to the Operating Agreement, shall enter
into an admission agreement with the Company as provided in Section 17.3 of
the Operating Agreement and shall become a member of the Company. By
executing and delivering this Agreement, AgriMax (as the only other remaining
member of the Company following such assignment and transfer) hereby consents
to the admission of UAF as a member of the Company.
ARTICLE III
FORMATION OF PARTNERSHIP;
CONVEYANCE AND ASSIGNMENT OF CERTAIN ASSETS TO PARTNERSHIP
3.1 Formation of Partnership. On or prior to the Closing Date, UAF
and AgriMax shall have entered into an Agreement of Limited Partnership in
form and content acceptable to UAF and AgriMax providing for and establishing
the Partnership pursuant to the laws of the State of Delaware. UAF shall be
the general partner of the Partnership and AgriMax shall be the initial
limited partner of the Partnership. In its capacity as general partner, UAF
shall have caused a Certificate of Limited Partnership of the Partnership in
form and content acceptable to UAF and AgriMax to be executed and filed with
the Secretary of State of the State of Delaware.
3.2 Conveyance and Assignment of AgriMax Equipment and AgriMax
Intellectual Property to Partnership. Immediately prior to the Merger,
AgriMax shall (a) convey and assign all of its rights, title and interests in
and to the AgriMax Equipment to the Partnership, free and clear of any and all
Encumbrances (other than those set forth in "Schedule 3.2(a)"), by executing
and delivering the AgriMax Equipment Bill of Sale in substantially the form
attached hereto as "Exhibit 3.2(a)" and (b) shall convey and assign all of its
rights, title and interests in and to the AgriMax Intellectual Property to the
Partnership free and clear of any and all Encumbrances by executing and
delivering the AgriMax Intellectual Property Assignment in substantially the
form attached hereto as "Exhibit 3.2(b)".
3.3 Conveyance and Assignment of Certain UAF Assets to Partnership.
Immediately prior to the Merger, UAF shall convey and assign all of its
rights, title and interests in and to the UAF Assets to the Partnership by
executing and delivering the UAF Bill of Sale, Assignment, Assumption and
General Conveyance in substantially the form attached hereto as "Exhibit 3.3"
and the Partnership shall assume the liabilities of UAF and any Encumbrances
upon the UAF Assets as provided therein.
3.4 Transfer Taxes and Fees. The Partnership shall assume and pay all
obligations for taxes and governmental fees incurred or imposed in connection
with the transfer as provided in Sections 3.2 and 3.3 of the AgriMax
Equipment, the AgriMax Intellectual Property and the UAF Assets to the
Partnership, other than any taxes on AgriMax's or UAF's respective net income.
3.5 Activities of UAF Following Closing. From and after the Closing
and for so long as UAF retains any interest in the Partnership, UAF shall not,
without the prior written consent of AgriMax, engage in any business
activities other than maintaining its corporate existence, holding its
interests in the Partnership, and acting as general partner of the Partnership
pursuant to the Agreement of Limited Partnership of the Partnership.
3.6 Agreements Relating to Competition With Partnership. The parties
acknowledge that UAF or Affiliates of UAF may from time to time in the future
desire to acquire one or more Competing Businesses. The provisions of this
Section 3.6 set forth certain agreements of the parties concerning activities
of UAF or its Affiliates regarding competition with the Partnership, NewCorp
or any successor entity. For purposes of this Section 3.6, the determination
as to whether a person or entity is an Affiliate of UAF shall be made at the
time the proposed competing activity is to be conducted and not as of the date
of this Agreement.
(a) In the event a Competing Business is proposed to be acquired
by the Partnership, NewCorp or any successor entity (and provided the
acquisition requires the consent of AgriMax or any Affiliate of AgriMax
pursuant to the Agreement of Limited Partnership of the Partnership or
any other agreement or applicable law), and if the acquisition of the
Competing Business is prevented as a result of the failure by AgriMax or
any Affiliate of AgriMax to provide any necessary consent or approval,
then UAF or its Affiliates shall be permitted to acquire the Competing
Business and to engage in activities pursuant to such Competing Business
as then being conducted that are in competition with the Partnership,
NewCorp or any successor entity.
<PAGE>
(b) In the event a Competing Business is proposed to be acquired
by UAF or any Affiliate of UAF, then UAF or its Affiliates shall offer
or cause to be offered to AgriMax or its Affiliates the opportunity to
participate in such Competing Business by acquiring (on terms not less
favorable than the terms upon which UAF or its Affiliates propose to
acquire the Competing Business) a percentage equity ownership interest
in the Competing Business equal to the then percentage equity interest
of AgriMax or its Affiliates in the Partnership, NewCorp or any
successor entity. If AgriMax or its Affiliates decline to participate
in such Competing Business by acquiring the full amount of equity
ownership offered as provided in the preceding sentence, then UAF or its
Affiliates shall be permitted to acquire the Competing Business and to
engage in activities pursuant to such Competing Business as then being
conducted that are in competition with the Partnership, NewCorp or any
successor entity.
(c) Except as otherwise provided in this Section 3.6, neither
UAF nor its Affiliates shall acquire or engage in any Competing Business
without the prior written consent of AgriMax. The restrictions in this
Section 3.6 or the ability of UAF or its Affiliates to engage in
competitive activities shall expire at such time as (i) UAF or its
Affiliates cease to own any equity interest in the Partnership, NewCorp
or any successor entity, (ii) AgriMax or its Affiliates cease to own any
equity interest in the Partnership, NewCorp or any successor entity or
(iii) the Partnership, NewCorp or UAF are required to file reports with
the Securities and Exchange Commission pursuant to Sections 13 or 15(d)
of the Securities Exchange Act of 1934, as amended.
ARTICLE IV
MERGER OF THE COMPANY INTO THE PARTNERSHIP
4.1 Merger and Effective Time. Subject to the terms and conditions of
this Agreement and in accordance with the provisions of the laws of the State
of Delaware, the Company shall be merged with and into the Partnership, which
shall be and is herein sometimes referred to as the "Surviving Entity," and
all of which entities sometimes hereinafter being referred to as the
"Constituent Entities." A properly executed Certificate of Merger shall be
filed with the Secretary of State of the State of Delaware in accordance with
the laws of the State of Delaware on the Closing Date. The Merger shall
become effective at the time of filing of the Certificate of Merger as
provided above (hereinafter referred to as the "Effective Time.")
4.2 Certificate of Limited Partnership of Surviving Entity. At the
Effective Time, the Certificate of Limited Partnership of the Partnership
shall become the Certificate of Limited Partnership of the Surviving Entity.
4.3 Agreement of Limited Partnership of Surviving Entity. At the
Effective Time, the Agreement of Limited Partnership of the Partnership shall
become the Agreement of Limited Partnership of the Surviving Entity.
<PAGE>
4.4 Partners. The partners of the Partnership at the Effective Time
shall be the partners of the Surviving Entity until such partners shall
withdraw or be removed or additional or substituted partners shall be admitted
as provided in the Agreement of Limited Partnership. The members of the
Company shall cease to have any power or authority in such capacity with
respect to any Constituent Entity at the Effective Time.
4.5 Effect of the Merger. At the Effective Time, the separate
existence of each of the Constituent Entities other than the Surviving Entity
shall cease, and in accordance with the terms of this Agreement, all of the
rights, privileges and powers of the Constituent Entities and all property,
real, personal and mixed, and all debts due to either of the Constituent
Entities, as well as all other things and causes of action belonging to each
of the Constituent Entities shall be vested in the Surviving Entity, and shall
thereafter be the property of the Surviving Entity as they were of each
Constituent Entity, and the title to any real property vested by deed or
otherwise in either of the Constituent Entities shall not revert or be in any
way impaired by reason of the Merger, but all rights of creditors and all
liens upon any property of either of the Constituent Entities shall be
preserved unimpaired. All debts, liabilities and duties of each Constituent
Entity shall thenceforth attach to the Surviving Entity, and may be enforced
against it to the same extent as if the debts, liabilities and duties had been
incurred or contracted by it.
4.6 Capital Accounts of and Percentage Interest in the Partnership.
At the Effective Time, UAF and AgriMax will be the only members of the Company
and the only partners of the Partnership. In connection with and as a result
of the Merger and the respective capital contributions to the Partnership
provided for in Sections 3.2 and 3.3, (i) UAF and AgriMax shall be credited on
the books of the Partnership with capital account balances in the amount of
$8,715,158 for UAF (an amount equal to 82.19% of the sum of $2,000,000 plus
the UAF Value) and $1,888,514 for AgriMax (an amount equal to 17.81% of the
sum of $2,000,000 plus the UAF Value) and (ii) the initial Percentage Interest
of UAF in the Partnership will be 82.19% and the initial Percentage Interest
of AgriMax in the Partnership will be 17.81%. The relative rights of UAF and
AgriMax pertaining to distributions from the Partnership and voting rights
based on respective capital account balances and Percentage Interests as well
as other matters pertaining to the operation and affairs of the Partnership
shall be as provided in the Agreement of Limited Partnership of the
Partnership.
ARTICLE V
OTHER MATTERS
5.1 Sale of UAF Common Stock to Bauer and Bakula. UAF shall issue and
sell 3,959 shares of UAF Common Stock to Bauer and 3,959 shares of UAF Common
Stock to Bakula. Each such purchase and sale shall be evidenced by and
conducted in accordance with a Restricted Stock Purchase Agreement in
substantially the form attached hereto as "Exhibit 5.1" to be executed and
delivered by UAF and Bauer or Bakula, as the case may be. The consideration
for the UAF Common Stock and other terms of the purchase and sale shall be as
set forth in the applicable Restricted Stock Purchase Agreement.
5.2 Appointment of AgriMax Representative to Board of Directors of
UAF. For so long as (i) UAF retains any interest in the Partnership and (ii)
AgriMax, or its successors or assigns, retains any interest in the
Partnership, each of McClure, Butler, Owens, Finn, Suber, Wright, Bauer and
Bakula agree to vote all of the UAF Common Stock or other voting securities of
UAF over which he or she has control and to take all other necessary actions
within his or her control in order:
(a) to cause the election to the Board of Directors of UAF of
one (1) person designated by AgriMax (which person shall be acceptable
to McClure in his reasonable discretion);
(b) to cause the removal from the Board of Directors of the
representative designated by AgriMax upon the express written request of
AgriMax;
(c) in the event that the representative designated by AgriMax
ceases to serve as a member of the Board of Directors during his term of
office, to cause the resulting vacancy on the Board to be filled by a
representative designated by AgriMax (which person shall be acceptable
to McClure in his reasonable discretion); and
(d) to refrain from, and to cause the Company to refrain from,
taking any action, without the prior written consent of AgriMax, to
remove the Board representative designated by AgriMax.
Each of McClure, Butler, Owens, Finn, Suber, Wright, Bauer and Bakula
further agree that, for so long as the agreements set forth above with respect
to the voting of certain shares by such persons remain in effect, he or she
shall not, without the prior written consent of AgriMax, sell, transfer,
assign or convey any of the shares that are subject to such agreements to any
other person or entity unless such person or entity has agreed in writing to
vote such shares and to take the other actions as set forth in clauses (a)
through (d) above.
In addition, for so long as (i) UAF retains any interest in the
Partnership and (ii) AgriMax, or its successors or assigns, retains any
interest in the Partnership, UAF shall not, without the prior written consent
of AgriMax, issue any shares of UAF Common Stock or other voting securities of
UAF to any person or entity unless such person or entity has first agreed in
writing to vote such shares and to take the other actions as set forth in
clauses (a) through (d) above.
All certificates evidencing shares of UAF Common Stock or other voting
securities of UAF shall bear a legend in substantially the following form:
"The shares represented by this certificate are subject to certain
transfer and other restrictions stated in that certain Agreement
and Plan of Reorganization dated as of October 27, 1995 which is
on file at the principal offices of the Corporation. By accepting
this certificate, or any of the shares represented hereby, such
transferee agrees automatically to be bound by and to accept the
restrictions set forth in such Agreement and Plan of
Reorganization."
Each of McClure, Butler, Owens, Finn, Suber, Wright, Bauer and Bakula
have pledged all of the UAF Common Stock owned by them to Sun Bank, National
Association pursuant to a pledge agreement. Anything in this Section 5.2 to
the contrary notwithstanding, the parties hereby agree that in the event of
any foreclosure pursuant to such pledge agreement or other event giving Sun
Bank, National Association, the right to vote the UAF Common Stock or other
voting securities of UAF owned by the above-named persons, Sun Bank, National
Association, and its successors or assigns, shall not be required to vote such
shares or take the other actions set forth in clauses (a) through (d) above.
5.3 Financing Assistance. For so long as AgriMax, or any affiliate
of AgriMax, hold any interest in the Partnership or any shares of capital
stock of NewCorp, AgriMax shall cause its indirect parent, Epitope, Inc., to
consult with the Partnership or NewCorp, as the case may be, and provide
advisory assistance as reasonably requested by the Partnership or NewCorp, as
the case may be, regarding financing of the Partnership's or NewCorp's
operations.
5.4 Effect on Operating Agreement. The Merger and the other
transactions contemplated by this Agreement are intended by the parties to
effect the transactions referred to in the Operating Agreement as the
"Combination," with such modifications as are set forth herein. This
Agreement sets forth and shall control in all respects the agreements of the
parties concerning the combination of certain assets of the Company and
certain assets of UAF and AgriMax as set forth herein and, as a result, shall
replace and supersede the provisions of the Operating Agreement pertaining
specifically to the manner of effecting the "Combination" and the
representations, warranties and agreements contained in the Operating
Agreement that were to have been given or made as of the effective date of the
"Combination." In this regard, it is understood and agreed that this
Agreement shall replace and supersede the representations and warranties of
the parties contained in the Operating Agreement that were to have been given
as of the "Transition Effective Date" (as defined in the Operating Agreement)
and that the representations and warranties contained in the Operating
Agreement have not been and will not be given pursuant to the Operating
Agreement as of any date other than the "Effective Date" under the Operating
Agreement. Except to the extent specifically indicated in this Section 5.4,
this Agreement and the transactions contemplated hereby shall not otherwise
alter or affect the obligations, rights, duties or liabilities of the parties
under the Operating Agreement relating to the formation and operation of the
Company prior to the Merger, including, without limitation, the
representations, warranties and agreements made or given as of the "Effective
Date" under the Operating Agreement and the indemnifications by AgriMax set
forth in Section 20 of the Operating Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of UAF. UAF represents and
warrants to AgriMax, as of the Closing Date, as follows:
(a) Authority; Binding Effect. UAF has full right, power and
authority to execute, deliver and perform this Agreement and the related
agreements referred to herein that are to be executed, delivered and
performed by UAF and to consummate the transactions contemplated hereby
and thereby. This Agreement is, and the related agreements referred to
herein that are to be executed and delivered by UAF are, the valid and
binding agreements of UAF enforceable against UAF in accordance with
their terms, except as such enforcement may be limited by the effect of
bankruptcy, reorganization, insolvency and other similar creditors
rights laws generally, and by equitable principles regardless of whether
the preceding is brought at law or in equity. The execution, delivery
and performance of this Agreement and the related agreements by UAF have
been duly authorized by the board of directors and shareholders of UAF.
No other proceedings on the part of UAF's board of directors or
shareholders are necessary to authorize the execution, delivery and
performance of this Agreement or the related agreement by UAF.
(b) No Consents. Except for consents in connection with the
transfer of the UAF Assets as provided herein that are required pursuant
to the Financing Documents and other agreements pertaining to or
included in the UAF Assets, no consent of, approval by, filing with, or
notice to any governmental authority or other person or entity is
required by UAF to execute, deliver and perform this Agreement or the
related agreements referred to herein that are to be executed, delivered
and performed by UAF or to consummate the transactions contemplated
hereby or thereby.
(c) No Violations. Neither the execution of this Agreement and
the related agreements referred to herein that are to be executed and
delivered by UAF nor the consummation of the transactions contemplated
hereby and thereby will result in (i) a violation or conflict with any
provision of UAF's articles of incorporation or bylaws, (ii) a breach
of, or default under, any term or provision of any contract (including,
without limitation, any Financing Document), indebtedness, lease,
encumbrance, commitment, license, franchise, permit, authorization, or
concession to which UAF is a party or by which its assets are bound
(except for violations, breaches or defaults as a result of the failure
to obtain any consents referred to in Section 6.1(b) in connection with
the transfer of the UAF Assets), (iii) a violation by UAF of any law,
rule, regulation or judicial or administrative order, or (iv) an
imposition of any encumbrance, restriction or charge on the business of
UAF or on any of its assets, except as contemplated by this Agreement.
(d) Organization, Standing and Power. UAF is a validly existing
corporation in good standing under the laws of the State of Florida. UAF
has all requisite
power and authority, corporate and other, to own and operate its
properties and assets, to lease any leased properties and assets used in
its business, and to carry on its business as it is now being conducted.
UAF is duly qualified and licensed to do business in every jurisdiction
in which such qualification or license is required. Complete and
accurate copies of UAF's articles of incorporation and bylaws, as
amended through the date hereof, have been delivered to AgriMax.
(e) Compliance with Laws and Other Instruments. UAF is in
compliance with its articles of incorporation and bylaws and with all
laws, regulations and judicial and administrative orders applicable to
it, to its assets, properties and rights, and to the conduct of its
business, the noncompliance with which would have a material adverse
effect on the financial condition or business of UAF, and UAF has not
received any notice or claim of a violation of any such law, rule,
regulation or order.
(f) Capitalization.
(i) Schedule 9.3.1(a) of the Operating Agreement contains
a complete and accurate list of the outstanding shares of capital
stock of UAF (the "Shares") showing the name of the issuer, the
certificate number, the number of Shares represented thereby, and
the name of the record holder. The authorized capital stock of
UAF is as follows: 125,000 shares of common stock, par value $1.00
per share, of which 108,959 shares are issued and outstanding.
(ii) Except as set forth on Schedule 9.3.1(b) of the
Operating Agreement or as contemplated by this Agreement, the
Shares constitute all the issued and outstanding shares of capital
stock of UAF and no person or entity has any right to acquire any
additional shares of such capital stock, any other security of UAF
or, except as set forth in this Agreement, any interest in the
Partnership. Except as set forth of Schedule 9.3.1(b) of the
Operating Agreement or as contemplated by this Agreement, there
are no outstanding proxies, subscriptions, options, warrants,
rights, puts, calls, commitments, voting trusts or plans or other
agreements of any character that restrict the transfer or voting
rights of, require UAF to redeem or otherwise acquire, restrict
the payment of dividends on, or otherwise relate to, capital stock
of UAF.
(iii) All the Shares have been duly authorized and are
validly issued, fully paid and nonassessable, and none of the
Shares have been issued in violation of any federal or state
securities or other laws, preemptive rights of any past or present
shareholder of UAF, or any stock purchase agreement or other
agreement to which UAF or any holder of shares of its capital
stock was or is a party or by which UAF or any holder of shares of
its capital stock was or is bound.
(g) Financing Documents. Schedule 9.3.3(b) of the Operating
Agreement includes true and complete copies of all loan agreements,
security agreements, mortgages, deeds of trust and other documents and
instruments (collectively, "Financing Documents") pursuant to which UAF
is indebted to others for borrowed money.
(h) Financial Statements. UAF has maintained its books of
account in accordance with generally accepted accounting principles
consistently applied. The Financial Statements have been prepared in
conformity with generally accepted accounting principles consistently
applied, and fairly present the financial position and the results of
operations of UAF at and for the year or periods indicated therein.
(i) Absence of Undisclosed Liabilities. Without limiting the
generality of Section 6.1(f) above, UAF does not have as of the Closing
Date, any material liability or obligation, whether matured, accrued,
absolute, contingent, direct or indirect, nor does there exist a set of
circumstances that could reasonably be expected to result in any such
material liability or obligation, other than as reflected in the
Financial Statements. For the purposes of this section, "material
liability or obligation" means any liability or obligation in excess of
$10,000, unless the liability or obligation is incurred in the ordinary
course of UAF's business.
(j) UAF Assets. UAF has, and pursuant to the UAF Bill of Sale,
Assignment, Assumption and General Conveyance will convey to the
Partnership, good title to, or valid leasehold interests in, or rights
to use all (except for $25,000 retained by UAF for general corporate
purposes) properties and assets used or held for use in the conduct of
its business and all goodwill associated therewith, subject to any
Encumbrances.
6.2 Representations and Warranties of AgriMax. AgriMax represents and
warrants to UAF and the UAF Members, as of the Closing Date, as follows:
(a) Authority; Binding Effect. AgriMax has full right, power
and authority to execute, deliver and perform this Agreement and the
related agreements referred to herein that are to be executed, delivered
and performed by AgriMax and to consummate the transactions contemplated
hereby and thereby. This Agreement is, and the related agreements
referred to herein that are to be executed and delivered by AgriMax
are, the valid and binding agreements of AgriMax enforceable against
AgriMax in accordance with their terms, except as such enforcement may
be limited by the effect of bankruptcy, reorganization, insolvency and
other similar creditors rights laws generally, and by equitable
principles regardless of whether the preceding is brought at law or in
equity. The execution, delivery and performance of this Agreement and
the related agreements by AgriMax have been duly authorized by the board
of directors and shareholders of AgriMax. No other proceedings on the
part of AgriMax's board of directors or shareholders are necessary to
authorize the execution, delivery and performance of this Agreement and
the related agreements by AgriMax.
(b) No Consents. Except for consents required pursuant to the
Sublease in connection with the succession of the Partnership to the
rights and duties of the Company under the Sublease, no consent of,
approval by, filing with, or notice to any governmental authority or
other person or entity is required for AgriMax to execute, deliver and
perform this Agreement or the related agreements referred to herein that
are to be executed, delivered and performed by AgriMax or to consummate
the transactions contemplated hereby or thereby.
(c) No Violations. Neither the execution and delivery of this
Agreement and the related agreements referred to herein that are to be
executed and delivered by AgriMax nor the consummation of the
transactions contemplated hereby and thereby will result in (i) a
violation or conflict with any provision of AgriMax's articles of
incorporation or bylaws, (ii) the breach of, or default under, any term
or provision of any contract, indebtedness, lease, encumbrance,
commitment, license, franchise, permit, authorization, or concession to
which AgriMax is a party or by which its assets are bound (other than a
default or breach resulting from failure to obtain the consent of the
lessor under the Main Lease to the extent required with respect to the
transactions contemplated by this Agreement), (iii) a violation by
AgriMax of any law, rule, regulation or judicial or administrative
order, or (iv) an imposition of any Encumbrance on the business of
AgriMax, the AgriMax Equipment or the AgriMax Intellectual Property,
except as contemplated by this Agreement.
(d) Organization, Standing and Power. AgriMax is a validly
existing corporation in good standing under the laws of the state of
Minnesota. AgriMax has all requisite power and authority, corporate and
other, to own and operate its properties and assets, to lease any leased
properties and assets used in its business, and to carry on its business
as it is now being conducted. AgriMax is duly qualified and licensed to
do business in every jurisdiction in which such qualification or license
is required.
(e) Compliance with Laws and Other Instruments. AgriMax is in
compliance with its articles of incorporation and bylaws and with all
laws, regulations and judicial and administrative orders applicable to
it, to its assets, properties and rights and to the conduct of its
business, and AgriMax has not received any notice or claim of a
violation of any such law, rule, regulation or order.
(f) Title to AgriMax Equipment. AgriMax has good and marketable
title to the AgriMax Equipment, free and clear of all Encumbrances
(other than as set forth in "Schedule 3.2(a)"), and upon execution and
delivery of the AgriMax Equipment Bill of Sale, AgriMax shall convey
good and marketable title to the AgriMax Equipment to the Partnership
free and clear of all Encumbrances (other than as set forth in "Schedule
3.2(a)").
(g) Title or Right to Use AgriMax Intellectual Property.
AgriMax owns or possesses the royalty free licenses or other rights to
use all AgriMax Intellectual Property. To the best of AgriMax's
knowledge, AgriMax's use of the AgriMax Intellectual Property does not
infringe on or otherwise violate any copyrights, trademarks, trademark
rights, service marks, service names, trade names, patents, patent
rights, license, trade secrets or other proprietary rights owned by any
other person or persons. There is no claim or action by any such person
pending or, to AgriMax's knowledge, threatened against AgriMax with
respect thereto. Upon execution and delivery of the AgriMax
Intellectual Property Assignment, AgriMax shall convey good and
marketable title or royalty free licenses or other rights to use the
AgriMax Intellectual Property, together with all goodwill associated
therewith, to the Partnership free and clear of all Encumbrances.
(h) AgriMax Facilities Lease Agreement. The "Main Lease" (as
defined in the Sublease) is in full force and effect, and AgriMax has
not been notified by any other party thereto of such party's intention
to terminate the Main Lease. Assuming the landlord's consent to the
succession of the Partnership to the rights and duties of the Company
under the Sublease is obtained, no event has occurred which constitutes
or, with the giving of notice or passage of time, or both, would
constitute a default by AgriMax or, to the best knowledge of AgriMax, by
any other party under the Main Lease. No dispute, suit or proceeding is
pending or, to the best knowledge of AgriMax, threatened in connection
with the Main Lease. AgriMax has provided to UAF a complete and correct
copy of the Main Lease. The AgriMax Facilities are located entirely on
the premises covered by the Main Lease and AgriMax is not a party to any
other lease for real property or similar agreement, whether written or
unwritten, relating to the AgriMax Facilities.
6.3 Representations and Warranties of UAF Members and Non-Member
Managers. Each UAF Member and each Non-Member Manager severally and not
jointly, represents and warrants to UAF and AgriMax, as of the Effective Date,
as follows:
(a) The UAF Member or Non-Member Manager has full legal capacity
to execute, deliver and perform this Agreement; and
(b) The execution, delivery and performance of this Agreement by
the UAF Member or Non-Member Manager will not conflict with any
undertaking, agreement, indenture, decree, order or judgment by which
such UAF Member or Non-Member Manager is bound, and will not violate any
law, rule or regulation applicable to such UAF Member or Non-Member
Manager.
ARTICLE VII
CLOSING
7.1 Closing. The Closing of the transactions contemplated by this
Agreement shall take place at the offices of UAF, 6610 Anderson Road, Tampa,
Florida on __________, 1995. At the Closing, this Agreement and each of the
related agreements and instruments referred to herein that by the terms hereof
are to be executed and delivered at the Closing shall be executed and
delivered by the respective parties hereto and thereto.
7.2 Simultaneous Transactions. The execution of this Agreement and
each of the related agreements and instruments referred to herein that by the
terms hereof are to be executed and delivered at the Closing and the
consummation of the transactions contemplated hereby and thereby shall occur
simultaneously at or as of the Closing. The performance or tender of
performance of all matters applicable to a party under this Agreement shall be
deemed concurrent conditions and no party shall be required to perform, or
tender performance of, the obligations of such party hereunder unless,
coincident therewith, each other party from whom performance is required under
this Agreement and the related agreements and instruments referred to herein
performs or tenders performance of its obligations.
7.3 Post-Closing Actions.
(a) AgriMax shall use its best efforts to obtain any consents
from third parties required under the Sublease or the Main Lease in
connection with the succession of the Partnership to the rights and
duties of the Company under the Sublease.
(b) UAF shall, to the extent reasonably requested by the
Partnership or AgriMax, as provided in the UAF Bill of Sale, Assignment,
Assumption and General Conveyance, use its best efforts to obtain any
consents from third parties required in connection with the transfer of
the UAF Assets to the Partnership and shall execute any instruments or
documents necessary to evidence or reflect the transfer of the UAF
Assets to the Partnership.
ARTICLE VIII
INDEMNIFICATION BY AGRIMAX
8.1 Indemnification by AgriMax. This Agreement provides for the
contribution of the AgriMax Equipment and the AgriMax Intellectual Property to
the Partnership and is not a sale of any stock in any entity comprising
AgriMax. The Partnership is not assuming and shall not be responsible for the
payment of any liabilities or obligations of AgriMax whatsoever, except as may
be expressly set forth in this Agreement or any agreement which is an exhibit
hereto. AgriMax shall indemnify and hold harmless the Partnership, UAF, any
other partners of the Partnership, and the officers, advisors, representatives
and shareholders of UAF or any such other partner of the Partnership
(collectively, "Indemnitees") from and against any and all liabilities,
obligations, losses, damages, judgments, claims, expenses, costs and legal
fees and disbursements incurred by any of them to the extent resulting from,
or arising out of, or related to (i) the ownership, use or operation of any of
the AgriMax Equipment and the AgriMax Intellectual Property prior to May 1,
1995, or (ii) any other act or omission of AgriMax (including, without
limitation, noncompliance with any applicable bulk transfer statutes and
claims of employees and former employees of AgriMax of any kind whatsoever
regarding their employment or termination by AgriMax). If any demand, action,
suit, proceeding or investigation is commenced, as to which an Indemnitee
proposes to demand indemnification, it shall notify AgriMax with reasonable
promptness; provided, however, that any failure by an Indemnitee to notify
AgriMax shall not relieve AgriMax from its obligations hereunder so long as
its failure does not materially prejudice the rights of AgriMax. AgriMax
shall assume the defense thereof and employ counsel of its own choosing. The
Indemnitee shall have the right to employ separate counsel in any such demand,
action, suit, proceeding or investigation and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
Indemnitee unless (a) the employment thereof has been specifically authorized
in writing by AgriMax, (b) AgriMax has failed to assume the defense and employ
counsel, or (c) the main parties to any such demand, action, suit, proceeding
or investigation, include both the Indemnitee and AgriMax and Indemnitee has
been advised in writing by independent counsel that the representation of
Indemnitee and AgriMax by the same counsel would be inappropriate due to
actual or potential differences between them, in each of which cases the
reasonable fees and disbursements of counsel for Indemnitee shall be paid by
AgriMax. In such event, AgriMax shall not have the right to assume the
defense of such demand, action, suit, proceeding or investigation on behalf of
Indemnitee. AgriMax shall not be liable for any settlement of any such
demand, action, suit, proceeding or investigation effected without AgriMax's
prior written consent. AgriMax shall not, without the prior written consent
of Indemnitee, settle or compromise any such demand, action, suit, proceeding
or investigation without such Indemnitee's prior written consent, which
consent shall not be unreasonably withheld.
ARTICLE IX
GENERAL PROVISIONS
9.1 Arbitration. Any dispute between the parties concerning this
Agreement shall be settled by arbitration conducted in Atlanta, Georgia, using
the Commercial Arbitration Rules of the American Arbitration Association. The
parties shall be entitled to conduct discovery in accordance with the Federal
Rules of Civil Procedure, subject to limitation by the arbitrators to secure
just and efficient resolution of the dispute. A party substantially
prevailing in the arbitration shall also be entitled to recover such amount
for its costs and attorney fees incurred in connection with the arbitration as
shall be determined by the arbitrators. Judgment upon the arbitration award
may be entered in any court having jurisdiction. Nothing herein, however,
shall prevent either party from resort to a court of competent jurisdiction
solely to seek injunctive relief.
9.2 Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, if mailed by
registered or certified mail (return receipt requested), or if sent by
telefacsimile confirmed in writing, to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
<PAGE>
(a) if to UAF or the Partnership:
Universal American Flowers, Inc.
6610 Anderson Road
Tampa, Florida 33634
Telephone No.: (813) 885-6936
Facsimile No: (813) 882-9918
Attn: President
with a copy to:
Crowe & Dunlevy
321 S. Boston Avenue
500 Kennedy Building
Tulsa, Oklahoma 74103-3313
Telephone No.: (918) 592-9800
Facsimile No: (918) 592-9801
Attn: Lon Foster, III
(b) if to AgriMax:
AgriMax Floral Products, Inc.
c/o Epitope, Inc.
8505 S.W. Creekside Place
Beaverton, Oregon 97008
Telephone No.: (800) 234-3786
Facsimile No: (503) 641-8665
Attn: President
with a copy to:
Miller, Nash, Wiener, Hager & Carlsen
3500 U.S. Bancorp Tower
111 S.W. Fifth Street
Portland, Oregon 97204-3699
Telephone No.: (503) 2244-5858
Facsimile No: (503) 224-0155
Attn: Erich Merrill
(c) if to the Company:
Fresche Blossoms, L.L.C.
3821 Barringer Drive
Charlotte, North Carolina 28217
<PAGE>
Telephone No.: (704) 529-0071
Facsimile No: (704) 525-2952
Attn: Chairman and Chief Executive Officer
with copies to:
Crowe & Dunlevy and
Miller, Nash, Wiener, Hager & Carlsen
at their respective addresses listed above
(d) if to any other party, to the address of such party
last shown
on the records of UAF.
9.4 Interpretation. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by
the words "without limitation." The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
9.5 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when all parties have executed a counterpart and
delivered it to the other parties. At the Closing, facsimile signatures will
be accepted, and the signing party shall promptly following the Closing
forward to the other parties originally signed counterparts.
9.6 Entire Agreement. This Agreement and the documents and
instruments and other agreements among the parties delivered pursuant hereto
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, among the parties with respect to the subject matter hereof
and are not intended to confer upon any other person any rights or remedies
hereunder except as otherwise expressly provided herein.
9.7 No Transfer. This Agreement and the rights and obligations set
forth herein may not be transferred or assigned by operation of law or
otherwise without the consent of each party hereto. This Agreement is binding
upon and will inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
9.8 Severability. If any provision of this Agreement, or the
application thereof, will for any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of the void or unenforceable provision.
9.9 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law or
equity on such party, and the exercise of any one remedy will not preclude the
exercise of any other.
9.10 Further Assurances. Each party agrees to cooperate fully with the
other parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement.
9.11 Absence of Third-Party Beneficiary Rights. No provision of this
Agreement is intended, nor will be interpreted, to provide to create any third
party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, stockholder, employee, partner or any other person or
entity unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely between the parties to
this Agreement.
9.12 Mutual Drafting. This Agreement is the joint product of the
parties hereto and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of such parties and shall not be
construed for or against any such parties.
9.13 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware (without giving effect to its choice of law principles).
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
as of the date first written above.
UNIVERSAL AMERICAN FLOWERS, INC.
By: William C. McClure
Name: William C. McClure
Title: President
AGRIMAX FLORAL PRODUCTS, INC.
By: Gilbert N. Miller
Name: Gilbert N. Miller
Title: Executive Vice President
Date: October 27, 1995
UAF, L.P.
By: UNIVERSAL AMERICAN FLOWERS,
INC., General Partner
By: William C. McClure
Name: William C. McClure
Title: President
FRESCHE BLOSSOMS, L.L.C.
By: William C. McClure
Name: William C. McClure
Title: Chairman and Chief Executive
Officer
William C. McClure
WILLIAM C. MCCLURE
Gay W. Butler
GARY W. BUTLER
Dorothea J. Owens
DOROTHEA J. OWENS
Timothy C. Finn
TIMOTHY C. FINN
John W. Suber, Jr.
JOHN W. SUBER, JR.
Anthony J. Wright
ANTHONY J. WRIGHT
Doug Bauer
DOUG BAUER
Roxanne E. Bakula
ROXANNE E. BAKULA
<PAGE>
Epitope, Inc., an Oregon corporation, the indirect parent corporation of
AgriMax, hereby unconditionally and irrevocably guarantees the due and
punctual payment when due of all sums which may be payable by AgriMax, and the
due and punctual performance of each and every obligation of AgriMax to be
performed, under this Agreement and under all agreements which are exhibits to
this Agreement.
EPITOPE, INC.
By: Gilbert N. Miller
Name: Gilbert N. Miller
Title: Executive Vice President
Date: October 27, 1995
<PAGE>
Exhibit 2.1
Assignment of Company Interests
<PAGE>
ASSIGNMENT OF COMPANY INTERESTS
For good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, _____________ ("Assignor"), does hereby
assign, transfer and convey to Universal American Flowers, Inc., a
Florida corporation ("UAF"), all of Assignor's right, title and interest
in and to the interests of Assignor in the Company (the "Company
Interests"), including, without limitation, (i) any and all rights to
receive a distributive share of the income and losses of the Company
(regardless of when earned or incurred), (ii) any and all rights to
receive a distributive share of the Company's assets, (iii) any and all
rights to participate in the management and affairs of the Company (if
any), (iv) any and all rights to vote on certain matters, and (v) all
other rights of the Assignor with respect to the Company as set forth in
the Operating Agreement of the Company and applicable law, free and clear
of any and all Encumbrances. This Assignment is being executed and
delivered by Assignor pursuant to the terms of the AGREEMENT AND PLAN OF
REORGANIZATION ("Agreement") dated as of __________, 1995, among UAF, the
Company, Assignor and certain other parties named therein. All
capitalized terms used in this Assignment shall have the meanings as in
the Agreement.
Assignor agrees that Assignor shall take such additional action as
may be reasonably requested by UAF to effect the assignment and transfer
of all the Company Interests and to assist and cooperate with UAF in any
proceedings involving the Company Interests. Requested action shall be
taken at UAF's expense.
IN WITNESS WHEREOF, the undersigned has executed in and delivered
this Assignment as of the __ day of ____________, 1995.
___________________________________
(Signature)
___________________________________
(Print Name)
<PAGE>
Exhibit 3.2(a)
AgriMax Equipment Bill of Sale
<PAGE>
EQUIPMENT BILL OF SALE
For good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, AgriMax Floral Products, Inc., a Minnesota
corporation ("AgriMax"), does hereby grant, bargain, transfer, sell,
assign, convey and deliver to UAF, L.P., a Delaware limited partnership,
all of AgriMax's right, title and interest in and to the AgriMax
Equipment free and clear of any and all Encumbrances. This Bill of Sale
is being executed and delivered by AgriMax pursuant to the terms of the
AGREEMENT AND PLAN OF REORGANIZATION ("Agreement") dated as of
_______________, 1995 among UAF, L.P., AgriMax, Fresche Blossoms, L.L.C.,
a Delaware limited liability company, Universal American Flowers, Inc., a
Florida corporation, and certain other persons named in the Agreement.
All capitalized terms used in this Bill of Sale shall have the same
meanings as in the Agreement.
EXCEPT AS EXPRESSLY PROVIDED IN THE AGREEMENT, THIS CONVEYANCE OF
THE AGRIMAX EQUIPMENT BY AGRIMAX TO UAF, L.P. IS "AS-IS, WHERE-IS,"
WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY
NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REPRESENTATIONS OR
WARRANTIES WITH RESPECT TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR VALUE).
Executed in Beaverton, Oregon, on _____________, 1995.
AGRIMAX FLORAL PRODUCTS, INC.
By: _________________________
Name: _______________________
Title: ______________________
<PAGE>
Exhibit 3.2(b)
AgriMax Intellectual Property Assignment
<PAGE>
INTELLECTUAL PROPERTY ASSIGNMENT
For good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, AgriMax Floral Products, Inc., a Minnesota
corporation ("AgriMax"), does hereby assign and transfer to UAF, L.P.,
all of AgriMax's right, title and interest in and to the AgriMax
Intellectual Property (as defined below) free and clear of any and all
Encumbrances (as defined below), together with all goodwill associated
therewith. This Assignment is being executed and delivered by AgriMax
pursuant to the terms of the AGREEMENT AND PLAN OF REORGANIZATION
("Agreement") dated as of __________, 1995, among UAF, L.P., AgriMax,
Fresche Blossoms, L.L.C., a Delaware limited liability company, Universal
American Flowers, Inc., a Florida corporation, and certain other persons
named in the Agreement. For purposes of this Assignment, the following
terms shall have the following meanings:
(i) "AgriMax Intellectual Property" means the trademarks
Fresche Blossoms(R) (U.S. Reg. No. - 1,815,566; Reg. Date - January
4, 1994) and Everguard(R) (U.S. Reg. No. - 1,792,277; Reg. Date -
September 14, 1993) and Fresche Blossoms Express(TM), the formula
for the Everguard preservative, any AgriMax trade secrets existing
on May 1, 1995 and all permits, licenses and franchises used by
AgriMax in its packaged fresh flower and floral preservative
distribution business as of May 1, 1995, to the extent
transferable); and
(ii) "Encumbrance" means any mortgage, claim, charge, lien,
encumbrance, easement, limitation, restriction, commitment, or
security interest, except statutory liens securing taxes,
assessments, and payments not yet due, or liens incurred in the
ordinary course of business (including liens in favor of mechanics
or materialmen).
EXCEPT AS EXPRESSLY PROVIDED IN THE AGREEMENT, THIS ASSIGNMENT OF
THE AGRIMAX INTELLECTUAL PROPERTY BY AGRIMAX TO UAF, L.P. IS "AS-IS,
WHERE-IS," WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
OF ANY NATURE WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REPRESENTATIONS
OR WARRANTIES WITH RESPECT TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, OR VALUE).
Agrimax agrees that it shall take such additional action as may be
reasonably requested by UAF, L.P. to effect the assignment and transfer
of all the AgriMax Intellectual Property, to cause the same to be made of
record where required, and to assist and cooperate with UAF, L.P. in any
proceedings involving the AgriMax Intellectual Property. Requested
action shall be taken at UAF, L.P.'s expense.
Executed in Beaverton, Oregon, on ___________, 1995.
AGRIMAX FLORAL PRODUCTS, INC.
By: __________________________
Name: ________________________
Title: _______________________
<PAGE>
Exhibit 3.3
UAF Bill of Sale, Assignment, Assumption
and General Conveyance
<PAGE>
BILL OF SALE, ASSIGNMENT, ASSUMPTION
AND GENERAL CONVEYANCE AGREEMENT
THIS BILL OF SALE, ASSIGNMENT, ASSUMPTION AND GENERAL CONVEYANCE
AGREEMENT ("Agreement") dated as of __________, 1995 is entered into by
and between Universal American Flowers, Inc., a Florida corporation (the
"Corporation"), and UAF, L.P. a Delaware limited partnership (the
"Partnership").
W I T N E S S E T H:
WHEREAS, the Corporation and the Partnership are parties to an
Agreement and Plan of Reorganization dated as of __________, 1995 (the
"Reorganization Agreement"); and
WHEREAS, pursuant to the Reorganization Agreement the Corporation
has agreed to sell, assign and convey all of its assets to the
Partnership and the Partnership has agreed to assume all of the
liabilities of the Corporation;
NOW, THEREFORE, in consideration of the premises contained herein
and in the Reorganization Agreement and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
the parties agree as follows:
1. Sale, Assignment and Conveyance of Assets. Subject to the
terms and conditions herein set forth, the Corporation hereby sells,
transfers, conveys, assigns and delivers to the Partnership to have and
to hold forever, and the Partnership hereby accepts, all of the
Corporation's right, title and interest in and to any and all of the
assets of the Corporation of whatever kind or nature, real, personal,
mixed, tangible, intangible, contingent or vested, as the same shall
exist on the date hereof, including, but without limiting the generality
of the foregoing, all machines and machinery, tools, appliances,
fixtures, vehicles and equipment; all inventories of raw materials, work
in process, finished products and stock in trade; all furniture,
fixtures, furnishings, office equipment and supplies; all investments and
securities; the business of the Corporation as a going concern together
with the good will attaching thereto; all letters patent, patent rights,
inventions, processes, formulae, trademarks, trade secrets and
applications thereof; all contracts, claims, notes, accounts receivable,
rights and choses in action; all moneys, cash (except as specifically
indicated below), bank credits or deposits, all duties and taxes
recoverable; all policies of insurance of whatsoever nature (life, group
life, fire, public liability, business interruption, and every other
type); all fidelity, contract and other bonds; all memberships, agencies
and permits, all deferred charges, advance payments, prepaid items,
advance receipts, and other deferred and prepaid assets and credits of
all kinds; all equitable interests in property whether standing in the
name of the Corporation or in the name of any other person, firm or
corporation for the use and benefit of the Corporation; all copyrights,
trade names, trade brands, drawings and engineering plans, customer lists
and directory listings; all contracts for the purchase of raw materials
and supplies, for the sale of goods, for service or employment whether
professional or non-professional, technical or non-technical; all
restrictive covenants and obligations of present and former officers and
employees of the Corporation and of individuals and corporations from
whom the Corporation acquired property; all agreements with sales agents,
representatives and dealers; all other contracts, arrangements or
agreements of the Corporation of any kind whatsoever; all books of
account, files, papers and records; and any and all other things of value
(all of the foregoing being collectively referred to herein as the "UAF
Assets"); provided, however, the properties and assets transferred hereby
shall not include (i) the corporate minute books and stock transfer
records of the Corporation and (ii) $25,000 in cash to be retained by the
Corporation for general corporate purposes.
2. Assumption of Liabilities and Obligations. Subject to the
terms and conditions herein set forth, the Partnership hereby assumes and
agrees to perform, observe, satisfy and fulfill all of the duties,
liabilities and obligations of the Corporation, whether direct or
indirect, contingent or otherwise, now existing or hereafter arising,
under, pursuant to or in connection with all contracts, agreements,
arrangements, debts, covenants, accounts, indemnities, claims, charges,
taxes, suits, actions, damages, executions, judgments, assessments or
other liabilities or obligations of any nature whatsoever of or affecting
the Corporation in existence as of the date hereof or arising from or
relating to actions or omissions of the Corporation prior to the date
hereof.
3. Power of Attorney. The Corporation hereby constitutes and
appoints the Partnership the true and lawful attorney of the Corporation,
with full power of substitution, in the name of the Corporation or
otherwise, to demand and receive any and all of the UAF Assets, and any
part thereof, and from time to time to institute and prosecute, for the
benefit of the Partnership, any and all proceedings at law, in equity or
otherwise, which the Partnership may deem proper for the collection or
reduction to possession of any of the UAF Assets or for the collection
and enforcement of any claim or right of any kind hereby sold, conveyed,
transferred or assigned, or intended so to have been, and to do all acts
and things in relation to the UAF Assets which the Partnership shall deem
advisable.
4. Further Assurances. The parties agree to execute and deliver
all documents and instruments, and to perform or cause to be performed
such further acts or things, as may be reasonably necessary to carry out
the intended assignments, assumptions and other transactions contemplated
by this Agreement. In furtherance of the foregoing, the Corporation
agrees, to the extent reasonably requested by the Partnership or AgriMax
Floral Products, Inc., to obtain any consents from third parties required
in connection with the conveyance of the UAF Assets, to execute any
instruments or documents necessary to evidence or reflect the conveyance
of the UAF Assets to the Partnership, to cause the same to be made of
record, and to assist and cooperate with the Partnership in any
proceedings involving the UAF Assets or the liabilities and obligations
assumed hereunder by the Partnership. Any requested action shall be at
the expense of the Partnership.
5. Disclaimer of Warranties. EXCEPT AS EXPRESSLY PROVIDED IN
THE REORGANIZATION AGREEMENT, THIS CONVEYANCE OF THE UAF ASSETS BY THE
CORPORATION TO THE PARTNERSHIP IS "AS-IS, WHERE-IS," WITHOUT ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE
WHATSOEVER (INCLUDING, WITHOUT LIMITATION, REPRESENTATIONS OR WARRANTIES
WITH RESPECT TO MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, OR
VALUE). THE PARTNERSHIP ACCEPTS THE UAF ASSETS SUBJECT TO ANY AND ALL
MORTGAGES, CLAIMS, CHARGES, LIENS, EASEMENTS, LIMITATIONS, RESTRICTIONS,
COMMITMENTS, SECURITY INTERESTS AND OTHER ENCUMBRANCES OF ANY NATURE
WHATSOEVER.
6. Amendment. This Agreement shall not be amended, except
pursuant to a writing executed by all of the parties hereto.
7. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of
which together shall constitute a single instrument.
8. Entire Agreement. This Agreement and the Reorganization
Agreement set forth the entire understanding and agreement between the
parties as to the matters covered herein and supersedes and replaces any
prior understanding, agreement or statement (written or oral) of intent.
Except as expressly provided for herein, no provision of this Agreement
shall be construed to confer any rights, or remedies on any person other
than the Corporation or the Partnership.
9. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10. Governing Law. This Agreement shall be construed in
accordance with, and governed by, the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered
as of the date first written above.
UNIVERSAL AMERICAN FLOWERS, INC.,
a Florida corporation
By: ________________________________
Name: ______________________________
Title:_______________________________
UAF, L.P.,
a Delaware limited partnership
By: Universal American Flowers, Inc.,
General Partner
By: ________________________________
Name: ______________________________
Title:_______________________________
<PAGE>
Exhibit 5.1
Restricted Stock Purchase Agreement
<PAGE>
RESTRICTED STOCK PURCHASE AGREEMENT
THIS RESTRICTED STOCK PURCHASE AGREEMENT ("Agreement") is made and
entered into effective as of the ____ day of _______, 1995 by and between
Universal American Flowers, Inc., a Florida corporation (the "Company")
and _________________ (the "Purchaser").
WITNESSETH:
WHEREAS, Purchaser is an employee of UAF, L.P., a limited
partnership organized under the laws of Delaware (the "Employer");
WHEREAS, the Company is the general partner of the Employer and has
significant interests in the growth and financial success of the
Employer;
WHEREAS, Purchaser's continued employment by Employer is considered
by the Company to be important for the growth and financial success of
Employer; and
WHEREAS, in order to encourage the continued participation of
Purchaser in the business of Employer, the Company is willing to sell to
Purchaser and Purchaser desires to purchase shares of the common stock,
par value $1.00 per share ("Common Stock"), of the Company.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained in this Agreement, the parties agree as follows:
1. Purchase of Shares by Purchaser.
1.1 Purchase of Shares; Consideration. The Company hereby
sells to Purchaser and Purchaser hereby purchases from the Company
3,959 shares of the Company's Common Stock (the "Shares") in
consideration of the payment by Purchaser to the Company,
simultaneously with the execution and delivery hereof, of $100, an
amount which, together with services previously performed for
Employer by Employee have been determined by the Board of Directors
of the Company to constitute adequate consideration for the
issuance of the Shares within the meaning of Section 621(3) of the
Florida Business Corporation Act.
1.2 Delivery of Certificates. The certificates
representing the Shares shall be held in escrow as provided in
Section hereof.
2. Restrictions on Transfer of Shares by Purchaser. For so long
as the Shares remain subject to the Purchase Option (as defined in
Section 3.2), Purchaser shall not sell, assign, donate, transfer, pledge,
hypothecate or otherwise dispose of (collectively, "Transfer"), or enter
into any agreement for the Transfer of, any of the Shares, without the
express prior written consent of the Company in its sole discretion.
<PAGE>
3. Repurchase Option of the Company.
3.1 Trigger Event. Each of the following events shall
constitute a "Trigger Event":
(a) the termination of employment of Purchaser by
Employer, or any parent or subsidiary of Employer, in a full-
time capacity, for any reason, with or without cause
including, without limitation, involuntary termination,
permanent disability or death of the Purchaser;
(b) Purchaser becomes a debtor under the United
States Bankruptcy Code (voluntarily or involuntarily);
(c) Purchaser makes a general assignment for the
benefit of creditors or permits any of the Shares to be
attached or levied upon or to become subject to judicial sale
or execution of judgment; or
(d) Purchaser would, but for this Agreement, be
required to involuntarily Transfer any of the Shares as a
result of any other event.
3.2 Purchase Option. Upon the occurrence of a Trigger
Event, Purchaser shall be deemed, immediately before such Trigger
Event occurs, to have made an offer to the Company to repurchase
all of the Shares, and the Company shall have the right and option
("Purchase Option") to repurchase all of such Shares as set forth
in this Section 3 at an aggregate purchase price of $100 (the
"Option Purchase Price").
3.3 Exercise of Purchase Option. Within thirty (30) days
after the date of any termination of employment of Purchaser as
provided in Section 3.1 (a), the Company shall notify Purchaser as
to whether the Company wishes to purchase all of the Shares
pursuant to the Purchase Option. Immediately upon the occurrence
of a Trigger Event other than termination of employment as
described in Section 3.1(a), Purchaser (or Purchaser's heirs at law
or legal representatives) shall deliver written notice to the
Secretary of the Company of the occurrence of such Trigger Event.
Within twenty (20) days following receipt of such notice from
Purchaser (or Purchaser's heirs at law or legal representatives),
the Company shall notify Purchaser (or Purchaser's heirs at law or
legal representatives) whether the Company wishes to purchase all
of the Shares pursuant to the Purchase Option. If the Company
elects to exercise the Purchase Option, the closing of the purchase
and the payment of the purchase price shall be as provided in
Section 4.
3.4 Effect of Non-Exercise of Purchase Option. If the
Purchase Option becomes exercisable as a result of the occurrence
of a Trigger Event described in Section 3.1 and the Purchase Option
is not exercised by the Company within the time period allotted in
Section 3.3 after proper notice from Purchaser (or Purchaser's
heirs at law or legal representatives), the Purchase Option shall
expire.
3.5 Expiration of Purchase Option. If not earlier
terminated pursuant to the provisions of this Agreement, the
Purchase Option shall expire at 5:00 p.m., Eastern Time, on the
tenth anniversary of the date hereof.
4. Closing. The closing of any purchase of the Shares by the
Company pursuant to this Agreement shall be held at the principal place
of business of the Company on a date determined by the Company but not
more than fifteen (15) days following the date upon which the Company
shall have exercised the Purchase Option, or at such other place and such
other time as the parties may agree. At any such closing, certificates
representing the Shares being purchased, duly endorsed, free and clear of
all liens and encumbrances, and ready for transfer, shall be delivered to
the Company in exchange for the Option Purchase Price.
5. Effect of Certain Corporate Transactions. In the event of any
of a merger, consolidation, reorganization or acquisition in which the
Company is not the surviving entity, the Purchase Option shall remain in
effect and, to the extent applicable, this Agreement and the Purchase
Option hereunder shall be deemed to be assigned to the surviving or
successor entity, unless prior to or in connection with such Transaction
the Board of Directors of the Company shall determine that the Purchase
Option shall lapse.
6. Capital Changes and Adjustments. If, from time to time
during the term of this Agreement:
(i) there is any stock dividend, stock split,
dividend of property other than cash, reclassification or
other change in the character or amount of any of the
outstanding securities of the Company; or
(ii) there is any reorganization, consolidation or
merger of the Company with another corporation or other
entity;
then, except as otherwise expressly provided in Section 5, in such
event, any and all new, substituted or additional securities, or
other property, other than cash, to which Purchaser is entitled by
reason of Purchaser's ownership of the Shares shall be immediately
subject to this Agreement, shall be deposited with the Escrow Agent
and shall be included in the word "Shares" for all purposes with
the same and force and effect as the Shares then subject to the
Purchase Option. While the aggregate Option Purchase Price shall
remain the same after each such event, the applicable Option
Purchase Price per Share payable upon exercise of the Purchase
Option shall be appropriately adjusted.
7. Shareholders Agreement.
7.1 Shareholders Agreement. The Company and/or its holders
of fifty percent (50%) or more of the Company's Common Stock are
parties to any shareholder agreement or other agreement affecting
generally dispositions of common stock by shareholders, (a
"Shareholders Agreement") then, if requested by the Company,
Purchaser shall be bound by and subject to the terms of the
Shareholders Agreement as a shareholder thereunder.
7.2 Transfer of Shares to Third Parties. In the event that
any or all of the Shares are proposed to be transferred to any
party other than to the Company pursuant to the Purchase Option,
under any circumstances whatsoever (including, without limitation,
any Transfer, whether voluntary or involuntary, resulting from a
Trigger Event pursuant to which the Company elected not to exercise
the Purchase Option), then any such Transfer shall be conducted in
accordance with the provisions of any Shareholders Agreement then
in effect as if Purchaser were then a party thereto (including,
without limitation, all rights of first refusal for the benefit of
other shareholders and other provisions thereof) and any transferee
shall acquire the Shares subject to the Shareholders Agreement and
shall become a party thereto and be bound by the terms thereof.
8. Tax Matters.
8.1 Valuation of Shares. Purchaser understands that the
Shares have been valued by the Board of Directors for the purpose
of sale pursuant to this Agreement, and that the Company believes
such valuation represents a fair attempt at reaching an accurate
appraisal of their worth. Purchaser also understands, however,
that the Company can give no assurances that such price is in fact
the fair market value of the shares and that it is possible that
the Internal Revenue Service would successfully assert that the
value of the Shares on the date of purchase is substantially
greater than so determined. If the Internal Revenue Service were
to succeed in a determination that the Shares had value greater
than the purchase price, the additional value could constitute
ordinary income to Purchaser as of the date of its receipt.
Additional taxes (and interest) due could be payable by Purchaser,
and there is no provision for the Company to reimburse Purchaser
for that tax liability. Purchaser assumes all responsibility for
such potential tax liability.
8.2 Section 83(b) Election. Purchaser understands that
Section 83 of the Internal Revenue Code of 1986, as amended (the
"Code"), taxes as ordinary income the difference between the amount
paid for the Shares and the fair market value of the Shares as of
the date any restrictions on the Shares lapse. In this context,
"restriction" means the right of the Company to repurchase the
Shares pursuant to the Purchase Option. Purchaser understands that
Purchaser may elect to be taxed at the time the Shares are
purchased rather than when the Purchase Option expires by filing an
election under Section 83(b) of the Code with the Internal Revenue
Service within thirty (30) days after the date of purchase. Even
if the fair market value of the Shares equals the amount paid for
the Shares (and thus no tax is payable), the election must be made
to avoid adverse tax consequences in the future. Purchaser
understands that failure to make this filing in a timely manner
will result in the recognition of ordinary income by Purchaser,
when the Purchase Option lapses, on the amount, if any, by which
the fair market value of the Shares at the time such restrictions
lapse exceeds the purchase price of the Shares.
PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO TIMELY FILE THE ELECTION
UNDER SECTION 83(b) EVEN IF PURCHASER REQUESTS THE COMPANY OR ITS
REPRESENTATIVES TO MAKE THIS FILING ON PURCHASER'S BEHALF.
8.3 Notice of Tax Election. If Purchaser makes any tax
election relating to the tax treatment of the Shares under the
Code, at the time of such election Purchaser shall promptly notify
the Company of such election.
9. Escrow. As security for the faithful performance of the
terms of this Agreement and to insure the availability for delivery of
the Shares upon exercise of the Purchase Option, Purchaser hereby
delivers for deposit with the Secretary of the Company, or such other
person designated by the Company, as escrow agent in this transaction
("Escrow Agent"), two stock assignments duly endorsed (with date and
number of shares blank) together with the certificate or certificates
evidencing the Shares. Such documents are to be held by the Escrow Agent
and delivered by the Escrow Agent pursuant to the following instructions
of the Company and Purchaser:
(a) In the event the Company exercises the Purchase Option,
Purchaser and the Company hereby irrevocably authorize and direct
the Escrow Agent to execute the transaction contemplated by any
notice of exercise of the Purchase Option in accordance with the
terms of such notice and this Agreement.
(b) In connection with such transaction the Escrow Agent is
directed to (i) to date the stock assignment necessary for the
transfer in question, (ii) to fill in the number of shares being
transferred, and (iii) to deliver such assignment, together with
the certificate evidencing the Shares to be transferred, to the
Company against the delivery of the Option Purchase Price.
(c) Purchaser irrevocably authorizes the Company to deposit
with the Escrow Agent any certificates evidencing the Shares to be
held by the Escrow Agent hereunder and any additions and
substitutions to said Shares as described in this Agreement.
Purchaser irrevocably constitutes and appoints the Escrow Agent as
Purchaser's attorney-in-fact and agent for the term of this escrow
to execute all documents appropriate to make such securities
negotiable and to complete any transaction herein contemplated.
(d) Upon the expiration or termination of the Purchase
Option as to the Shares as provided in this Agreement, the Escrow
Agent will deliver to Purchaser the certificate or certificates
representing such Shares and the escrow shall thereafter terminate
as to such Shares.
(e) If at the time of termination of this escrow the Escrow
Agent has possession of any documents, securities, or other
property belonging to Purchaser, the Escrow Agent shall deliver
such property to Purchaser, and be discharged of all further
obligations hereunder.
(f) The responsibilities of the Escrow Agent hereunder
shall terminate if the Secretary of the Company shall cease to be
the Secretary or if the Escrow Agent shall resign by written notice
to each party. In the event of any such termination, the Company
shall appoint a successor Escrow Agent. In the absence of such
appointment, the President of the Company shall be the Escrow
Agent.
(g) It is understood and agreed that should any dispute
arise with respect to the delivery, ownership, or right of
possession of the Shares held by the Escrow Agent hereunder, the
Escrow Agent is authorized to retain without liability to anyone
all or any part of said Shares until such disputes shall have been
settled either by mutual written agreement or by a court order,
decree, or judgment, if applicable, but the Escrow Agent shall be
under no duty whatsoever to institute or defend such proceedings.
(h) By signing this Agreement, the Escrow Agent becomes a
party hereto only for the purpose of executing the instructions set
forth in this Section 10 and does not otherwise become a party to
this Agreement.
10. Securities Law Compliance.
10.1 Absence of Registration. Purchaser is aware that the
Shares have not been registered under the Securities Act of 1933,
as amended (the "Act"), or applicable state securities laws and
have been issued to Purchaser in reliance upon exemptions from the
registration requirements of the Act and applicable state
securities laws.
10.2 Investment Representations. In connection with the
Purchaser's acquisition of the Shares from the Company pursuant to
this Agreement, Purchaser hereby represents and warrants to the
Company as follows:
(a) Investment Intent. Purchaser is aware of and
familiar with the Company's business affairs and financial
condition and has acquired sufficient information about the
Company to reach a knowledgeable and informed decision to
acquire the Shares. Purchaser is acquiring the Shares for
investment for his own account, not for resale, without any
intention of or view toward or for participating, directly or
indirectly, in a distribution of the Shares or any portion
thereof.
(b) Representatives. Purchaser has consulted with
such professional advisors (the "Representatives"), if any,
as Purchaser has seen fit in connection with this proposed
investment.
(c) Experience. Purchaser and Purchaser's
Representatives, if any, have such knowledge and experience
in financial and business matters that Purchaser is capable
of evaluating the merits and risks of investment in the
Shares.
(d) Risks. Purchaser understands that an investment
in the Company is speculative, that any possible profits
therefrom are uncertain, and that Purchaser must bear the
economic risks of the investment in the Company for an
indefinite period of time. Purchaser is able to bear these
economic risks and to hold the Shares for an indefinite
period.
(e) Information. Purchaser and Purchaser's
Representatives, if any, have received all information and
data with respect to the Company which Purchaser or
Purchaser's Representatives have requested and have deemed
relevant in connection with an evaluation of the merits and
risks of this investment in the Company, and do not desire
any further information or data with respect to the Company
or the purchase of the Shares.
(f) Legends. Purchaser understands and agrees that
(i) the legends set forth in Section 12 will be placed on the
certificate(s) evidencing the Shares and on, as applicable,
certificate(s) issued to transferees; (ii) the stock records
of the Company will be noted with respect to such
restrictions; and (iii) the Company will not be under any
obligation to register the Shares or to comply with any
exemption available for resale of the Shares without
registration.
(g) Restrictions on Resale. Purchaser understands
that, under relevant securities law requirements, the Shares
must be held indefinitely unless they are subsequently
registered under the Act or an exemption from such
registration is available. The Company is under no
obligation to so register the Shares. Purchaser understands
that Rule 144 of the Securities and Exchange Commission
permits limited public resale of securities acquired in a
non-public offering subject to satisfaction of certain
conditions. Purchaser understands that the Company may not
be satisfying, and is not obligated to satisfy, any
requirement of Rule 144 at such time as Purchaser might wish
to sell any of the Shares, and, if so, Purchaser might be
precluded from selling any of the Shares under Rule 144.
10.3 Further Limitations on Disposition. Without in any way
limiting the representations set forth above, Purchaser further agrees
that Purchaser shall in no event make any disposition of any portion of
the Shares unless and until:
(i)(A) there is in effect a registration
statement under the Act covering such proposed
disposition and such disposition is made in accordance
with said registration statement; or, (B)(1) Purchaser
shall have notified the Company of the proposed
disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the
proposed disposition, (2) Purchaser shall have
furnished the Company with an opinion of the
Purchaser's counsel to the effect that such disposition
will not require registration of such shares under the
Act and (3) such opinion of the Purchaser's counsel
shall have been concurred in by counsel for the Company
and the Company shall have advised Purchaser of such
concurrence; and
(ii) there has been compliance with all
requirements of this Agreement.
10.4 Disclosures Pursuant to State Securities Laws.
Purchaser is aware of and understands the following:
(i) IN MAKING AN INVESTMENT DECISION PURCHASER MUST RELY ON
PURCHASER'S OWN EXAMINATION OF THE ISSUER AND THE TERMS OF THE
OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE SHARES HAVE
NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION
OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES
HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS
DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
(ii) THE SHARES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION
OR EXEMPTION THEREFROM. PURCHASER SHOULD BE AWARE THAT PURCHASER
WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR
AN INDEFINITE PERIOD OF TIME.
(iii) UNDER THE FLORIDA SECURITIES AND INVESTOR PROTECTION
ACT Section 517.061(11)(a)(5), SUBSCRIPTIONS FOR THE SHARES BY EACH
PERSON WHO IS A RESIDENT OF THE STATE OF FLORIDA (A "FLORIDA
PURCHASER") MAY (IF THE REQUIREMENTS OF SUCH ACT ARE SATISFIED) BE
VOIDABLE BY EACH SUCH FLORIDA PURCHASER FOR A PERIOD EXPIRING ON
THE THIRD DAY AFTER THE FLORIDA PURCHASER'S TENDER OF CONSIDERATION
FOR THE SHARES. If a Florida Purchaser exercises the right to void
his or her purchase, the purchase price paid shall be returned to
the Florida Purchaser by the Company and such Florida Purchaser
shall thereafter cease to have any interest in the Shares.
11. Legends on Shares. Each certificate representing the Shares
shall have conspicuously printed on it the following legends:
(i) "THESE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE SECURITIES LAWS OF THE VARIOUS STATES,
AND HAVE BEEN ISSUED AND SOLD PURSUANT TO AN EXEMPTION FROM THE
ACT, AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE TRANSFERRED BY THE
HOLDER THEREOF AT ANY TIME EXCEPT (1) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT COVERING THESE SHARES,
OR (2) UPON DELIVERY TO THE CORPORATION OF AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT THESE SHARES MAY BE
TRANSFERRED WITHOUT REGISTRATION."
(ii) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO CERTAIN RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS
SET FORTH IN AN AGREEMENT BETWEEN THE CORPORATION AND THE
REGISTERED HOLDER OR HIS PREDECESSOR IN INTEREST, A COPY OF WHICH
IS ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION."
(iii) Any legend required to be placed thereon by any state
securities commissioner or the applicable blue sky laws of any
state.
12. Improper Disposition of Shares. If any of the Shares shall
be disposed of otherwise than in accordance with the terms and conditions
of this Agreement, such disposition shall be of no force, effect or
validity. Alternatively, at the option of the Company, instead of
treating such transfer as a nullity, the Company shall have the right,
exercisable at any time prior to the expiration of six (6) months after
the Company received written or other notice of such disposition, to
purchase such Shares as if a notice of offer had been timely given as
provided in Section 3. In enforcing such rights, the Company may hold
and refuse to transfer any stock, or any certificate therefor, tendered
to it for transfer, in addition to, and without prejudice to, any and all
other rights or remedies which may be available to the Company.
13. Employment at Will. The parties acknowledge that Purchaser's
employment relationship with Employer is at the will of either party,
unless otherwise agreed in writing, and that nothing in this Agreement
shall affect in any manner whatsoever the right or power of Purchaser or
Employer, or a parent or subsidiary of Employer, to terminate Purchaser's
employment.
14. Rights as a Shareholder. Subject to the provisions and
limitations hereof, Purchaser shall be entitled to exercise all rights
and privileges of a shareholder of the Company with respect to the
Shares.
<PAGE>
15. Miscellaneous Provisions.
15.1 Additional Actions. The parties will execute such
further instruments and take such further action as may reasonably
be necessary to carry out the intent of this Agreement.
15.2 Notices. Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given
upon personal delivery or upon deposit in the United States Post
Office, by regular or certified mail with postage and fees prepaid,
addressed, if to Purchaser, at Purchaser's address set forth on the
signature page hereto and, if to the Company, at the address of its
principal corporate offices (Attention: President) or at such
other address as such party may designate by ten days' advance
written notice to the other party.
15.3 Assignment. Rights and obligations under this Agreement
may not be assigned without the written consent of each of the
parties hereto, except that the Company may assign its rights and
delegate its duties under this Agreement in connection with any
certain Transaction as provided in Section 5 without the prior
consent of Purchaser. Subject to the foregoing, this Agreement
shall inure to the benefit of and be binding upon heirs, executors,
administrators, successors and assigns of the parties.
15.4 No Waiver. No waiver of any breach or condition of
this Agreement shall be deemed a waiver of any other or subsequent
breach or condition, whether of like or different nature.
15.5 Cancellation of Shares. If the Company shall make
available, at the time and place and in the amount and form
provided in this Agreement, the consideration for the Shares to be
repurchased in accordance with the provisions of this Agreement,
then from and after such time, the person from whom such Shares are
to be repurchased shall no longer have any rights as a holder of
such Shares (other than the right to receive payment of such
consideration in accordance with this Agreement), and such Shares
shall be deemed purchased in accordance with the applicable
provisions hereof and the Company shall be deemed the owner and
holder of such shares, whether or not the certificates therefor
have been delivered as required by this Agreement.
15.6 Entire Agreement. This Agreement constitutes the
entire contract between the parties hereto with regard to the
subject matter hereof.
15.7 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Florida,
as such laws are applied to contracts entered into and performed in
such State.
<PAGE>
15.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but
all of which together shall constitute one and the same instrument.
15.9 Severability. If any provision of this Agreement is
held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue
in full force and effect without being impaired in any way and
shall be construed in accordance with the purpose and terms of this
Agreement.
15.10 Amendments. This Agreement may not be amended,
modified or supplemented except by a writing executed by both
parties.
15.11 Headings. The section headings contained in this
Agreement are included for convenience of reference only and are
not intended by the parties to be a part of or to affect the
meaning or interpretation of this Agreement.
15.12 Jurisdiction, Venue and Waiver of Jury Trial. Any
suit, action or proceeding with respect to this Agreement shall be
brought exclusively in the Florida state courts of competent
jurisdiction in Hillsborough, County, Florida or in the United
States District Court in which the City of Tampa is located. ALL
PARTIES HEREBY IRREVOCABLY WAIVE ANY OBJECTIONS WHICH THEY MAY NOW
OR HEREAFTER HAVE TO THE PERSONAL JURISDICTION OR VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT BROUGHT IN SUCH COURT AND HEREBY FURTHER IRREVOCABLY
WAIVE ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE PARTIES
HEREBY FURTHER IRREVOCABLY WAIVE ANY RIGHT TO A JURY TRIAL IN ANY
ACTION ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
15.13 Specific Performance and Injunctive Relief. The
parties hereto declare that it may be impossible to measure in
money the damages which will accrue to a party hereto or to their
heirs, personal representatives, or assigns by reason of a failure
to perform any of the obligations under this Agreement and agree
that the terms of this Agreement shall be specifically enforceable
and that injunctive relief shall be available. If any party hereto
or his heirs, personal representatives or assigns institutes any
action or proceeding to specifically enforce the provisions hereof,
any person against whom such action or proceeding is brought hereby
waives the claim or defense therein that such party or such
personal representative has an adequate remedy at law, and such
person shall not urge in any such action or proceeding the claim or
defense that such remedy at law exists.
<PAGE>
15.14 Remedies Cumulative. All remedies available to the
parties or herein expressly conferred shall be deemed cumulative
with and not exclusive of any other remedies expressly conferred
hereby or available to any party, and the exercise of any one
remedy shall not preclude the exercise of any other.
15.15 Attorneys' Fees. The prevailing party in any legal
action arising out of this Agreement shall be entitled, in addition
to any other rights and remedies such party may have, to
reimbursement for its expenses, including costs and reasonable
attorneys' fees.
16. Pledge of Shares to Bank. The parties acknowledge that the
Purchaser has pledged the Shares to Sun Bank, National Association
("Bank") pursuant to a Pledge Agreement by and among Purchaser, Bank and
certain other parties named therein (the "Pledge Agreement"). Anything
to the contrary in this Agreement notwithstanding, the parties agree that
the Shares shall be subject in all respects to the Pledge Agreement and
that the rights of the parties pursuant to this Agreement shall be
subordinate to the rights of Bank under the Pledge Agreement. The
parties further agree not to exercise any right pursuant to this
Agreement in a manner that would violate the provisions of the Pledge
Agreement. In furtherance of the foregoing, certificates evidencing the
Shares shall be held by Bank pursuant to the Pledge Agreement and only
upon release by Bank shall be deposited with the Escrow Agent pursuant to
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
PURCHASER: COMPANY:
____________________________ UNIVERSAL AMERICAN FLOWERS,
INC.
(Signature)
By: _______________________
_____________________________
(Print Name) Name: _____________________
___________________________
Title:_____________________
____________________________
_____________________________
_____________________________
(Address)
WITH RESPECT TO SECTION 9 ONLY:
ESCROW AGENT
____________________________
(Signature)
____________________________
(Print Name)
<PAGE>
CONSENT
The undersigned spouse of Purchaser agrees that the spouse's interest in
the Shares subject to this Agreement shall be irrevocably bound by this
Agreement and further understands and agrees that any community property
interest, if any, shall be similarly bound by this Agreement.
Date: _________________________ ________________________
Spouse of Purchaser
<PAGE>
Schedule 1.3
List of Additional AgriMax Equipment
1. Haworth systems furniture.
2. AccPac accounting software.
3. AST portable computer.
4. Telemagic marketing software.
5. Illinois Instruments headspace analyzer (Model 3600) 6. Gage
marketing stands.<PAGE>
Schedule 3.2(a)
Encumbrances Pertaining to AgriMax Equipment
1. Interest of Northstate International Trucks in 1994 Mitsubishi truck
evidenced by Retail Installment Contract dated August 24, 1993.
<PAGE>
EXHIBIT 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of July 15, 1995,
between Byron A. Allen, Jr. ("Employee") and Epitope, Inc., an Oregon
corporation (the "Company").
1. Services.
1.1 Employment. The Company agrees to employ Employee
as the Vice President of Corporate Communications of the Company, and
Employee hereby accepts such employment in accordance with the terms and
conditions of this Agreement. Employment shall continue until terminated
pursuant to the terms of this Agreement.
1.2 Duties. Employee shall have the position named in
Section 1.1 with such powers and duties appropriate to that office (a) as
may be provided by the bylaws of the Company, (b) as otherwise set forth
on Schedule 1.2 attached to this Agreement (the absence of which shall
indicate that no additional specific duties are so provided for), and (c)
as determined by the president of the Company from time to time. Subject
to the provisions of Section 5.2 hereof, Employee's position and duties
may be changed from time to time during the term of this Agreement,
including that Employee's place of work may be relocated at the sole
discretion of the Company's board of directors.
1.3 Outside Activities. Employee shall obtain the
consent of the board of directors before he engages, either directly or
indirectly, in any other professional or business activities that may
require an appreciable portion of Employee's time or effort to the
detriment of the Company's business. Such consent will not be
unreasonably withheld.
1.4 Direction of Services. Employee shall at all times
discharge his duties in consultation with and under the supervision and
direction of the Company's president, any duly designated representative
of the president, and board of directors.
2. Compensation and Expenses.
2.1 Salary. As compensation for services under this
Agreement, the Company shall pay to Employee a regular salary to be
established each year by the President of the Company. Such salary may
be adjusted from time to time unless the board of directors in its
discretion determines not to do so. Payment shall be made on a bi-weekly
basis, less all amounts required by law to be withheld or deducted, at
such times as shall be determined by the board of directors.
2.2 Additional Employee Benefits. Employee shall also
have the right to receive or participate in (a) any additional benefits,
including, but not limited to, insurance programs, profit sharing or
pension plans, and medical reimbursement plans, which may from time to
time be made available by the Company to corporation officers as a group,
and (b) any additional benefits set forth in Schedule 2.2 attached to
this Agreement (the absence of which shall indicate that no additional
specific benefits are so provided for).
2.3 Expenses. The Company shall reimburse Employee for
all reasonable and necessary expenses incurred in carrying out his duties
under this Agreement. Employee shall present to the Company from time to
time an itemized account of such expenses in such form required by the
Company.
3. Confidential Information.
3.1 Access to Information. Employee acknowledges that
in the course of his employment he will have access to proprietary
information, trade secrets, and other confidential information, that such
information is a valuable asset of the Company, and that its disclosure
or unauthorized use will cause the Company substantial harm. As used in
this Agreement, the term "Confidential Information" means: (a)
proprietary information and trade secrets of the Company and (b)
information designated by the Company as confidential or which Employee
knows or should know is confidential.
3.2 Ownership. Employee acknowledges that all
Confidential Information shall continue to be the exclusive property of
the Company, whether or not prepared in whole or in part by Employee and
whether or not disclosed to Employee or entrusted to his custody in
connection with his employment by the Company.
3.3 Nondisclosure and Nonuse. Unless authorized or
instructed in writing by the Company, or required by legally constituted
authority, Employee will not, except as required in the course of the
Company's business, during or after his employment, disclose to others or
use any Confidential Information, unless and until, and then only to the
extent that, such items become available to the public, other than by his
act or failure to prevent accidental or negligent loss or release to any
unauthorized person of the Confidential Information.
3.4 Return of Confidential Information. Upon request by
the Company during or after his employment, and without request upon
termination of employment pursuant to this Agreement, Employee will
deliver immediately to the Company all Confidential Information; Employee
will thereafter retain no excerpts, notes, photographs, reproductions, or
copies thereof.
3.5 Work Made for Hire. Employee agrees that all
creative work, including without limitation designs, drawings,
specifications, techniques, models, and processes, prepared or originated
by Employee for the Company, or during or within the scope of employment
by the Company, whether or not subject to protection under federal
copyright or other law, constitutes work made for hire, all rights to
which are owned by the Company; and, in any event, Employee assigns to
the Company all rights, title, and interest, whether by way of copyright,
trade secret, or otherwise, in all such work, whether or not subject to
protection by copyright or other law.
3.6 Duration. The obligations set forth in this Section
3 will continue beyond the term of employment of Employee by the Company
and for so long as Employee possesses Confidential Information.
4. Noncompetition.
4.1 Covenant. Employee covenants that Employee will
not, throughout the United States, either individually or as a director,
officer, partner, employee, agent, representative, or consultant with any
business, directly or indirectly during the term of employment and for
one year thereafter:
4.1.1 Engage or prepare to engage in any business
that competes with the Company;
4.1.2 Induce or attempt to induce any person who is
an employee of the Company during the term of this covenant to leave the
employ of the Company; or
4.1.3. Solicit, divert, or accept orders for
products or services that are substantially competitive with the products
or services sold by the Company from any customer of the Company.
4.2 Enforcement. Employee acknowledges and agrees that
the time, scope, and other provisions of this Section 4 have been
specifically negotiated by sophisticated parties with the advice and
consultation of counsel and specifically hereby agrees that such time,
scope, and other provisions are reasonable under the circumstances.
Employee further agrees that if, at any time, despite the express
agreement of the parties hereto, a court of competent jurisdiction holds
that any portion of this Section 4 is unenforceable for any reason, the
maximum restrictions reasonable under the circumstances, as determined by
such court, will be substituted for any such restrictions held
unenforceable.
5. Termination.
5.1 Voluntary Resignation. Employee may terminate his
employment under this Agreement by 90 days' written notice to the
Company.
5.2 Termination by the Company. The Company may
terminate Employee's employment under this Agreement with or without
cause by 90 days' written notice to Employee. If the Company shall
substantially diminish Employee's salary, duties, or title, or shall
relocate the principal place where Employee's duties are performed to a
place outside of the Portland metropolitan area, then Employee may elect
(but shall not be required) to treat such event as a termination without
cause. This Agreement shall terminate immediately upon employee's death.
In the event of the termination of the employment of Employee by the
Company without cause, Employee (a) shall continue to be paid the salary
provided in Section 2.1 for 6 months from the date of notice of
termination of employment in the manner and at the times at which regular
compensation was paid to Employee during the term of his employment under
the Agreement and (b) shall be reimbursed for reasonable expenses to
accommodate relocation back to the East Coast.
6. Remedies. The respective rights and duties of the Company
and Employee under this Agreement are in addition to, and not in lieu of,
those rights and duties afforded to and imposed upon them by law or at
equity. Employee acknowledges that breach of Sections 3, 4.1, or 4.2 of
this Agreement will cause irreparable harm to the Company and agrees to
the entry of a temporary restraining order and permanent injunction by
any court of competent jurisdiction to prevent breach or further breach
of this Agreement. Such remedy shall be in addition to any other remedy
available to the Company at law or in equity.
7. Severability of Provisions. The provisions of this
Agreement are severable, and if any provision hereof is held invalid or
unenforceable, it shall be enforced to the maximum extent permissible,
and the remaining provisions of the Agreement shall continue in full
force and effect.
8. Attorney Fees. In the event a suit or action is filed to
enforce Sections 3, 4.1, or 4.2 of this Agreement, the prevailing party
shall be reimbursed by the other party for all costs and expenses
incurred in connection with the suit or action, including without
limitation reasonable attorney fees at trial or on appeal.
9. Nonwaiver. Failure of the Company at any time to require
performance of any provision of this Agreement shall not limit the right
of the Company to enforce the provision. No provision of this Agreement
or breach thereof may be waived by either party except by a writing
signed by that party. A waiver of any breach of a provision of this
Agreement shall be construed narrowly and shall not be deemed to be a
waiver of any succeeding breach of that provision or a waiver of that
provision itself or of any other provision.
10. Arbitration.
10.1 Claims Covered. All claims or controversies, except
for those excluded by Section 10.2 ("claims"), whether or not arising out
of Employee's employment (or its termination), that Company may have
against the Employee or that Employee may have against the Company or
against its officers, directors, employees or agents, in their capacity
as such or otherwise, shall be resolved as provided in this Section 10.
Claims covered by this Agreement include, but are not limited to, claims
for wages or other compensation due; claims for breach of any contract or
covenant (express or implied); tort claims; claims for discrimination
(including, but not limited to, race, sex, sexual orientation, religion,
national origin, age, marital status, or medical condition, handicap or
disability); claims for benefits (except where an employee benefit or
pension plan specifies that its claims procedure shall culminate in an
arbitration procedure different from this one), and claims for violation
of any federal, state, or other governmental law, statute, regulation, or
ordinance, except as provided in Section 10.2.
10.2 Non-covered Claims. Claims arising out of Sections
3, 4.1, or 4.2 of this Agreement and workers' compensation or
unemployment compensation benefits are not covered by this Agreement.
Non-covered claims include but are not limited to claims by the Company
for injunctive and/or other equitable relief for unfair competition
and/or the use and/or unauthorized disclosure of trade secrets or
confidential information, as to which Employee understands and agrees
that the Company may seek and obtain relief from a court of competent
jurisdiction.
10.3 Required Notice of All Claims and Statute of
Limitations. Company and Employee agree that the aggrieved party must
give written notice of any claim to the other party within one year of
the date the aggrieved party first has knowledge of the event giving rise
to the claim; otherwise the claim shall be void and deemed waived even if
there is a federal or state statute of limitations which would have given
more time to pursue the claim. The written notice shall identify and
describe the nature of all claims asserted and the facts upon which such
claims are based.
10.4 Hearing or Mediation. Prior to any arbitration
proceeding taking place pursuant to this Section, Company or Employee
may, at its respective option, elect to submit the claim to non-binding
mediation before a mutually agreeable mediation tribunal or mediator, in
which event both parties shall execute a suitable confidentiality
agreement and abide by the procedures specified by the mediation tribunal
or mediator.
10.5 Arbitration Procedures. Any arbitration shall be
conducted in accordance with the then-current Model Employment
Arbitration Procedures of the American Arbitration Association ("AAA"),
modified to substitute for AAA actions, the United States Arbitration and
Mediation Service ("USA&MS"), before an arbitrator who is licensed to
practice law in the State of Oregon ("the Arbitrator"). The arbitration
shall take place in or near Portland, Oregon.
10.5.1 Selection of Arbitrator. The USA&MS shall
give each party a list of 11 arbitrators drawn from its panel of labor-
management dispute arbitrators. Each party may strike all names on the
list it deems unacceptable. If only one common name remains on the lists
of all parties, that individual shall be designated as the Arbitrator.
If more than one common name remains on the lists of all parties, the
parties shall strike names alternately until only one remains. The party
who did not initiate the claim shall strike first. If no common name
remains on the lists of all parties, the USA&MS shall furnish an
additional list or lists until an Arbitrator is selected.
10.5.2 Applicable Law. The Arbitrator shall apply
the substantive law (and the law of remedies, if applicable) specified in
this Agreement or federal law, or both, as applicable to the claim(s)
asserted. The Oregon Rules of Evidence shall apply. The Arbitrator, and
not any federal, state, or local court or agency, shall have exclusive
authority to resolve any dispute relating to the interpretation,
applicability, enforceability or formation of this Agreement, including
but not limited to any claim that all or any part of this Agreement is
void or voidable. The arbitration shall be final and binding upon the
parties, except as provided in this Agreement.
10.5.3 Authority. The Arbitrator shall have
jurisdiction to hear and rule on pre-hearing disputes and is authorized
to hold pre-hearing conferences by telephone or in person as the
Arbitrator deems necessary. The Arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any
party and shall apply the standards governing such motions under the
Federal Rules of Civil Procedure. The Arbitrator shall render an award
and opinion in the form typically rendered in labor arbitrations.
10.5.4 Representation. Any party may be represented
by an attorney or other representative selected by the party.
10.5.5 Discovery. Each party shall have the right
to take the deposition of one individual and any expert witness
designated by another party. Each party also shall have the right to
make requests for production of documents to any party. The subpoena
right specified below shall be applicable to discovery pursuant to this
paragraph. Additional discovery may be had only where the Arbitrator
selected pursuant to this Agreement so orders, upon a showing of
substantial need. At least 30 days before the arbitration, the parties
must exchange lists of witnesses, including any experts, and copies of
all exhibits intended to be used at the arbitration. Each party shall
have the right to subpoena witnesses and documents for the arbitration.
10.5.6. Reporter. Either party, at its expense, may
arrange for and pay the cost of a court reporter to provide a
stenographic record of proceedings.
10.5.7 Post-Hearing Briefs. Either party, upon
request at the close of hearing, shall be given leave to file a
post-hearing brief. The time for filing such a brief shall be set by the
Arbitrator.
10.6 Enforcement. Either party may bring an action in
any court of competent jurisdiction to compel arbitration under this
Agreement and to enforce an arbitration award. Except as otherwise
provided in this Agreement, both the Company and Employee agree that
neither shall initiate or prosecute any lawsuit or administrative action
(other than for a non-covered claim) in any way related to any claim
covered by this Agreement. A party opposing enforcement of an award may
not do so in an enforcement proceeding, but must bring a separate action
in any court of competent jurisdiction to set aside the award, where the
standard of review will be the same as that applied by an appellate court
reviewing a decision of a trial court sitting without a jury.
10.7 Arbitration Fees and Costs. Company and Employee
shall equally share the fees and costs of the Arbitrator. Each party
will deposit funds or post other appropriate security for its share of
the Arbitrator's fee, in an amount and manner determined by the
Arbitrator, 10 days before the first day of hearing. Each party shall
pay for its own costs and attorneys' fees, if any, provided that the
Arbitrator, in its sole discretion, may award reasonable fees to the
prevailing party in a proceeding.
11. General Terms and Conditions. The parties acknowledge
that the Company is engaged in transactions involving interstate commerce
and that Employee's employment involves such commerce. This Agreement
constitutes the entire understanding of the parties relating to the
employment of Employee by the Company, and supersedes and replaces all
written and oral agreements heretofore made or existing by and between
the parties relating thereto. This Agreement shall be construed in
accordance with the laws of the state of Oregon, without regard to any
conflicts of laws rules thereof. This Agreement shall inure to the
benefit of any successors or assigns of the Company. All captions used
herein are intended solely for convenience of reference and shall in no
way limit any of the provisions of this Agreement.
IN WITNESS HEREOF, the parties have executed this Employment
Agreement as of the date first hereinabove written.
EPITOPE, INC.
Bryon A. Allen, Jr. By: Adolph J. Ferro, Ph.D.
Byron A. Allen, Jr. Adolph J. Ferro, Ph.D.
Title: President
<PAGE>
EXHIBIT 10.24
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of August 31, 1993,
between Charles E. Bergeron ("Employee") and Epitope, Inc., an Oregon
corporation ("Epitope").
1. Services.
1.1 Employment. Epitope agrees to employ Employee as
the President and Chief Executive Officer of Agrimax, Inc., a Minnesota
corporation ("Agrimax") and a subsidiary of Epitope, and Employee hereby
accepts such employment in accordance with the terms and conditions of
this Agreement. Employment shall continue until terminated pursuant to
the terms of this Agreement.
1.2 Duties. Employee shall have the position named in
Section 1.1 with such powers and duties appropriate to that office (a) as
may be provided by the bylaws of Agrimax, (b) as otherwise set forth on
Schedule 1.2 attached to this Agreement (the absence of which shall
indicate that no additional specific duties are so provided for), and (c)
as determined by the board of directors of Agrimax from time to time.
Subject to the provisions of Section 5.2.1 hereof, Employee's position
and duties may be changed from time to time during the term of this
Agreement at the sole discretion of Agrimax's board of directors. Except
while on temporary assignment to other locations, Employee's principal
place of business shall be Beaverton, Oregon.
1.3 Outside Activities. Employee shall obtain the
consent of the board of directors of Agrimax before he engages, either
directly or indirectly, in any other professional or business activities
that would require an appreciable portion of Employee's time and effort
to the detriment of the Agrimax's business. Such consent will not be
unreasonably withheld.
1.4 Direction of Services. Employee shall at all times
discharge his duties in consultation with and under the supervision and
direction of the board of directors of Agrimax.
2. Compensation and Expenses.
2.1 Salary. As compensation for services under this
Agreement, Epitope shall pay to Employee a regular salary of $105,000 per
year. Effective January 1 of each year that this Agreement is in effect,
such salary may be adjusted unless the board of directors of Epitope in
its discretion determines not to do so. Payment shall be made on a
bi-weekly basis, less all amounts required by law to be withheld or
deducted, at such times as shall be determined by the board of directors
of Epitope.
2.2 Additional Employee Benefits. Employee shall also
have the right to receive or participate in (a) any additional benefits,
including, but not limited to, insurance programs, profit sharing or
pension plans, and medical reimbursement plans, which may from time to
time be made available by Epitope to its employees, and (b) any
additional benefits set forth in Schedule 2.2 attached to this Agreement
(the absence of which shall indicate that no additional specific benefits
are so provided for).
2.3 Extraordinary Compensation. Employee shall have the
right, in addition to all other compensation provided for in this
Section 2, to additional extraordinary compensation in accordance with
the terms set forth in Schedule 2.3 attached to this Agreement (the
absence of which shall indicate that no additional extraordinary
compensation is so provided for).
2.4 Fees. All compensation earned by Employee, other
than pursuant to this Agreement, as a result of services performed on
behalf of Agrimax or as a result of or arising out of any work done by
Employee in any way related to the scientific or business activities of
Agrimax, Epitope, or Epitope's other subsidiaries (collectively, the
"Companies") shall belong to Epitope. Employee shall pay or deliver such
compensation to Epitope promptly upon receipt. For the purposes of this
provision, "compensation" shall include, but is not limited to, all
professional and nonprofessional fees, lecture fees, expert testimony
fees, publishing fees, royalties, and any related income, earnings, or
other things of value; and "scientific or business activities of the
Companies" shall include, but not be limited to, any project or projects
in which the Companies are involved and any subject matter that is
directly or indirectly researched, tested, developed, promoted, or
marketed by the Companies.
2.5 Expenses. Epitope shall reimburse Employee for all
reasonable and necessary expenses incurred in carrying out his duties
under this Agreement. Employee shall present to Epitope from time to
time an itemized account of such expenses in such form required by
Epitope.
3. Confidential Information.
3.1 Access to Information. Employee acknowledges that
in the course of his employment he will have access to proprietary
information, trade secrets, and other confidential information, that such
information is a valuable asset of the Companies, and that its disclosure
or unauthorized use will cause the Companies substantial harm. As used
in this Agreement, the term "Confidential Information" means: (a)
proprietary information of the Companies and (b) information designated
by the Companies as confidential or which Employee knows or should know
is confidential.
3.2 Ownership. Employee acknowledges that all
Confidential Information shall continue to be the exclusive property of
the Companies, whether or not prepared in whole or in part by Employee
and whether or not disclosed to Employee or entrusted to his custody in
connection with his employment.
3.3 Nondisclosure and Nonuse. Unless authorized or
instructed in writing by Epitope, or required by legally constituted
authority, Employee will not, except as required in the course of the
Companies' business, during or after his employment, disclose to others
or use any Confidential Information, unless and until, and then only to
the extent that, such items become available to the public, other than by
his act or failure to prevent accidental or negligent loss or release to
any unauthorized person of the Confidential Information.
3.4 Return of Confidential Information. Upon request by
Epitope during or after his employment, and without request upon
termination of employment pursuant to this Agreement, Employee will
deliver immediately to the Companies all Confidential Information
thereof; Employee will thereafter retain no excerpts, notes, photographs,
reproductions, or copies thereof.
3.5 Work Made for Hire. Employee agrees that all
creative work, including without limitation designs, drawings,
specifications, techniques, models, and processes, prepared or originated
by Employee during or within the scope of employment, whether or not
subject to protection under federal copyright or other law, constitutes
work made for hire, all rights to which are owned by Epitope; and, in any
event, Employee assigns to Epitope all rights, title, and interest,
whether by way of copyright, trade secret, or otherwise, in all such
work, whether or not subject to protection by copyright or other law.
3.6 Duration. The obligations set forth in this
Section 3 will continue beyond the term of employment of Employee and for
so long as Employee possesses Confidential Information.
4. Noncompetition.
4.1 Covenant. Subject to the provisions of Section 4.3,
Employee covenants that Employee will not, throughout the United States,
either individually or as a director, officer, partner, employee, agent,
representative, or consultant with any business, directly or indirectly
during the term of employment and for one year thereafter:
4.1.1 Engage or prepare to engage in any
business that competes with the Companies;
4.1.2 Induce or attempt to induce any
person who is an employee of the Companies during the
term of this covenant to leave the employ of the
Companies; or
4.1.3 Solicit, divert, or accept orders
for products or services that are substantially
competitive with the products or services sold by the
Companies from any customer of the Companies.
4.2 Enforcement. Employee acknowledges and agrees that
the time, scope, and other provisions of this Section 4 have been
specifically negotiated by sophisticated parties with the advice and
consultation of counsel and specifically hereby agrees that such time,
scope, and other provisions are reasonable under the circumstances.
Employee further agrees that if, at any time, despite the express
agreement of the parties hereto, a court of competent jurisdiction holds
that any portion of this Section 4 is unenforceable for any reason, the
maximum restrictions reasonable under the circumstances, as determined by
such court, will be substituted for any such restrictions held
unenforceable.
4.3 Release from Obligation. In the event that Employee
shall be entitled to extraordinary compensation pursuant to the
provisions of Section 2.3, Employee may elect to waive all rights to
receive such compensation from and after the date of such waiver in
exchange for the release of Employee from the obligations of Sections
4.1.1 and 4.1.3. Such waiver shall be in writing, shall state that it is
in consideration for the release of Employee from the obligations of
Sections 4.1.1 and 4.1.3 of this Agreement, and shall be effective when
delivered to Epitope. In the event of such a waiver, the amounts payable
pursuant to the provisions of Section 2.3 shall be prorated through the
period commencing on the date of termination of employment and ending on
the date of delivery of the written notice of waiver to Epitope. For
example, if such waiver is delivered to Epitope six months after the
commencement of the 12-month period set forth in paragraph 1 of
Schedule 2.3, Employee shall be paid one-half of the amounts otherwise
payable pursuant to the provisions of Section 2.3; in the event that
Employee shall have received more than such pro rata share of such
compensation, it shall be a condition of Employee's rights under this
Section that he shall have returned to Epitope any amounts in excess of
such pro rata share with the delivery of the waiver notice to Epitope.
5. Termination.
5.1 Voluntary Resignation. Employee may terminate his
employment under this Agreement by 90 days' written notice to Epitope.
<PAGE>
5.2 Termination by Epitope.
5.2.1 Epitope may terminate Employee's
employment under this Agreement without cause by 90
days' written notice to Employee.
5.2.2 Epitope may terminate Employee's
employment under this Agreement by 90 days' written
notice given at any time within six months after Epitope
determines that Employee (a) has committed a material
breach of his obligations under this Agreement, and
failed to cure such breach promptly after receipt of
written notice thereof from the board of directors of
Epitope, (b) has willfully and continuously failed or
refused to comply with the policies, standards, and
regulations of Epitope, (c) has been guilty of fraud,
dishonesty, or other acts of misconduct in rendering
services on behalf of Epitope, or (d) has failed to
otherwise comply with the standards of behavior that an
employer has the right to expect of an employee.
5.2.3 In the event that the board of
directors of Epitope shall determine that Employee has
become physically or mentally disabled such that
Employee shall be unable to render services to the same
nature and extent as such services were rendered
immediately prior to the disability, the board of
directors of Epitope may terminate Employee's employment
under this Agreement by 15 days' written notice
effective any time after the date 13 weeks following the
determination of disability.
5.3 Compensation Upon Termination.
5.3.1 In the event of a termination under
Section 5.1 or 5.2.2, Employee shall not be entitled to
receive any compensation otherwise payable pursuant to
Sections 2.2 or 2.3 of this Agreement, and Employee's
regular compensation pursuant to Section 2.1 shall be
prorated and payable until the date of termination,
except to the extent expressly provided to the contrary
in writing in any insurance policy covering Employee or
any employee benefit plan in which Employee
participates.
5.3.2 In the event of a termination under
Section 5.2.1, Employee shall be entitled to receive
compensation payable pursuant to Section 2.3, if
applicable, and Employee's compensation pursuant to
Section 2.1 or 2.2 shall be prorated and payable until
the date of termination, except to the extent expressly
provided to the contrary in writing in any insurance
policy covering Employee or any employee benefit plan in
which Employee participates.
5.3.3 In the event of a termination under
Section 5.2.3, Employee's compensation pursuant to
Sections 2.1 and 2.2 shall be prorated and payable until
the date of termination, except to the extent expressly
provided to the contrary in writing in any insurance
policy covering Employee or any employee benefit plan in
which Employee participates.
6. Remedies. The respective rights and duties of Epitope and
Employee under this Agreement are in addition to, and not in lieu of,
those rights and duties afforded to and imposed upon them by law or at
equity. Employee acknowledges that breach of this Agreement will cause
irreparable harm to Epitope and agrees to the entry of a temporary
restraining order and permanent injunction by any court of competent
jurisdiction to prevent breach or further breach of this Agreement. Such
remedy shall be in addition to any other remedy available to Epitope at
law or in equity.
7. Severability of Provisions. The provisions of this
Agreement are severable, and if any provision hereof is held invalid or
unenforceable, it shall be enforced to the maximum extent permissible,
and the remaining provisions of the Agreement shall continue in full
force and effect.
8. Attorney Fees. In the event of a default under this
Agreement, the defaulting party shall reimburse the nondefaulting party
for all costs and expenses reasonably incurred by the nondefaulting party
in connection with the default, including without limitation attorney
fees. Additionally, in the event a suit or action is filed to enforce
this Agreement or with respect to this Agreement, the prevailing party
shall be reimbursed by the other party for all costs and expenses
incurred in connection with the suit or action, including without
limitation reasonable attorney fees at trial or on appeal.
9. Nonwaiver. Failure of Epitope at any time to require
performance of any provision of this Agreement shall not limit the right
of Epitope to enforce the provision. No provision of this Agreement or
breach thereof may be waived by either party except by a writing signed
by that party. A waiver of any breach of a provision of this Agreement
shall be construed narrowly and shall not be deemed to be a waiver of any
succeeding breach of that provision or a waiver of that provision itself
or of any other provision.
10. General Terms and Conditions. This Agreement constitutes
the entire understanding of the parties relating to the employment of
Employee by Epitope, and supersedes and replaces all written and oral
agreements heretofore made or existing by and between the parties
relating thereto. This Agreement shall be construed in accordance with
the laws of the state of Oregon, without regard to any conflicts of laws
rules thereof. This Agreement shall inure to the benefit of any
successors or assigns of Epitope. All captions used herein are intended
solely for convenience of reference and shall in no way limit any of the
provisions of this Agreement.
IN WITNESS HEREOF, the parties have executed this Employment
Agreement as of the date first hereinabove written.
EPITOPE, INC.
Charles E. Bergeron By: Adolph J. Ferro, Ph.D.
Charles E. Bergeron Adolph J. Ferro, Ph.D.,
President
<PAGE>
Schedule 2.3 to Employment Agreement
Extraordinary Compensation
1. Termination. In the event of the termination of the
employment of Employee pursuant to Section 5.2.1 of the Agreement,
Employee shall continue to be paid the salary provided in Section 2.1 for
12 months in the manner and at the times at which regular compensation
was paid to Employee during the term of his employment under the
Agreement.
2. Termination After Change in Control. At any time after the
common stock of the Company has been registered pursuant to the terms of
the Securities Exchange Act of 1934, in the event that the termination of
the employment of Employee pursuant to Section 5.2.1 of the Agreement
either (a) occurs within 12 months following a change in control, within
the meaning of the Securities Exchange Act of 1934, or sale of
substantially all the assets of Epitope or Agrimax, or (b) is contingent
upon such a change in control or sale of assets, Employee shall continue
to be paid the salary provided in Section 2.1 for 24 months; provided,
however, that the present value of the stream of payments to be made to
Employee shall not exceed 295 percent of Employee's Annualized Includable
Compensation (in which event the payments shall be reduced pro rata such
that the present value thereof does not exceed such amount).
3. Definitions. The term Annualized Includable Compensation
shall mean the average annual compensation payable by Epitope that was
includable in the gross income of Employee for the taxable years in the
Base Period. The term Base Period shall mean the period consisting of
the most recent five taxable years ending before the date on which the
change in ownership or control occurs. Present value shall be determined
by using a discount rate equal to 120 percent of the applicable Federal
Rate (determined under Section 1274(d) of the Internal Revenue Code of
1986, as amended) compounded semiannually.
4. Change in Law. The parties agree that in the event
Section 280G or Section 4999 of the Internal Revenue Code is amended
after the date hereof with the effect that any of the compensation
payable to Employee by Epitope pursuant to the foregoing provisions
either (i) is not deductible for tax purposes from the gross income of
Epitope, or (ii) subjects Employee to a federal excise tax thereon, then,
unless the parties otherwise agree, the foregoing provisions may be
modified at the discretion of the board of directors in order to comply
with the amended provisions of the Internal Revenue Code in order that,
to the greatest extent possible, such compensation shall be so deductible
by Epitope and Employee shall not be subject to an excise tax thereon.
<PAGE>
Exhibit 10.25
PROMISSORY NOTE
Principal amount $ 173,000 Date: August 29, 1995
FOR VALUE RECEIVED, the undersigned hereby jointly and severally promise
to pay to the order of Epitope, Inc. the sum of One Hundred Seventy-Three
Thousand Dollars ($173,000), together with interest thereon at the rate
of 6% per annum on the unpaid balance commencing on October 28, 1995.
Said sum shall be paid upon closing of sale of former residence in
Charlotte, North Carolina.
All payments shall be first applied to interest and the balance to
principal. This note may be prepaid, at any time, in whole or in part,
without penalty.
This note shall at the option of any holder thereof be immediately due
and payable upon the occurrence of any of the following: 1) Failure to
make any payment due hereunder within 10 days of its due date. 2)
Breach of any condition of any security interest, mortgage, loan
agreement, pledge agreement or guarantee granted as collateral security
for this note. 3) Breach of any condition of any loan agreement,
security agreement or mortgage, if any, having a priority over any loan
agreement, security agreement or mortgage on collateral granted, in whole
or in part, as collateral security for this note. 4) Upon the death,
incapacity, dissolution or liquidation of any of the undersigned, or any
endorser, guarantor to surety hereto. 5) Upon the filing by any of the
undersigned of an assignment for the benefit of creditors, bankruptcy or
other form of insolvency, or by suffering an involuntary petition in
bankruptcy or receivership not vacated within thirty (30) days.
In the event this note shall be in default and placed for collection,
then the undersigned agrees to pay all reasonable attorney fees and costs
of collection. All payments hereunder shall be made to such address as
may from time to time be designated by any holder.
The undersigned and all other parties to this note, whether as endorsers,
guarantors or sureties, agree to remain fully bound until this note shall
be fully paid and waive demand, presentment and protest and all notices
hereto and further agree to remain bound, notwithstanding any extension,
modification, waiver, or other indulgence or discharge or release of any
obligor hereunder or exchange, substitution, or release of any collateral
granted as security for this note. No modification or indulgence by any
holder hereof shall be binding unless in writing; and any indulgence on
any one occasion shall not be an indulgence for any other or future
occasion. Any modification or change in terms, hereunder granted by any
holder hereof, shall be valid and binding upon each of the undersigned,
notwithstanding the acknowledgment of any of the undersigned, and each of
the undersigned does hereby irrevocably grant to each of the others a
power of attorney to enter into any such modification on their behalf.
The rights of any holder hereof shall be cumulative and not necessarily
successive. This note shall take effect as a sealed instrument and shall
be construed, governed and enforced in accordance with the laws of the
State of Oregon.
Witnessed:
Nancy Jameson-Davis C. E. Bergeron
Witness Borrower
<PAGE>
MORTGAGE DEED
This Mortgage is given by Charles E. Bergeron, hereinafter called
Borrower, of Lake Oswego, Oregon to Epitope, Inc., hereinafter called
Lender, which term includes any holder of this Mortgage, to secure the
payment of the PRINCIPAL SUM of $173,000 together with interest thereon
computed on the outstanding balance, all as provided in a Note having the
same date as this Mortgage, and also to secure the performance of all the
terms, covenants, agreements, conditions and extensions of the Note and
this Mortgage.
In consideration of the loan made by Lender to Borrower and for the
purpose expressed above, the Borrower does hereby grant and convey to
Lender, with MORTGAGE COVENANTS, the land with the building situated
thereon and all the improvements and fixtures now and hereafter a part
thereof, being more particularly described in Exhibit A attached hereto
and made a part hereof and having a street address of:
5385 Denton Drive, Lake Oswego, Oregon
Borrower further covenants and agrees that:
1. In the event that Borrower fails to carry out the covenants and
agreements set forth herein, the Lender may do any pay for whatever is
necessary to protect the value of and the Lender's rights in the
mortgaged property and any amounts so paid shall be added to the
Principal Sum due the Lender hereunder.
2. In the event that any condition of this Mortgage or any senior
mortgage shall be in default for fifteen (15) days, the entire debt shall
become immediately due and payable at the option of the Lender. Lender
shall be entitled to collect all costs and expenses, including reasonable
attorney's fees incurred.
3. In the event that the Borrower transfers ownership (either legal
or equitable) or any security interest in the mortgaged property, whether
voluntarily or involuntarily, the Lender may as its option declare the
entire debt due and payable.
4. Borrower shall maintain adequate insurance on the property in
amounts and form of coverage acceptable to Lender and the Lender shall be
a named insured as its interest may appear.
5. Borrower shall not commit waste or permit other to commit
actual, permissive or constructive waste on the property.
This mortgage is upon the STATUTORY CONDITION and the other conditions
set forth herein, for breach of which lender shall have the STATUTORY
POWER OF SALE to the extent existing under State Law.
Executed under seal this 22nd day of December, 1995.
C. E. Bergeron
Borrower
STATE OF OREGON )
COUNTY OF WASHINGTON )
On 22 December 1995 before me, Mary Hagen, personally appeared Charles
Bergeron, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signature(s) on the instrument the person(s),
or the entity upon behalf of which the person(s) acted, executed the
instrument.
WITNESS with my hand and official seal.
Signature Mary Hagen
My commission expires October 21, 1998 (Seal)
<PAGE>
EXHIBIT 23
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (Numbers 33-
68510, 33-67618, 33-57246, 33-52920, 33-42841, 33-39166 and 33-32673) and Form
S-8 (Numbers 33-63220, 33-63106, 33-63218, 33-41712, 33-13416, 33-21545, 33-
82788 and 33-60789) of Epitope, Inc. of our report dated October 30, 1995
appearing under Item 14 of this Form 10-K.
PRICE WATERHOUSE LLP
Portland, Oregon
December 26, 1995
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following persons in the capacities indicated effective as of December 12,
1995.
Name Title
President, Chief Executive
Adolph J. Ferro Officer, and Director
Adolph J. Ferro, Ph.D. (Principal executive officer)
Executive Vice-President,
Chief Financial Officer, and
Gilbert N. Miller Treasurer
Gilbert N. Miller (Principal financial officer)
Accounting Manager
T.J. Paulsen (Principal accounting officer)
T.J. Paulsen
Andrew S. Goldstein Director
Andrew S. Goldstein<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
W. Charles Armstrong Director
W. Charles Armstrong
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
Richard K. Donahue Director
Richard K. Donahue
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
Margaret H. Jordan Director
Margaret H. Jordan
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
R. Douglas Norby Director
R. Douglas Norby
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
Roger L. Pringle Director
Roger L. Pringle
12/20/95
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
G. Patrick Sheaffer Director
G. Patrick Sheaffer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the person whose signature appears
below constitutes and appoints ADOLPH J. FERRO, Ph.D., and GILBERT N. MILLER
and each of them his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place, and
stead, in any and all capacities, to sign the Annual Report on Form 10-K of
Epitope, Inc., for its fiscal year ended September 30, 1995, and any and all
amendments to the report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or each of them or their or his substitute or
substitutes may lawfully do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, this power of attorney has been signed by the
following person in the capacity indicated effective as of December 12, 1995.
Name Title
Michael J. Paxton Director
Michael J. Paxton
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial
information extracted from the condensed
consolidated financial statements included
herein and is qualified in its entirety by
reference to such financial statements.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> SEP-30-1995
<CASH> 4,259,897
<SECURITIES> 17,080,246
<RECEIVABLES> 1,816,074
<ALLOWANCES> 72,044
<INVENTORY> 1,433,746
<CURRENT-ASSETS> 24,677,382
<PP&E> 2,544,772
<DEPRECIATION> 3,945,611
<TOTAL-ASSETS> 30,134,022
<CURRENT-LIABILITIES> 4,145,669
<BONDS> 0
<COMMON> 93,931,947
0
0
<OTHER-SE> (71,585,346)
<TOTAL-LIABILITY-AND-EQUITY> 30,134,022
<SALES> 4,822,168
<TOTAL-REVENUES> 4,965,210
<CGS> 6,398,687
<TOTAL-COSTS> 24,383,284
<OTHER-EXPENSES> (922,246)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (18,495,828)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (18,495,828)
<EPS-PRIMARY> (1.56)
<EPS-DILUTED> 0
</TABLE>
