SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-KSB/A
AMENDMENT #2
(Mark One)
[ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended
[x] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from February 1, 1996 to December 31, 1996
Commission File Number 0-11572
Endorex Corp.
(Name of small business issuer in its charter)
Delaware 41-1505029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
900 North Shore Drive
Lake Bluff, Illinois 60044
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 847-604-7555
ImmunoTherapeutics, Inc., 3233 15th Street South, Fargo, ND 58104,
January 31, 1996
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered under Section 12(b) of the Exchange Act:
Title of Each Class Name of each exchange on which registered
None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $.001 per share
Common Stock Purchase Warrants
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will
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-KSB or any amendment to this Form 10-KSB. [ X ]
Revenues for its most recent fiscal year were - $-0-.
The aggregate market value of the voting stock held by non-affiliates
computed by reference to the average bid and asked prices of such stock, as
of April 8, 1997 was $2,414,186. Non-affiliates have been determined on
the basis of holdings set forth under Item 11 of this Annual Report on Form
10-KSB.
As of April 8, 1997 the issuer had 16,318,870 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(c) Exhibits:
3 (i) Certificate of Incorporation of Registrant (1).
3 (i)(a) Certificate of Ownership and Merger filed March 30, 1987 (1).
3 (i)(b) Certificate of Amendment to Certificate of Incorporation filed
September 7, 1989(2).
3 (i)(c) Certificate of Amendment to Certificate of Incorporation filed
November 13, 1990 (3).
3 (i)(d) Certificate of Amendment to Certificate of Incorporation filed
May 29, 1991 (3).
3 (i)(e) Certificate of Amendment to Certificate of Incorporation filed
February 27, 1992 (reverse stock split)(3).
3 (i)(f) Certificate of Amendment to Certificate of Incorporation filed
February 27, 1992 (increase in authorized shares)(3).
3 (i)(g) Certificate of Amendment to Certificate of Incorporation filed
June 29, 1993. SE
3 (i)(h) Certificate of Amendment to Certificate of Incorporation filed
August 15, 1996. SE
3 (ii) By-laws of Registrant (1).
4 (i)(a) Specimen Common Stock Certificate (1).
4 (i)(b) Form of Warrant Agreement between the Registrant and American
Stock Transfer & Trust Company (1).
10.1 Patent License Agreement dated December 16, 1996 between the
Registrant and Massachusetts Institute of Technology. SE
10.2 Consultation Agreement dated as of September 1, 1996 between the
Registrant and Kenneth Tempero, Ph.D., M.D. SE
10.3 Employment Agreement dated June 1, 1996 between the Registrant and
Gerald Vosika. SE
10.4 Letter Agreement Amendment and Waiver dated June 25, 1996 to
Employment Agreement between Registrant and Gerald Vosika dated
June 1, 1996. SE
10.5 Employment Agreement dated July 25, 1996 between the Registrant and
Michael S. Rosen (5).
10.6 Employment Agreement dated December 1, 1996 between the Registrant
and Robert N. Brey. SE
10.7 Purchase Agreement dated March 1, 1996 between the Registrant and
Dominion Resources, Inc.(4).
10.8 Purchase Agreement dated as of June 13, 1996 between the
Registrant, Dominion Resources, Inc., The Aries Fund and The Aries
Domestic Fund, L.P. SE
10.9 Purchase Agreement dated as of June 26, 1996 between the
Registrant, The Aries Fund and The Aries Domestic Fund, L.P. SE
10.10 Incentive Stock Option Plan (1).
10.11 Lease dated April 28, 1993 between the Registrant and Landmark
Investors. SE
10.12 Office Lease dated September 18, 1996 between the Registrant and
American National Bank & Trust Company of Chicago, as amended. SE
11 Statement re: computation of per share earnings (7).
16 Letter on change in certifying accountants (6).
21 Subsidiaries of the Registrant. SE
27 Financial Data Schedule (7).
(1) Incorporated by reference to the Registrant's Registration Statement
on Form S-1 (File No. 33-13492).
(2) Incorporated by reference to the Registrant's Annual Report on Form
10-K (File no. 0-11572) for the fiscal year ended January 31, 1989.
(3) Incorporated by reference to the Registrant's Annual Report on Form
10-K (File No. 0-11572) for the fiscal year ended January 31, 1992.
(4) Incorporated by reference to the Registrant's Annual Report on Form
10-KSB (File No. 0-11572) for the fiscal year ended January 31, 1996.
(5) Incorporated by reference to the Registrant's Quarterly Report on
Form 10-QSB for the quarter ended July 31, 1996.
(6) Incorporated by reference to the Registrant's Report on Form 8-K/A
dated February 10, 1997.
(7) Previously filed on this Form 10-KSB.
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
IMMUNOTHERAPEUTICS, INC.
ImmunoTherapeutics, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of ImmunoTherapeutics,
Inc., resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that the introductory paragraph to the Fourth Article of the
Certificate of Incorporation of this corporation be hereby amended to read as
follows:
"The total number shares of capital stock of all classes which the Corporation
shall have authority to issue is fifty-million-five-hundred-thousand
(50,500,000) shares of which fifty-million (50,000,000) shares, of a par value
of $.001 per share, shall be of a class designated "Common Stock," and five-
hundred-thousand (500,000) shares of a par value of $.05 per share, shall be
of a class designated "Preferred Stock".
Be it further
RESOLVED, that except as expressly amended, the Fourth Article of the
Certificate of Incorporation of this corporation shall hereby remain in effect
as heretofore set forth and shall be unchanged in any respect by any provision
hereof.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, a
special meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation
law of the state of Delaware at which meeting the necessary number of shares
as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the capital of said corporation shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, said ImmunoTherapeutics, Inc. has caused this certificate
to be signed by Gerald Vosika, its President, and Harold Rotunda, its
Secretary, this 9th day of June, 1993.
ImmunoTherapeutics, Inc.
By: /s/ Gerald Vosika
President
Attest: /s/ Harold Rotunda
Secretary
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
IMMUNOTHERAPEUTICS, INC.
ImmunoTherapeutics, Inc., a corporation organizion and existing under and by
virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That at a meeting of the Board of Directors of ImmunoTherapeutics,
Inc., resolutions were duly adopted setting forth a proposed amendment of the
Certificate of Incorporation of said corporation, declaring said amendment to
be advisable and calling a meeting of the stockholders of said corporation for
consideration thereof. The resolution setting forth the proposed amendment is
as follows:
RESOLVED, that to the First Article of the Certificate of Incorporation of
this corporation be hereby amended to read in its entirety as follows:
"The name of the corporation (herein referred to as the "Corporation") is
Endorex Corp.
SECOND: That thereafter, pursuant to resolution of its Board of Directors, an
annual meeting of the stockholders of said corporation was duly called and
held, upon notice in accordance with Section 222 of the General Corporation
Law of the State of Delaware at which meeting the necessary number of shares
as required by statute were voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the provisions
of Section 242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, said ImmunoTherapeutics, Inc. has caused this certificate
to be signed by Gerald Vosika, its President, and James W. Burrow, its
Secretary, this 8th day of August, 1996.
Attest:
BY: /s/ James W. Burrow
Secretary
ImmunoTherapeutics, Inc.
BY: /s/ Gerald Vosika
President
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
and
ORASOMAL TECHNOLOGIES, INC.
PATENT LICENSE AGREEMENT
(EXCLUSIVE)
TLO: LP
12/6/96
TABLE OF CONTENTS
WITNESSETH 1
1 DEFINITIONS 2
2 GRANT 3
3 DILIGENCE 4
4 ROYALTIES AND OTHER PAYMENTS 5
5 REPORTS AND RECORDS 6
6 PATENT PROSECUTION 8
7 INFRINGEMENT 8
8 PRODUCT LIABILITY 10
9 EXPORT CONTROLS 11
10 NON-USE OF NAMES 12
11 ASSIGNMENT 12
12 DISPUTE RESOLUTION 12
13 TERMINATION 13
14 PAYMENTS, NOTICES AND OTHER COMMUNICATIONS 14
15 MISCELLANEOUS PROVISIONS 14
APPENDIX A 16
APPENDIX B 17
<PAGE>
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
AND
ORASOMAL TECHNOLOGIES, INC.
PATENT LICENSE AGREEMENT
This Agreement is made and entered into this _____ day of December, 1996 (the
"Effective Date") by and between the Massachusetts Institute of Technology, a
corporation duly organized and existing under the laws of the Commonwealth of
Massachusetts and having its principal office at 77 Massachusetts Avenue,
Cambridge, Massachusetts 02139, U.S.A. (hereinafter referred to as "M.I.T."),
and Orasomal Technologies, Inc., a corporation duly organized under the laws
of the State of Delaware and a subsidiary of Endorex Corp. and having its
principal office at 900 North Shore Drive, Lake Bluff, Illinois 60044
(hereinafter referred to as "Licensee").
WITNESSETH
WHEREAS, M.I.T. is the owner of certain Patent Rights (as later defined
herein) relating to M.I.T. Case No. 6388, "Polymerized Liposomes with
Enhanced Stability," by Junichi Okada, Smadar Cohen and Robert S. Langer,
and has the right to grant licenses under said Patent Rights;
WHEREAS, M.I.T. desires to have the Patent Rights developed and commercialized
to benefit the public and is willing to grant a license thereunder;
WHEREAS, Licensee has represented to M.I.T., to induce M.I.T. to enter into
this Agreement, that Licensee is experienced in the development, production,
manufacture, marketing and sale of products similar to the Licensed Products
(as later defined herein) and/or the use of the Licensed Processes (as later
defined here) and that it shall commit itself to a thorough, vigorous and
diligent program of exploiting the Patent Rights so that public utilization
shall result therefrom; and
WHEREAS, Licensee desires to obtain a license under the Patent Rights upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties hereto agree as follows:
<PAGE>
1 - DEFINITIONS
For the purposes of this Agreement, the following words and phrases shall have
the following meanings:
1.1 Licensee shall mean Orasomal Technologies, Inc., a Delaware corporation.
1.2 Patent Rights shall mean all of the following M.I.T. intellectual
property:
(a) the United States patent applications listed in Appendix A, and
divisionals, continuations and claims of continuation-in-part
applications which shall be directed to subject matter specifically
described in such patent applications, and the resulting patents;
(b) any patents resulting from reissues or reexaminations of the United
States patents described in (a) above;
(c) the Foreign patents, if any, listed in Appendix A;
(d) the Foreign patent applications, if any, listed in Appendix A, and
divisionals, continuations and claims of continuation-in-part
applications which shall be directed to subject matter specifically
described in such Foreign patent applications, and the resulting
patents;
(e) Foreign patent applications filed after the Effective Date in the
countries listed in Appendix B and divisionals, continuations and
claims of continuation-in-part applications which shall be directed
to subject matter specifically described in such patent applications,
and the resulting patents; and
(f) any Foreign patents, resulting from equivalent Foreign procedures to
United States reissues and reexaminations, of the Foreign patents
described in (c), (d) and (e) above.
1.3 A Licensed Product shall mean any product or part thereof which:
(a) is covered in whole or in part by an issued, unexpired claim in the
Patent Rights in the country in which any such product or part
thereof is made, used or sold; or
(b) is manufactured by using a process or is employed to practice a
process which is covered in whole or in part by an issued, unexpired
claim in the Patent Rights in the country in which any Licensed
Process is used or in which such product or part thereof is used or
sold.
1.4 A Licensed Process shall mean any process which is covered in whole or in
part by an issued, unexpired claim or a pending claim contained in the
Patent Rights.
1.5 Net Sales shall mean Licensee's and its sublicensees' billings for
Licensed Products and Licensed Processes less the sum of the following:
(a) discounts, rebates, and other price adjustments or price reduction
programs allowed in amounts customary in the trade for quantity
purchases, cash payments, prompt payments, to wholesalers and
distributors;
(b) sales, use, value-added and other direct taxes, tariff duties and/or
other governmental charges directly imposed and with reference to
particular sales;
<PAGE>
(c) outbound transportation prepaid or allowed;
(d) amounts allowed or credited on returns; and
(e) bad debts, as written off in accordance with Licensee's (or
sublicensee's) customary accounting practices (which practices shall
be based on generally accepted accounting principles consistently
applied), provided that such bad debts do not exceed five percent
(5%) of total Net Sales per calendar year.
No deductions shall be made for commissions paid to individuals whether
they be with independent sales agencies or regularly employed by Licensee
and on its payroll, or for cost of collections. Net Sales shall occur
when a Licensed Product or Licensed Process shall be invoiced. If a
Licensed Product or Licensed Process shall be distributed or invoiced for
a discounted price substantially lower than customary in the trade or
distributed at no cost to affiliates or otherwise, Net Sales shall be
based on the customary amount billed for such Licensed Products or
Licensed Processes.
Net Sales shall be determined at the point of sale from Licensee (or
from its sublicensees) to an entity other than Licensee. Sales by
Licensee or a sublicensee to an entity other than Licensee shall
constitute a sale for purposes of this definition if the entity or
sublicensee is the end user of the Licensed Product or Licensed Process.
Notwithstanding the foregoing, any Licensed Product or Licensed Process
used (but not sold for consideration) for promotional or advertising
purposes or used for clinical or other research purposes shall not be
considered Net Sales hereunder.
1.6 Territory shall mean any country in which patent rights exist
1.7 Major Country shall mean the United States of America, Great Britain,
France, Germany, or Japan.
1.8 Running Royalties shall mean a royalty paid on Net Sales of Licensed
Product or Licensed Process.
2 - GRANT
2.1 M.I.T. hereby grants to Licensee the exclusive right and license in the
Territory to practice under the Patent Rights and to make, have made,
use, lease, sell and import Licensed Products and to practice the
Licensed Processes, until the expiration of the last to expire of the
Patent Rights, unless this Agreement shall be sooner terminated according
to the terms hereof.
2.2 Licensee agrees that Licensed Products leased or sold in the United
States shall be manufactured substantially in the United States.
<PAGE>
2.3 M.I.T. reserves the right to practice under the Patent Rights for non-
commercial research purposes.
2.4 Licensee shall have the right to enter into sublicensing agreements for
the rights, privileges and licenses granted hereunder. Upon any
termination of this Agreement, sublicensees' rights shall also terminate,
subject to Paragraph 13.6 hereof.
2.5 Licensee agrees to incorporate terms and conditions substantively similar
to Articles 2, 5.1, 7.1, 7.2, 73, 7.5, 7.6, 8, 9, 10, 12 and 15 of this
Agreement into its sublicense agreements, that are sufficient to enable
Licensee to comply with this Agreement.
2.6 Licensee agrees to forward to M.I.T. a copy of any and all sublicense
agreements promptly upon execution by the parties.
2.7 Licensee shall not receive from sublicensees anything of value in lieu
of cash payments in consideration for any sublicense under this
Agreement, without the express prior written permission of M.I.T.
2.8 Nothing in this Agreement shall be construed to confer any rights upon
Licensee by implication, estoppel or otherwise as to any technology or
patent rights of M.I.T. or any other entity other than the Patent Rights,
regardless of whether such patent rights shall be dominant or subordinate
to any Patent Rights.
3 - DILIGENCE
3.1 Licensee shall use its best efforts to bring one or more Licensed
Products or Licensed Processes to market through a thorough, vigorous and
diligent program for exploitation of the Patent Rights and to continue
active, diligent marketing efforts for one or more Licensed Products or
Licensed Processes throughout the life of this Agreement.
3.2 Licensee shall deliver to M.I.T. on or before June 30, 1997, a business
plan showing the amount of money, number and kind of personnel and time
budgeted and planned for each phase of development of the Licensed
Products and Licensed Processes and shall provide similar reports to
M.I.T. on or before sixty (60) days of the close of each fiscal year of
Licensee thereafter.
3.3 On or before January 1, 1998 Licensee will start animal studies to
further evaluate and develop the technology described in the Patent
Rights as:
a) a potential carrier or delivery system for a vaccine and/or
b) a potential carrier system for a therapeutic agent, compound or drug.
3.4 On or before January 1, 2000 Licensee will enter Phase I clinical trials
or equivalent in the U.S. or other Major Country for at least one
application of the technology described in the Patent Rights.
3.5 Within 12 months of receiving approval for marketing the Licensed
Product by the F.D.A. or equivalent agency of a Major Country, Licensee
will have the product available for sale.
3.6 Licensee's failure to perform in accordance with either paragraph 3.1,
3.2, 3.3, 3.4. or 3.5 above shall be grounds to terminate this Agreement
pursuant to Paragraph 13.3 hereof.
<PAGE>
4 - ROYALTIES AND OTHER PAYMENTS
4.1 For the rights, privileges and license granted hereunder, Licensee shall
pay royalties and other payments to M.I.T. in the manner hereinafter
provided to the end of the term of the Patent Rights or until this
Agreement shall be terminated:
(a) License Issue Fee of Twenty-Five Thousand Dollars ($25,000), which
said License Issue Fee shall be deemed earned and due immediately
upon the Effective Date.
(b) License Maintenance Fee of Ten Thousand Dollars ($10,000) per year
payable on January 1, 1998, January 1, 1999, and January 1, 2000,
provided, however, that such License Maintenance Fees may be fully
credited to Running Royalties subsequently due on Net Sales for
each said year. Furthermore, Licensee may submit evidence of money
spent the previous calendar year prosecuting the Patent Rights,
which money shall be fully creditable against the License
Maintenance Fees due in this paragraph. For example, money spent
between January 1, 1997 and December 31, 1997 shall be creditable
against the January 1, 1998 License Maintenance Fee.
(c) License Maintenance Fee of Ten Thousand Dollars ($10,000) per year
payable on January 1, 2001, January 1, 2002, and January 1, 2003,
provided, however, that such License Maintenance Fees may be fully
credited to Running Royalties subsequently due on Net Sales for each
said year. Furthermore, Licensee may submit evidence of money spent
the previous calendar year prosecuting the Patent Rights, which
money shall be fully creditable against up to one half of the
License Maintenance Fees due in this paragraph.
(d) License Maintenance Fee of Ten Thousand Dollars ($10,000) per year
payable on January 1, 2004 and each subsequent year, provided,
however, that such License Maintenance Fees may be fully credited
to Running Royalties subsequently due on Net Sales for each said
year.
(e) Licensee shall pay to M.I.T. a milestone payment of Twenty Thousand
Dollars ($20,000) upon the first Investigational New Drug
application incorporating the Patent Rights that is accepted and
approved by the U.S. Food and Drug Administration or equivalent
agency in a Major Country.
(f) Licensee shall pay to M.I.T. an additional milestone payment of Two
Hundred Fifty Thousand Dollars ($250,000) upon the first New Drug
Application or Product License Application or Establishment License
Application incorporating the Patent Rights that is approved by the
U.S. Food and Drug Administration or equivalent agency in a Major
Country.
(g) Licensee shall pay Running Royalties to M.I.T. equal to Three
Percent (3%) of Net Sales of Licensed Products.
(h) Licensee shall pay M.I.T. the greater of (i) one and one-half
percent (1.5%) of its sublicensee's Net Sales of Licensed Products,
or (ii) fifteen percent (15%) of earned royalties received from
sublicensee(s) of the Patent Rights.
<PAGE>
(i) The Licensee shall pay M.I.T. fifteen percent (15%) of any lump sum
type payments, such as sublicense issue fees, received from
sublicensees for rights to the Patent Rights.
4.2 All payments due hereunder shall be paid in full, without deduction of
taxes or other fees which may be imposed by any government, except as
otherwise provided in Paragraph 1.5(b).
4.3 No multiple royalties shall be payable because any Licensed Product,
its manufacture, use, lease or sale are or shall be covered by more than
one Patent Rights patent application or Patent Rights patent licensed
under this Agreement.
4.4 Royalty payments shall be paid in United States dollars in Cambridge,
Massachusetts, or at such other place as M.I.T. may reasonably designate
consistent with the laws and regulations controlling in any foreign
country. If any currency conversion shall be required in connection
with the payment of royalties hereunder, such conversion shall be made
by using the exchange rate prevailing at the Chase Manhattan Bank (N.A.)
on the last business day of the calendar quarterly reporting period to
which such royalty payments relate.
4.5 In the event that Licensee believes it necessary or appropriate to pay a
royalty to a third party in order to avoid infringement of such third
party's patent or other intellectual property rights arising from the
manufacture, use or sale of a Licensed Product or Licensed Process in a
country, Licensee will notify M.I.T. of such intention and discuss same
with M.I.T. In the event that Licensee pays a royalty or other payment
to such third party in order to avoid infringement of such third party's
patent or other intellectual property rights arising from the
manufacture, use or sale of a Licensed Product or Licensed Process in a
country, Licensee shall be entitled to offset fifty percent (50%) of
the royalty or other sums paid to such third party against the royalties
payable to M.I.T. on Net Sales of such Licensed Product or Licensed
Process in such country hereunder, provided, that the foregoing shall
not reduce the royalties payable for an accounting period with respect
to such country below fifty percent (50%) of the amount that would
otherwise have been paid. Amounts that Licensee is not able to apply or
offset against royalties in an accounting period shall be carried over
to succeeding accounting periods until fully applied.
5 - REPORTS AND RECORDS
5.1 Licensee shall keep full, true and accurate books of account containing
all particulars that may be necessary for the purpose of showing the
amounts payable to M.I.T. hereunder. Said books of account shall be
kept at Licensee's principal place of business or the principal place
of business of the appropriate division of Licensee to which this
Agreement relates. Said books and the supporting data shall be open
at all reasonable times for five (5) years following the end of the
calendar year to which they pertain, to the inspection of M.I.T. or its
agents for the purpose of verifying Licensee's royalty statement or
compliance in other respects with this Agreement. Should such
inspection lead to the discovery of a greater than ten percent (10%)
discrepancy in reporting to M.I.T.'s detriment, Licensee agrees to pay
the full cost of such inspection.
<PAGE>
5.2 Licensee shall deliver to M.I.T. true and accurate reports, giving such
particulars of the business conducted by Licensee and its sublicensees
under this Agreement as shall be pertinent to diligence under Article 3
and royalty accounting hereunder:
(a) before the first commercial sale of a Licensed Product or Licensed
Process, annually, on April 30 of each year;
(i) amount spent toward the commercial development of Licensed
Products and Licensed Processes;
(ii) amount spent prosecuting the Patent Rights';
(iii) whether or not an Investigational New Drug application
incorporating the Patent Rights has been accepted by the U.S.
Food and Drug Administration or equivalent agency in a Major
Country;
(iv) whether or not a New Drug Application or Product License
Application or Establishment License Application incorporating
the Patent Rights has been approved by the U.S. Food and Drug
Administration or equivalent agency in a Major Country.
(b) after the first commercial sale of a Licensed Product or Licensed
Process, quarterly, within ninety (90) days after January 31,
April 30, July 31 and October 31, of each year.
These reports shall include at least the following:
(i) amount spent prosecuting the Patent Rights, only to the extent
such an accounting may be pertinent to a calculation of the
License Maintenance Fees below;
(ii) License Maintenance Fees due under Paragraphs 4.1(b), (c),
and (d);
(iii) number of Licensed Products manufactured, leased and sold by
and/or for Licensee and all sublicensees;
(iv) accounting for all Licensed Processes used or sold by and/or
for Licensee and all sublicensees;
(v) accounting for Net Sales, noting the deductions applicable as
provided in Paragraph 1.5;
(vi) Royalties due under Paragraph 4.1(g)
(vii) royalties due on other payments from sublicensees under
Paragraphs 4.1(h) and 4.1(i);
(viii) total royalties due; and
(ix) names and addresses of all sublicensees of License.
<PAGE>
5.3 With each such report submitted, Licensee shall pay to M.I.T. the
royalties due and payable under this Agreement as Net Sales are
collected by Licensee and its sublicensees. If no royalties shall be
due, Licensee shall so report.
5.4 On or before the ninetieth (90th) day following the close of Licensee's
fiscal year, Licensee shall provide M.I.T. with Licensee's certified
financial statements for the preceding fiscal year including, at a
minimum, a balance sheet and an income statement.
5.5 The amounts due under Articles 4 and 6 shall, if overdue, bear interest
until payment at a per annum rate two percent (2%) above the prime rate
in effect at the Chase Manhattan Bank (N.A.) on the due date. The pay-
ment of such interest shall not foreclose M.I.T. from exercising any
other rights it may have as a consequence of the lateness of any
payment.
6 - PATENT PROSECUTION
6.1 M.I.T. shall apply for, seek prompt issuance of, and maintain the Patent
Rights during the term of this Agreement. Appendix B is a list of the
foreign countries in which patent applications corresponding to the
United States Patent applications listed in Appendix A shall be filed.
Appendix B may be amended by mutual agreement of both parties. The
filing, prosecution and maintenance of all Patent Rights applications
and patents shall be the primary responsibility of M.I.T.; provided,
however, Licensee shall have reasonable opportunities to advise M.I.T.
and shall cooperate with M.I.T. in such filing, prosecution and
maintenance. With the prior written consent of M.I.T., Licensee may
assume the responsibility in M.I.T.'s name and M.I.T.'s best interest
for the filing and prosecution of patent applications and the issuance
and maintenance of Patent Rights and in connection therewith Licensee
may retain the firm of Pennie & Edmonds as patent counsel, the fees and
expenses of which firm shall be borne by Licensee.
6.2 Payment of all fees and costs relating to the filing, prosecution and
maintenance of the Patent Rights incurred after the Effective Date
shall be the responsibility of Licensee. Licensee shall pay such fees
and costs to M.I.T. within thirty (30) days of invoicing; late payments
shall accrue interest and shall be subject to Paragraph 5.5.
7 - INFRINGEMENT
7.1 Licensee and M.I.T. shall promptly notify the other in writing of any
alleged or threatened infringement of any Patent Rights of which either
becomes aware. Both parties shall use all reasonable efforts in
cooperating with each other to terminate such infringement without
litigation. Licensee shall have the first right to bring and control
any action or proceeding with respect to such infringement at its own
expense and by counsel of its own choice as to any such Patent Rights,
and M.I.T. shall have the right, at its own expense, to be represented
in any action involving any such Patent Rights using counsel of its
own choice.
<PAGE>
7.2 If Licensee fails to bring an action or proceeding within (i) 120 days
following receipt of written notice from M.I.T. with respect to such
alleged infringement, or (ii) 10 days before the time limit, if any, set
forth in the appropriate laws and regulations for the filing of such
actions, whichever comes first, with respect to those Patent Rights as
to which Licensee has the first right to bring and control an action
under Section 7.1 above, M.I.T. shall have the right to bring and
control any such action at its own expense and by counsel of its own
choice, and Licensee shall have the right, at its own expense, to be
represented in any such action by counsel of its own choice.
7.3 In the event a party hereto brings an infringement action under this
Section 7, the other party shall cooperate fully, including if required
to bring such action, the furnishing of a power of attorney. Licensee
will consult with M.I.T. as to any significant actions that Licensee
proposes to take with respect to same. The non-controlling party shall
give to the controlling party all authority (including the right to
exclusive control of the defense of any such suit, action or proceeding
and the exclusive right to compromise, litigate, settle or otherwise
dispose of any such suit, action or proceeding), information and
assistance necessary to defend or settle any such suit, action or
proceeding, and the controlling party shall have sole discretion to
determine actions to be taken or not taken in connection therewith and
the terms of any settlement; provided, however, that the controlling
party shall not have the right to settle any patent infringement
litigation under this Section 7 without the prior written consent of the
other party (not to be unreasonably withheld or delayed) in a manner
that diminishes the scope or duration of the Patent Rights, which would
constitute an amendment of this Agreement, which would adversely affect
the compensation or revenues to be derived by a party pursuant to this
Agreement, or which would require a payment by the other party
hereunder, or would require an admission of wrongdoing by the other
party. Except as otherwise agreed to by the parties as part of a cost
sharing arrangement, any recovery realized as a result of such
litigation, shall be applied first toward reimbursement of any
litigation expenses of Licensee and M.I.T., and then Licensee shall pay
M.I.T. Five Percent (5%) of the remainder.
7.4 M.I.T. will cooperate with Licensee, at Licensee's expense, in the
defense of any suit, action or proceeding against M.I.T. or Licensee, or
any sublicensee of Licensee, alleging the infringement of the
intellectual property rights of a third party by reason of the
manufacture, use or sale of a Licensed Product or Licensed Process.
Licensee will consult with M.I.T. as to any significant actions that
Licensee proposes to take with respect to same. M.I.T. shall give to
Licensee all authority (including the right to exclusive control of the
defense of any such suit, action, or proceeding), information and
assistance necessary to defend or settle any such suit, action or
proceeding, and Licensee shall have sole discretion to determine actions
to be taken or not taken in connection therewith and the terms of any
settlement; provided, however, Licensee shall obtain M.I.T.'s prior
written consent (not to be unreasonably withheld or delayed) to all or
such part of any settlement which would require a payment by M.I.T. (or
any of its affiliates) to such third party, would constitute an amend-
ment of this Agreement, would require an admission of wrongdoing in any
way by M.I.T. or its affiliates, or which may have an adverse effect on
the scope or duration of the Patent Rights licenses hereunder by M.I.T.;
and provided further, that if Licensee should require that M.I.T. (or
any of its affiliates or licensees) should institute or join in any such
suit, action or proceeding, pursuant to this Section 7.4, Licensee shall
hold M.I.T. (and any such affiliate or licensee, as applicable) free,
clear and harmless from any and all costs and expenses of such
litigation, including reasonable attorneys' fees, and M.I.T. shall
execute all documents, provide pertinent records, and take all other
actions, including using reasonable efforts to require persons within
its control to give testimony, which may be reasonably required in
connection with such litigation. Subject to the foregoing, M.I.T. (and
such affiliates and licensees) may participate in any such litigation or
other proceeding using attorneys of their choice and at their expense.
<PAGE>
7.5 Licensee shall have the sole right, in accordance with the terms and
conditions herein, to sublicense any alleged infringer in the Territory
future use of the Patent Rights. Any upfront fees as part of such a
sublicense shall be treated in accordance with Article 4.
8 - PRODUCT LIABILITY
8.1 Licensee shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold M.I.T., its trustees, directors,
officers, employees and affiliates, harmless against all claims,
proceedings, demands and liabilities of any kind whatsoever, including
legal expenses and reasonable attorneys' fees, arising out of the death
of or injury to any person or persons or out of any damage to property,
resulting from the production, manufacture, sale, use, lease, consump-
tion or advertisement of the Licensed Product(s) and/or Licensed
Process(es) or arising from any obligation of Licensee hereunder.
8.2 Licensee shall obtain and carry in full force and effect commercial,
general liability insurance, including product liability and errors and
omissions insurance, which shall protect Licensee and M.I.T. with
respect to events covered by Paragraph 8.1 above. Such insurance shall
be written by a reputable insurance company authorized to do business in
the Commonwealth of Massachusetts, shall list M.I.T. as an additional
named insured thereunder, shall be endorsed to include product liability
coverage and shall require thirty (30) days written notice to be given
to M.I.T. prior to any cancellation or material change thereof. The
limits of such insurance shall not be less than One Million Dollars
($1,000,000.00) per occurrence with an aggregate of Three Million
Dollars ($3,000,000.00) for personal injury including death; One Million
Dollars ($1,000,000.00) per occurrence with an aggregate of Three
Million Dollars ($3,000,000.00) for property damage; and One Million
Dollars ($1,000,000.00) per occurrence with an aggregate of Three
Million Dollars ($3,000,000.00) for errors and omissions. Licensee
shall provide M.I.T. with Certificates of Insurance evidencing the same.
<PAGE>
8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T., ITS
TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY,
FITNESS FOR PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED
OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT
DISCOVERABLE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A
REPRESENTATION MADE OR WARRANTY GIVEN BY M.I.T. THAT THE PRACTICE BY
LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT
RIGHTS OF ANY THIRD PARTY.
8.4 IN NO EVENT SHALL M.I.T., ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES
AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY
KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS,
REGARDLESS OF WHETHER M.I.T. SHALL BE ADVISED, SHALL HAVE OTHER REASON
TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.
9 - EXPORT CONTROLS
Licensee acknowledges that it is subject to United States laws and
regulations controlling the export of technical data, computer software,
laboratory prototypes and other commodities (including the Arms Export
Control Act, as amended and the United States Department of Commerce
Export Administration Regulations). The transfer of such items may
require a license from the cognizant agency of the United States
Government and/or written assurances by Licensee that Licensee shall not
export data or commodities to certain foreign countries without prior
approval of such agency. M.I.T. neither represents that a license shall
not be required nor that, if required, it shall be issued.
<PAGE>
10 - NON-USE OF NAMES
Licensee shall not use the names or trademarks of the Massachusetts
Institute of Technology or Lincoln Laboratory, nor any adaptation
thereof, nor the names of any of their employees, in any advertising,
promotional or sales literature without prior written consent obtained
from M.I.T., or said employee, in each case, except that Licensee may
state that it is licensed by M.I.T. under one or more of the patents
and/or applications comprising the Patent Rights.
11 - ASSIGNMENT
11.1 Before either: a) the start of Phase I clinical trials of a Licensed
Product or b) January 1, 2000, provided that Licensee has invested a
minimum of Three Hundred Thousand Dollars ($300,000) toward the
development of Licensed Products and Licensed Processes, this License is
assignable with M.I.T.'s written consent, which consent shall not
unreasonably be withheld, providing that such assignment or transfer is
in conjunction with the sale of all or substantially all of Licensee's
assets pertaining to the commercialization of Licensed Products, and
providing that such assignee or transferee agrees in writing to be bound
by all the terms and conditions of this Agreement.
11.2 After either: a) the start of Phase I clinical trials of a Licensed
Product or b) January 1, 2000, provided that Licensee has invested a
minimum of Three Hundred Thousand Dollars ($300,000) toward the
development of Licensed Products and Licensed Processes, this License
may be assigned, with notice to M.I.T., providing that such assignment
or transfer is in conjunction with the sale of all or substantially all
of Licensee's assets pertaining to the commercialization of Licensed
Products, and providing that such assignee or transferee agrees in
writing to be bound by all the terms and conditions of this Agreement.
11.3 This Agreement shall survive any merger of Licensee with or into another
party and no consent for a merger or similar reorganization shall be
required hereunder.
12 - DISPUTE RESOLUTION
12.1 Except for the right of either party to apply to a court of competent
jurisdiction for a temporary restraining order, a preliminary
injunction, or other equitable relief to preserve the status quo or
prevent irreparable harm, any and all claims, disputes or controversies
arising under, out of, or in connection with the Agreement, including
any dispute relating to patent validity or infringement, which the
parties shall be unable to resolve within one hundred twenty (120) days
shall be mediated in good faith. The party raising such dispute shall
promptly advise the other party of such claim, dispute or controversy
in a writing which describes in reasonable detail the nature of such
dispute. By not later than five (5) business days after the recipient
has received such notice of dispute, each party shall have selected for
itself a representative who shall have the authority to bind such party,
and shall additionally have advised the other party in writing of the
name and title of such representative. By not later than ten (10)
business days after the date of such notice of dispute, the party
against whom the dispute shall be raised shall select a mediation firm
in the Boston area and such representatives shall schedule a date with
such firm for a mediation hearing. The parties shall enter into good
faith mediation and shall share the costs equally. If the
representatives of the parties have not been able to resolve the dispute
within fifteen (15) business days after such mediation hearing, then any
and all claims, disputes or controversies arising under, out of, or in
connection with this Agreement, including any dispute relating to patent
validity or infringement, shall be resolved by final and binding
arbitration in Boston, Massachusetts under the rules of the American
Arbitration Association, or the Patent Arbitration Rules if applicable,
then obtaining. The arbitrators shall have no power to add to, subtract
from or modify any of the terms or conditions of this Agreement, nor to
award punitive damages. Any award rendered in such arbitration may be
enforced by either party in either the courts of the Commonwealth of
Massachusetts or in the United States District Court for the District
of Massachusetts, to whose jurisdiction for such purposes M.I.T. and
Licensee each hereby irrevocably consents and submits.
<PAGE>
12.2 Notwithstanding the foregoing, nothing in this Article shall be
construed to waive any rights or timely performance of any obligations
existing under this Agreement.
13 - TERMINATION
13.1 If Licensee shall cease to carry on its business, this Agreement shall
terminate upon notice by M.I.T.
13.2 Should Licensee fail to make any payment whatsoever due and payable to
M.I.T. hereunder, M.I.T. shall have the right to terminate this
Agreement effective on sixty (60) days' notice, unless Licensee shall
make all such payments to M.I.T. within said sixty (60) day period.
Upon the expiration of the sixty (60) day period, if Licensee shall not
have made all such payments to M.I.T., the rights, privileges and
license granted hereunder shall automatically terminate.
13.3 Upon any material breach or default of this Agreement by Licensee
(including, but not limited to, breach or default under Paragraph 3.3),
other than those occurrences set out in Paragraphs 13.1 and 13.2
hereinabove, which shall always take precedence in that order over any
material breach or default referred to in this Paragraph 13.3, M.I.T.
shall have the right to terminate this Agreement and the rights,
privileges and license granted hereunder effective on ninety (90) days'
notice to Licensee. Such termination shall become automatically
effective unless Licensee shall have cured any such material breach or
default prior to the expiration of the ninety (90) day period.
<PAGE>
13.4 Licensee shall have the right to terminate this Agreement at any time
on six (6) months' notice to M.I.T., and upon payment of all amounts due
M.I.T. through the effective date of the termination.
13.5 Upon termination of this Agreement for any reason, nothing herein shall
be construed to release either party from any obligation that matured
prior to the effective date of such termination; and Articles 1, 8, 9,
10, 12, 13.5, 13.6 and 15 shall survive any such termination. Licensee
and any sublicensee thereof may, however, after the effective date of
such termination, sell all Licensed Products, and complete Licensed
Products in the process of manufacture at the time of such termination
and sell the same, provided that Licensee shall make the payments to
M.I.T. as required by Article 4 of this Agreement and shall submit the
reports required by Article 5 hereof.
13.6 Upon termination of this Agreement for any reason, any sublicensee not
then in default shall have the right to seek a license from M.I.T.
M.I.T. agrees to negotiate such licenses in good faith under reasonable
terms and conditions.
14 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
Any payments, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of mailing if sent to
such party by certified first class mail, return receipt requested,
postage prepaid, addressed to it at its address below, or as it shall
designate by written notice given to the other party:
In the case of M.I.T.:
Director, Technology Licensing Office
Massachusetts Institute of Technology
Five Cambridge Center, Kendall Square
Room NE2-230
Cambridge, Massachusetts 02142-1493
In the case of Licensee:
Michael Rosen, President/CEO
Orasomal Technologies, Inc.
900 North Shore Drive
Lake Bluff, Illinois 60044
15 - MISCELLANEOUS PROVISIONS
15.1 All disputes arising out of or related to this Agreement, or the
performance, enforcement, breach or termination hereof, and any remedies
relating thereto, shall be construed, governed, interpreted and applied
in accordance with the laws of the Commonwealth of Massachusetts,
U.S.A., except that questions affecting the construction and effect of
any patent shall be determined by the law of the country in which the
patent shall have been granted.
<PAGE>
15.2 The parties hereto acknowledge that this Agreement sets forth the
entire Agreement and understanding of the parties hereto as to the
subject matter hereof, and shall not be subject to any change or
modification except by the execution of a written instrument signed by
the parties.
15.3 The provisions of this Agreement are severable, and in the event that
any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or
enforceability of the remaining provisions hereof.
15.4 Licensee agrees to mark the Licensed Products sold in the United States
with all applicable United States patent numbers. All Licensed Products
shipped to or sold in other countries shall be marked in such manner as
to conform with the patent laws and practice of the country of
manufacture or sale.
15.5 The failure of either party to assert a right hereunder or to insist
upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure
to perform any such term or condition by the other party.
IN WITNESS WHEREOF, the parties have duly executed this Agreement the day and
year set forth below.
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
By Lita Nelsen
Name Lita Nelsen
Title Director
Date December 16, 1996
ORASOMAL TECHNOLOGIES, INC.
By Michael S. Rosen
Name Michael S. Rosen
Title President/CEO
Date December 10, 1996
<PAGE>
APPENDIX A
PATENT RIGHTS on the EFFECTIVE DATE
UNITED STATES PATENT RIGHTS
M.I.T. Case No. 6388
U.S.S.N. 096,689, Filed 7/23/93
"Polymerized Liposomes with Enhanced Stability"
by Junichi Okada, Smadar Cohen and Robert Langer
FOREIGN PATENT RIGHTS
None.
<PAGE>
APPENDIX B
DESIGNATED FOREIGN COUNTRIES
Foreign countries in which PATENT RIGHTS shall be filed, prosecuted and
maintained in accordance with Article 6:
For M.I.T. Case No. _________:
CONSULTATION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day of August, 1996, by and
between Endorex Corporation, a Delaware Corporation duly authorized To Do
Business in North Dakota, hereinafter termed the 'Company'; and Kenneth
Tempero, Ph.D., M.D. hereinafter termed 'Consultant'.
W I T N E S S E T H :
WHEREAS, the Company is engaged in, among other things, the development and
marketing of immunomodulators for the treatment of cancer and other diseases,
WHEREAS, Consultant is ready, willing, and able to provide consulting
service in the area of corporate development upon the following terms and
conditions, and
WHEREAS, both parties understand that it is the policy of the Company to
respect the secret or confidential information of Third Parties, and
should Consultant possess secret or confidential information of Third
Parties, such information will not be disclosed to the Company.
NOW, THEREFORE, for and in consideration of these terms and conditions
hereinafter set forth to be kept and performed, the Parties hereto agree
as follows:
1. TERM
The term of this Agreement will be for twelve (12) months from and after
the 1st day of August 1996. However, it is mutually agreed that this
agreement shall, as needed and requested by the Company, be extended
for consecutive six month terms by mutual agreement.
2. COMPENSATION
ImmunoTherapeutics agrees to pay Consultant a sum of $2,500/month over
the twelve month period for the services herein described, to be paid in
monthly installments. The Company agrees to reimburse Consultant for
all out-of-pocket expenses relative to the Consultant's activities, subject
to prior approval of the Company. All such expenses will be reimbursed
within 30 days of submission of expenses with appropriate vouchers.
3. SERVICES
Consultant, as an independent contractor and not as an employee of the
Company, will devote 1-3 days per month to the Agreement. Consultant
agrees, on a non-exclusive basis, to assist and advise the Company in
its research and development activities and clinical trials. It is agreed
that the time comittment and compensation herewith may be adjusted from
time to time upon mutual agreements of the parties.
Services will include the following:
a) Evaluate and/or advise the Company on matters related to licensing
opportunities and agreements.
b) Advise the Company on product development strategy.
c) Identify and assist the Company in developing corporate partners.
d) Advise the Company in the design of petinent clinical trials.
Consultant will not be or represent himself as an agent of
ImmunoTherapeutics, Inc. and shall have no authority to incur obligation
on behalf of the Company or sign contracts for the Company.
4. SUBCONTRACTS
It is expressly understood that Consultant will not subcontract for, nor
employ anyone to, perform the consulting services to be provided pursuant
to this Agreement without the prior written approval of the Company.
5. CONFLICTS
a) Consultant represents and warrants that to the best of his knowledge he
has no direct or indirect interest which is, or may appear to be,
incompatible with his services under this Agreement.
b) Consultant agrees to refrain from any activity during the term of this
Agreement which could be interpreted as constituting a conflict of
interest, and to promptly notify the Company regarding any change in his
private interests which might result, or appear to result,
in a conflict of interest.
6. DATA AND CONFIDENTIAL INFORMATION
a) With respect to "data", which term shall include, but is not limited
to, writings, drawings, pictures, statistical information, graphic
representation, and computer software. Consultant agrees that:
1) All data first originated, developed, or reduced to normal
communicable form in collaboration with the Company personnel
pursuant to this Agreement shall be available to, and for the use of
the Company; and Consultant shall be reimbursed by the Company
for the cost or reproduction and delivery of any data requested.
2) With respect to data subject to a copyright owned by Consultant or
a Third party which is delivered to the Company pursuant to this
Agreement, and to the extent Consultant may have, or may acquire,
prior to expiration or termination of this Agreement the right to do
so, Consultant hereby grants or agrees to grant to the Company a
non-exclusive and irrevocable license throughout the world to publish,
translate, reproduce, and deliver the data.
3) Consultant shall not deliver data subject to proprietary rights, or
data subject to copyright owned by a Third Party, unless such data is
licensed pursuant to paragraph 6: 1 and 2, above.
b) With respect to "confidential information", of the Company which will be
so marked and shall include, but not be limited to, unpublished information
and data relating to: technological and scientific developments, including
inventions, designs, plans, methods, processes, internal specifications and
reports, anticipated procurements; possible new projects or programs.
Consultant agrees that:
1) Confidential information shall not be disclosed or discussed with
anyone except authorized personnel or persons specified in writing by
the Company;
2) Consultant shall not use for personal gain and shall preserve as
confidential all information furnished or acquired in the
performance of this Agreement.
The obligation will continue both during and after the period of this
Agreement and subsequent renewals, but does not apply to information which
is or will become public knowledge through no act or omission on
Consultant's part.
7. ASSIGNMENT/ENTIRE AGREEMENT
Neither party may assign its rights or obligations under this Agreement
without the written consent of the other party. Neither this Agreement
or any provision hereof may be changed, waived, discharged, or terminated
orally, but rather by an instrument in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is being
considered. This Agreement constitutes the entire Agreement between the
parties with respect to its subject matter. If any provision of this
Agreement is held unenforceable or inoperative by any court, either or
whole or in part the remaining provisions shall be deemed severable and
unaffected and shall continue in full force and effect.
IN WITNESS WHEREOF, the Parties hereto set their hands effective the date
first herein written.
ENDOREX CORPORATION
By: /s/ GERALD J. VOSIKA,
Chairman
CONSULTANT:
/s/ KENNETH F. TEMPERO, Ph.D., M.D.
EMPLOYMENT AGREEMENT
By and Between
ImmunoTherapeutics, Inc.
and
Gerald Vosika, M.D.
Agreement made as of this 1st day of June, 1996, between ImmunoTherapeutics,
Inc., a Delaware corporation (the "Company") and Gerald Vosika, M.D. (the
"Executive").
The Executive is presently employed by the Company as Chairman of the Board,
President and Scientific Director.
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the Company during the past years has been
substantial. The Board desires to provide for the continued employment
of the Executive and to make certain changes in the Executive's employment
arrangements with the Company which the Board has determined will reinforce
and encourage the continued attention and dedication to the Company of the
Executive as a member of the Company's management, in the best interest of
the Company and its shareholders. The Executive is willing to commit
himself to continue to serve the Company, on the terms and conditions
herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the promises and the respective
covenants and agreements of the parties herein contained, and intending to
be legally bound hereby, the parties hereto agree as follows:
1. Employment
The Company hereby agrees to continue to employ the Executive, and the
Executive hereby agrees to continue to serve the Company, on the terms and
conditions set forth herein.
2. Term
The employment of the Executive by the Company as provided in Section 1
will commence on the date hereof and end on May 31, 1999, unless further
extended or sooner terminated as hereinafter provided. On and before
May 31, 1999, and on the last day of each year thereafter, the term of the
Executive's employment shall be automatically extended one (1) additional
year unless, prior to such May 31 of such year, the Company shall have
delivered to the Executive or the Executive shall have delivered to the
Company written notice that the term of the Executive's employment hereunder
will not be extended.
3. Position and Duties
The Executive shall serve as Chairman of the Board, President and Scientific
Director of the Company and shall have such responsibilities and authority
consistent with those position as may, from time to time, be assigned to the
Executive by the Board of Directors of the Company. The Executive shall
devote substantially all his working time and efforts to the business and
affairs of the Company.
4. Place of Performance
In connection with the Executive's employment by the Company, the Executive
shall be based at the principal executive offices of the Company in Fargo,
North Dakota, except for required travel on the Company's business to an
extent substantially consistent with present business travel obligations.
5. Compensation and Related Matters
(a) Salary. During the period of the Executive's employment hereunder, the
Company shall pay to the Executive a salary at a rate of not less than
$225,000 per annum in equal monthly or other installments. This salary
may be increased from time to time in accordance with determinations made
by the Company's Board of Directors and, if so increased, shall not
thereafter during the term of this Agreement be decreased. Compensation
of the Executive by salary payments shall not be deemed exclusive and
shall not prevent the Executive from participating in any other
compensation or benefit plan of the Company. The salary payments
(including any increased salary payments) hereunder shall not, in any way,
limit or reduce any other obligation of the Company hereunder, and no other
compensation, benefit or payment hereunder shall, in any way, limit or
reduce the obligation of the Company to pay the Executive's salary hereunder.
(b) Expenses. During the term of the Executive's employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in performing services
hereunder, including all expenses of travel and living expenses while away
from home on business or at the request of and in the service of the
Company, provided that such expenses are incurred and accounted for in
accordance with the policies and procedures presently established by the
Company.
(c) Other Benefits. The Company shall maintain in full force and effect,
and the Executive shall be entitled to continue to participate in, all of
its employee benefit plans and arrangements in effect on the date hereof
in which the Executive participates or plans or arrangements providing the
Executive with at least equivalent benefits thereunder (including, without
limitation, each pension and retirement plan and arrangement, supplemental
pension and retirement plan and arrangement, stock option plan, life
insurance and health and accident plan and arrangement, medical insurance
plan, disability plan, survivor income plan, relocation plan and vacation
plan). The Company shall not make any changes in such plans or arrangements
which would adversely affect the Executive's rights or benefits thereunder,
unless such change occurs pursuant to a program applicable to all executives
of the Company and does not result in a proportionately greater reduction in
the rights of or benefits to the Executive as compared with any other
executive of the Company. The Executive shall be entitled to participate
in or receive benefits under any employee benefit plan or arrangement made
available by the Company in the future to its executives and key management
employees, subject to and on a basis consistent with the terms, conditions
and overall administration of such plans and arrangements. Nothing paid to
the Executive under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the salary payable
to the Executive pursuant to paragraph (a) of this Section. Any payments
or benefits payable to the Executive hereunder in respect of any calendar
year during which the Executive is employed by the Company for less than
the entire such year shall, unless otherwise provided in the applicable
plan or arrangement, be prorated in accordance with the number of days in
such calendar year during which he is so employed.
(d) Vacations. The Executive shall be entitled to the number of vacation
days in each calendar year, and to compensation in respect of earned but
unused vacation days, determined in accordance with the Company's vacation
plan. The Executive shall also be entitled to all paid holidays given by
the Company to its executives.
(e) Services Furnished. The Company shall furnish the Executive with office
space, stenographic assistance and such other facilities and services as
shall be suitable to the Executive's position and adequate for the
performance of his duties as set forth in Section 3 hereof.
6. Offices
The Executive agrees to serve without additional compensation, if elected
or appointed thereto, as a Director of the Company and any of its
subsidiaries and in one or more executive offices of any of the Company's
subsidiaries, provided that the Executive is indemnified for serving in any
and all such capacities on a basis no less favorable than is currently
provided by Article VII of the Company's By-Laws.
7. Termination
The Executive's employment hereunder may be terminated without any breach of
this Agreement only under the following circumstances:
(a) Death. The Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of the Executive's incapacity due to
physical or mental illness, the Executive shall have been absent from his
duties hereunder on a full-time basis for the entire period of six (6)
consecutive months, and within thirty (30) days after written notice of
termination is given (which may occur before or after the end of each such
six-month period) shall not have returned to the performance of his duties
hereunder on a full-time basis, the Company may terminate the Executive's
employment hereunder.
(c) Cause. The Company may terminate the Executive's employment hereunder
for Cause. For purposes of this Agreement, the Company shall have "Cause"
to terminate the Executive's employment hereunder upon (A) the willful and
continued failure by the Executive to substantially perform his duties
hereunder (other than any such failure resulting from the Executive's
incapacity due to physical or mental illness), after demand for substantial
performance is delivered by the Company that specifically identifies the
manner in which the Company believes the Executive has not substantially
performed his duties, or (B) the willful engaging by the Executive in
misconduct which is materially injurious to the Company, monetarily or
otherwise. For purposes of this paragraph, no act, or failure to act,
on the Executive's part shall be considered "willful" unless done, or
omitted to be done, by him not in good faith and without reasonable belief
that his action or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have
been terminated for Cause without (i) reasonable notice to the Executive
setting forth the reasons for the Company's intention to terminate for
Cause, (ii) an opportunity for the Executive, together with his counsel,
to be heard before the Board of Directors of the Company, and (iii) delivery
to the Executive of a Notice of Termination as defined in subsection (e)
hereof from the Board of Directors of the Company finding that in the good
faith opinion of the Board of Directors the Executive was guilty of conduct
set forth above in clause (A) or (B) of the preceding sentence, and
specifying the particulars thereof in detail.
(d) Termination by the Executive. The Executive may terminate his
employment hereunder (i) for Good Reason or (ii) if his health should become
impaired to an extent that makes his continued performance of his duties
hereunder hazardous to his physical or mental health or his life, provided
that the Executive shall have furnished the Company with a written statement
from a qualified doctor to such effect and provided, further, that, at the
Company's request, the Executive shall submit to an examination by a doctor
selected by the Company and such doctor shall have concurred in the
conclusion of the Executive's doctor. For purposes of this Agreement,
"Good Reason" shall mean (A) any event described as a change in control
of the Company (as defined below) which may occur at any time or from time
to time on one or more occasions during the term of this Agreement
(including any extension hereof); (B) a failure by the Company to comply
with any material provision of this Agreement which has not been cured within
ten (10) days after notice of such non-compliance has been given by the
Executive to the Company; or (C) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of Termination
satisfying the requirements of paragraph (e) hereof (and for purposes of
this Agreement, no such purported termination shall be effective).
For purposes of this Agreement, a "change in control of the Company" shall
mean a change in control of a nature that would be required to be reported
in response to Item 5(f) of Schedule 14A promulgated under the Securities
Exchange Act of 1934 (the "Exchange Act"); provided that, without limitation,
such a change in control shall be deemed to have occurred if (Y) any "person"
(as such term is used in Section 13(d) and 14(d) of the Exchange Act), other
than the Company or any "person" who, on the date hereof, is a director or
officer of the Company, is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of
the Company representing twenty percent (20%) or more of the combined voting
power of the Company's then outstanding securities, or (Z) during any period
of two (2) consecutive years during the term of this Agreement, individuals
who at the beginning of such period constitute the Board cease for any reason
to constitute at least a majority thereof, unless the election of each
director who was not a director at the beginning of such period has been
approved in advance by directors representing at least two-thirds (2/3) of the
directors then in office who were directors at the beginning of the period.
(e) Any termination of the Executive's employment by the Company or by the
Executive (other than termination pursuant to subsection (a) above) shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice
which shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive's
employment under the provision so indicated.
(f) "Date of Termination" shall mean (i) if the Executive's employment is
terminated by his death, the date of his death, (ii) if the Executive's
employment is terminated pursuant to subsection (b) above, thirty (30)
days after Notice of Termination is given (provided that the Executive shall
not have returned to the performance of his duties on a full-time basis
during such thirty (30) day period), (iii) if the Executive's employment
is terminated pursuant to subsection (c) above, the date specified in the
Notice of Termination, and (iv) if the Executive's employment is terminated
for any other reason, the date on which a Notice of Termination is given;
provided that, if within thirty (30) days after any Notice of Termination
is given the party receiving such Notice of Termination notifies the other
party that a dispute exists concerning the termination, the Date of
Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, by a binding and final
arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and
no appeal having been perfected).
8. Compensation Upon Termination or During Disability
(a) During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness
("disability period"), the Executive shall continue to receive his full
salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 7(b) hereof, and for a period of six (6)
months thereafter, provided that payments so made to the Executive during
the first six (6) months of the disability period shall be reduced by the
sum of the amounts, if any, payable to the Executive at or prior to the
time of any such payment under disability benefit plans of the Company and
which were not previously applied to reduce any such payment.
(b) If the Executive's employment is terminated by his death, the Company
shall pay to the Executive's spouse, or if he leaves no spouse, to his estate,
commencing on the next succeeding day which is the fifteenth day or last day
of the month, as the case may be, and monthly thereafter on the fifteenth and
last days of each month, until a total of six (6) payments have been made, an
amount on each payment date equal to the monthly salary payment to the
Executive pursuant to Section 5(a) hereof at the time of his death.
(c) If the Executive's employment shall be terminated for Cause, the Company
shall pay the Executive his full salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given and the Company
shall have no further obligations to the Executive under this Agreement.
(d) If (A) in breach of this Agreement, the Company shall terminate the
Executive's employment other than pursuant to Section 7(b) or 7(c) hereof
(it being understood that a purported termination pursuant to Section 7(b)
or 7(c) hereof which is disputed and finally determined not to have been
proper shall be a termination by the Company in breach of this Agreement)
or (B) the Executive shall terminate his employment for Good Reason, then:
(i) the Company shall pay the Executive his full salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given;
(ii) in lieu of any further salary payments to the Executive for periods
subsequent to the Date of Termination, the Company shall pay as severance
pay to the Executive an amount equal to the product of (A) the Executive's
annual salary rate in effect as of the Date of Termination, multiplied by
(B) the greater of the number of years (including partial years) remaining
in the term of employment hereunder or the number three (3), such payment to
be made (X) if resulting from a termination based on a change of control of
the Company, in a lump sum on or before the fifth day following the Date of
Termination, or (Y) if resulting from any other cause, in substantially equal
monthly installments commencing with the month in which the Date of
Termination occurs and continuing for the number of consecutive monthly
payment dates (including the first such date as aforesaid) equal to the
product obtained by multiplying the number of years (including partial years)
applicable under (ii)(B) above by twelve (12); and
(iii) if termination of the Executive's employment arises out of a breach
by the Company of this Agreement, the Company shall pay all other damages
to which the Executive may be entitled as a result of such breach, including
damages for any and all loss of benefits to the Executive under the Company's
employee benefit plans (other than the Company's Incentive Compensation Plan)
which the Executive would have received if the Company had not breached this
Agreement and had the Executive's employment continued for the full term
provided in Section 2 hereof, and including all legal fees and expenses
incurred by him as a result of such termination.
(e) If the Executive shall terminate his employment under clause (ii) of
Section 7(d) hereof, the Company shall pay the Executive his full salary
through the Date of Termination at the rate in effect at the time Notice
of Termination is given.
(f) Unless the Executive is terminated for Cause, the Company shall maintain
in full force and effect, for the continued benefit of the Executive for the
greater of the number of years (including partial years) remaining in the
term of employment hereunder or the number three (3), all employee benefit
plans and programs in which the Executive was entitled to participate
immediately prior to the Date of Termination provided that the Executive's
continued participation is possible under the general terms and provisions
of such plans and programs. In the event that the Executive's continued
participation is possible under the general terms and provisions of such
plans and programs. In the event that the Executive's participation in any
such plan or program is barred, the Company shall arrange to provide the
Executive with benefits substantially similar to those which the Executive
would otherwise have been entitled to receive under such plans and programs
from which his continued participation is barred.
(g) The Executive shall not be required to mitigate the amount of any payment
provided for in this Section 8 by seeking other employment or otherwise.
9. Successors; Binding Agreement
(a) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the
Executive to compensation from the Company in the same amount and on the
same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall
be deemed the Date of Termination. As used in this Agreement, "Company"
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which executes and delivers the
agreement provided for in this Section 9, or which otherwise becomes
bound by all the terms and provisions of this Agreement by operation of
law.
(b) This Agreement, and all rights of the Executive hereunder, shall inure
to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amounts would
still be payable to him hereunder if he had continue to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement to the Executive's devisee, legatee, or
other designee or, if there be no such designee, to the Executive's estate.
10. Notice
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States registered mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
Gerald Vosika, M.D.
c/o ImmunoTherapeutics, Inc.
3233 Fifteenth Street South
Fargo, North Dakota 58104
If to the Company:
ImmunoTherapeutics, Inc.
3233 Fifteenth Street South
Fargo, North Dakota 58104
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
11. Miscellaneous
No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
parties hereto. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a
waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreements or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement. The validity, interpretation, construction and performance of
this Agreement shall be governed by the laws of the State of North Dakota.
12. Validity
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
13. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together will constitute
one and the same instrument.
14. Arbitration
Any dispute or controversy arising under or in connection with this Agreement
shall be settled exclusively by arbitration, conducted before a panel of
three arbitrators, in Chicago, Illinois, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction. The expense of such
arbitration shall be borne by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.
ImmunoTherapeutics, Inc.
By: /s/ James Burrow
Title: Secretary
/s/ Gerald Vosika, M.D.
Attest: /s/ Cheryl Brammer
IMMUNOTHERAPEUTICS, INC.
June 25, 1996
Gerald Vosika, M.D.
3233 Fifteenth Street South
Fargo, North Dakota 58104
Letter Agreement, Amendment and Waiver
Dear Mr. Vosika:
In connection with the purchase by Aries Domestic Fund,
L.P., a Delaware limited partnership (the "Fund"), and the Aries
Trust, a Cayman Islands Trust (the "Trust", and collectively with
the Fund, the "Purchasers") of 5,000,000 shares of Common Stock
of ImmunoTherapeutics, Inc., a Delaware corporation (the
"Company"), directly from the Company and the purchase by the
Purchasers of 4,000,000 shares of the Company's Common Stock from
Dominion Resources, Inc., a Delaware corporation, the Company and
Mr. Gerald R. Vosika (the "Executive" and the Company,
collectively referred to as the "Parties") wish to enter into an
agreement as follows:
(1) The Parties have agreed that the Company may hire a
Chief Executive Officer who, if hired, will have the
corporate title of President, which such title will be
relinquished by Executive. Executive expressly agrees
to relinquish such title and agrees to the hiring of
such CEO and the conduct by such CEO of the duties
assigned him by the Board of Directors. The Executive
agrees that the hiring of such CEO will not constitute
"Good Reason" as such term is defined in the Employment
Agreement between the Company and Executive dated June
1, 1996 (the "Employment Agreement") and will not be
grounds for the Executive to terminate his employment
for "Good Reason" as provided pursuant to the
Employment Agreement. Executive further agrees that
the Company may take any of the foregoing actions and
such actions will not result in any breach or violation
of any provisions of the Employment Agreement or
entitle the Executive to any payments or severance pay
under the terms of the Employment Agreement. The
Executive hereby waives any claims or causes of action,
whether based on contract or otherwise, in any way
related to or arising out of such actions.
(2) The Executive hereby agrees that the acquisition of the
shares of Common Stock of the Company by the Purchasers
(including any purchases made subsequent to the date
hereof) and the appointment by Purchasers of any
representatives to the Board of Directors or other
change in the configuration of the Board of Directors
by Purchasers did not and will not constitute (x) a
"change in control of the Company" or "Good Reason" as
such terms are defined in the Employment Agreement and
will not be grounds for the Executive to terminate his
employment with the Company or (y) a "change of
control" or other event giving rise to a cancellation
of the Option under Section 5(b), (c) or (d) of the
Stock Option Agreement (the "Option") dated March 21,
1996 or any other option agreement to which the
Executive is a party (collectively with the Option, the
"Options"). Executive further agrees that such
acquisitions of shares or future acquisitions of shares
or changes to the configuration of the Company's Board
of Directors did not and will not result in any breach
or violation, or acceleration of any rights to payment
pursuant to any provisions of the Employment Agreement
or Options or entitle the Executive to any payments,
accelerated rights or severance pay under the terms of
the Employment Agreement or Options. The Executive
hereby waives any claims or causes of action, whether
based on contract or otherwise, in any way related to
or arising out of such actions.
(3) The Executive hereby agrees to amend paragraph 8(d)(ii)
of the Employment Agreement to read as follows:
(ii) in lieu of any further salary payments to the
Executive for periods subsequent to the Date of
Termination, the Company shall pay as severance
pay to the Executive an amount equal to the
product of (A) the Executive's annual salary rate
in effect as of the Date of Termination,
multiplied by (B) the number of years (including
partial years) remaining in the term of employment
hereunder, such payment to be made in
substantially equal monthly installments
commencing with the month in which the Date of
Termination occurs and continuing for the number
of consecutive monthly payment dates (including
the first such date as aforesaid) equal to the
product obtained by multiplying the number of
years (including partial years) applicable under
(ii)(B) above by twelve (12); and
The foregoing language shall be substituted for and
shall replace the language in paragraph 8(d)(ii).
(4) The Executive hereby agrees that the Employment
Agreement shall be amended to delete any reference to
the term "change in control of the Company" and agrees
that he shall not be entitled to terminate his
employment with the Company or to any additional
severance or termination payments as a result of the
occurrence of any events which satisfy the definition
of "change of control of the Company" in Section 7(d)
of the Employment Agreement.
(5) The Executive hereby agrees that the Option shall be
amended to delete Sections 5(b), (c) and (d) and the
Executive hereby waives any rights to any payments
pursuant to those provisions.
(6) The Executive hereby agrees that from the date hereof
and continuing for a period (the "Lock-Up Period") of
twenty four (24) months from the date hereof, he will
not, without the prior written consent of Aries
Financial Services, Inc., offer, pledge, sell, contract
to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of any
equity securities of ImmunoTherapeutics, Inc. (the
"Company") or any options, warrants or other securities
convertible into equity securities of the Company (the
"Shares") provided however that, on the date twelve
months from the date hereof, an amount of Shares equal
to 25% of the number of Shares currently owned by the
Executive (as set forth in the Company's current SEC
filings) shall become exempt from the lock-up
provisions contained in this sentence. In addition,
Executive agrees that while Executive hold any Shares,
Executive will not directly or indirectly, through
related parties, affiliates or otherwise sell "short"
or "short against the box" (as those terms are
generally understood) any equity security of the
Company. Notwithstanding the foregoing, (i) the
Executive will be permitted to transfer his shares in
private sale transactions pursuant to a valid private
placement exemption provided any transferee in
connection with such any such transaction expressly
consents in writing to be subject to the same
restrictions and agreements applicable to such shares
as Executive was hereunder, pursuant to the Employment
Agreement and the Option Agreement.
This letter agreement shall not be amended or modified
without the prior written consent of both Parties and Aries
Financial Services, Inc, a Delaware corporation. Aries Financial
Services, Inc. and the Purchasers shall be third party
beneficiaries of this letter agreement, have relied on the
provisions contained herein and shall be entitled to enforce the
rights of the Company hereunder. This letter agreement shall act
as a complete release of the Company from all claims which the
Executive had with respect to any of the matters with respect to
which the Executive agreed to waive, forego or amend any rights
as provided herein.
If you agree with the foregoing, please execute a copy
of this letter in the space provided below and return the
executed copy to me whereupon this letter will become a binding
agreement among the Parties.
________________________
IMMUNOTHERAPEUTICS, INC.
Name:
Title: Secretary
AGREED TO AND ACCEPTED AS OF
THE DATE FIRST WRITTEN ABOVE:
GERALD VOSIKA, M.D.
_____________________________
EMPLOYMENT AGREEMENT
By and Between
Endorex Corp. ("Endorex"), Orasomal Technologies, Inc. ("Orasomal") and
Robert Brey
Agreement made this 1st day of December, 1996, between Endorex Corp., a
Delaware Corporation and Orasomal Technologies, Inc., a subsidiary of Endorex
Corp., (herein Endorex and Orasomal, are jointly referred to as the "Company")
and ROBERT BREY (the "Employee").
The Company is desirous of employing the Employee as its Vice-President,
Vaccine Development of Endorex and Vice-President, Research and Development of
Orasomal, and the Employee is desirous of becoming employed by the Company in
those capacities.
The Company and the Employee desire to set forth in this Agreement the terms
and conditions on which the Employee will be employed by the Company as its
Vice-President, Vaccine Development of Endorex and Vice-President, Research
and Development of Orasomal.
Accordingly, in consideration of the promises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment
The Company hereby agrees to employ the Employee, and the Employee hereby
agrees to serve the Company, on the terms and conditions set forth herein.
2. Term
The employment of the Employee by the Company as provided in Section 1 will
commence on the date of this Agreement and end on November 30, 2000, unless
further extended or sooner terminated as hereinafter provided.
3. Position and Duties
The Employee shall serve as Vice-President, Vaccine Development of Endorex
and Vice-President, Research and Development of Orasomal and shall have such
responsibilities and authority consistent with those positions as may, from
time to time, be assigned to the Employee by the President or Board of
Directors of the Company. The Employee shall devote substantially all his
working time and efforts to the business and affairs of the Company.
4. Place of Performance
In connection with the Employee's employment by the Company, the Employee
shall be based at the principal offices of the Company located in Chicago,
Illinois, except for required travel on the Company's business.
5. Compensation and Related Matters
(A) Salary. During the period of the Employee's employment hereunder, the
Company shall pay to the Employee a salary at a rate of not less than
$100,000 per annum until such time as Employee relocates his residence and
family to the Chicago, Illinois area, and thereafter at the rate of not
less than $115,000 per annum payable in equal monthly or other install-
ments. The Employee's salary shall be subject to an annual review
commencing twelve (12) months following the commencement of the term of
the Employee's employment hereunder.
(B) Bonuses. At the end of each full year of employment, Employee shall
be entitled to a bonus of up to 25% of Employee's salary as provided in
Section 5(a) based upon meeting mutually agreed to pre-established
written objectives and overall performance of the Company.
(C) Expenses. The company shall reimburse Employee for all normal, usual
and necessary expenses incurred by Employee in furtherance of the business
and affairs of the Company (incuding up to $25,000 of reasonable
relocation expenses for Employee and his family, which may include moving
costs, hotel expenses, and real estate commissions and other costs of
Employee selling his current residence in Atlanta, Georgia and relocating
to the Chicago, Illinois area), against receipt by the company of
appropriate vouchers or other proof of the Employee's expenditures and
otherwise in accordance with such expense reimbursement policy as may,
from time to time, be adopted by the Board of Directors of the Company.
(D) Other Benefits. The Company shall provide to Employee paid medical
insurance (including for the benefit of the dependents of Employee). In
addition, the Company shall provide and maintain in full force and effect,
and the Employee shall be entitled to participate in, all of its employee
benefit plans and arrangements in effect on the date hereof or plans or
arrangements hereafter adopted providing the Employee with at least
equivalent benefits thereunder (including, without limitation, each pension
and retirement plan and arrangement, supplemental pension and retirement
plan and arrangement, stock option plan, life insurance and health and
accident plan and arrangement, medical insurance plan, disability plan,
survivor income plan, relocation plan and vacation plan). The Company
shall not make any changes in such plans or arrangements which would
adversely affect the Employee's rights or benefits thereunder, unless such
change occurs pursuant to a program applicable to all employees of the
Company and does not result in a proportionately greater reduction in the
rights of or benefits to the Employee as compared with any other employee
of the Company. The Employee shall be entitled to participate in or
receive benefits under any employee benefit plan or arrangement made
available by the company in the future to its key management employees,
subject to and on a basis consistent with the terms, conditions and
overall administration of such plans and arrangements. Nothing paid to
the Employee under any plan or arrangement presently in effect or made
available in the future shall be deemed to be in lieu of the salary payable
to the employee pursuant to paragraph (A) of this Section.
(E) Vacations. The Employee shall be entitled to three (3) weeks of
vacation in each year of his employment. The Employee shall also be
entitled to all paid holidays given by the Company to its Employees.
(F) Services Furnished. The Company shall furnish the Employee with
office space, stenographic assistance and such other facilities and
services as shall be suitable to the Employee's position and adequate for
the performance of his duties as set forth in Section 3 hereof.
(G) Options. Subject to execution of this Agreement, Employee shall be
granted an option effective on the date of execution of this Agreement,
to purchase 100,000 shares of the Company's Common Stock, exercisable for
a period of seven (7) years at an exercise price per share equal to the
fair market value of the Common Stock on the date of execution of this
Agreement, based on the bid quotations for the Common Stock in the over-
the-counter market on that date. Such option shall be an Incentive Stock
Option granted under the Company's 1995 Omnibus Incentive Plan. Such
option shall vest and become exercisable at the rate of (i) 6,250 shares on
December 1, 1996 and (ii) a cumulative additional 6,250 shares at the
close of business on the last day of each three-month period thereafter,
commencing March 1, 1997 through December 1, 2000, at which time this
option shall have vested in full. If Employee's employment with the
Company shall terminate before such option is fully vested, such option
shall be exercisable only to the extent the option is exercisable on the
date Employee's employment terminates. The grant of the foregoing option
shall not preclude the participation of the employee in any other stock
option plan of the Company.
(H) It is understood that Employee will relocate his residence and family
home to the Chicago, Illinois area no later than July 1, 1997.
6. Offices
The Employee agrees to serve without additional compensation, if elected
or appointed thereto, as an executive officer of any of the subsidiaries
of Endorex or Orasomal, provided that the Employee is indemnified for
serving in any and all such capacities on a basis no less favorable than
is currently provided by Article VII of the Company's By-Laws. Employee
agrees that, upon termination of his employment with the Company, for any
reason whatsoever, he will resign from all positions as an employee and
officer of the Company and all of its subsidiaries.
7. Confidential Information
Employee covenants and agrees that he will not (except as required in the
course of his employment), while in the employment of the Company or
thereafter, communicate or divulge to, or use for the benefit of himself,
or any other person, firm, association or corporation, without the consent
of the Company, any information concerning any inventions, discoveries,
improvements, processes, formulas, apparatus, equipment, methods, trade
secrets, research, secret data, costs or uses or purchasers of the
Company's current or future products, research activities, immuno-
pharmaceutical agents, or services, or other confidential matters
possessed, owned, or used by the Company that may be communicated to,
acquired by, or learned of by the employee in the course of, or as a
result of, his employment with the Company. All records, files,
memoranda, reports, price lists, customer lists, drawings, plans,
sketches, documents, equipment, and the like, relating to the business of
the Company, which the Company shall use or prepare or come into contact
with, shall remain the sole property of the Company.
8. Competition
(A) During the period of the Employee's employment by the Company and for
a period of eighteen (18) months after such employment (whether such
employment shall have ended by reason of the expiration or termination of
this Agreement or otherwise), Employee will not (i) engage in; (ii) have
any interest in any person, firm or corporation that engages in; or (iii)
perform any services for any person, firm or corporation that engages in
competition with the Company, or any of its subsidiaries in the
development, research relating to, manufacture, processing, marketing,
distribution, or sale of any current or future products that were the
subject of research activities, developed, licensed, manufactured,
processed, distributed, or sold by the Company, or any of its
subsidiaries, at any time during the period of his employment by the
Company, in any area in which such business shall be carried on.
(B) Employee will not, directly or indirectly, employ, solicit for
employment, or advise or recommend to any other person that they employ or
solicit for employment, any employee of the Company during the period of
Employee's employment by the Company and for a period of two (2) years
thereafter.
(C) Notwithstanding any provision of this Section 8 to the contrary,
Employee may own no more than three percent (3%) of the total shares of
all classes of stock outstanding of any corporation having securities
registered with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934.
(D) Employee represents that his experience and capabilities are such that
the provisions of this Section 8 will not prevent him from earning a
livelihood.
9. Termination
(A) Notwithstanding any provision of this Agreement to the contrary,
Employee's employment shall automatically terminate upon his death, and
the Company at any time may terminate his employment immediately by giving
him written notice of such termination (i) for cause, as hereinafter
defined; (ii) if Employee shall violate any of the provisions of Sections
7 or 8 hereof; or (iii) if Employee shall become physically or mentally
incapacitated and by reason thereof unable to perform his duties hereunder
for a period of ninety (90) consecutive days. For the purpose of clause
(i) of this Subsection 9A, "for cause" shall mean any of the following
events: (x) conviction in a court of law of any crime or offense involving
money or other property of the Company, or any of its subsidiaries, or any
felony, or (y) violation of specific written directions of the Board of
Directors of the Company, provided, however, no discharge shall be deemed
"for cause" under this clause (y) unless Employee shall have first
received written notice from the Board of Directors of the Company
advising of the acts or omissions that constitute such violation, and such
violation continues uncured for a period of thirty (30) days after
Employee shall have received such notice.
(B) In the event that the Company terminates the employment of Employee
for any reason other than "for cause", as defined in Section 9(A) hereof,
Employee shall continue to be paid compensation by the Company for a
period of six (6) months thereafter at the rate and in the amount provided
in Section 5(A) hereof at the time of his termination.
10. Successors; Binding Agreement
(A) The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all
of the business and/or assets of the Company, by agreement in form and
substance satisfactory to the Employee, to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor to its business and/or assets as aforesaid which
executes and delivers the Agreement provided for in this Section 10, or
which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.
(B) This Agreement, and all rights of the Employee hereunder, shall inure
to the benefit of and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees. If the Employee should die while
any amounts would still be payable to him hereunder if he had continued to
life, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to the Employee's devisee,
legatee, or other designee or, if there be no such designee, to the
Employee's estate. The Employee shall not be entitled to assign any of
his rights or obligations under this Agreement.
11. Notice
For the purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to be effective upon personal delivery or fax or two (2) days after
deposit in the U.S. registered mail, return receipt requested, postage pre-
paid, addressed as follows:
If to the Employee: If to the Employer: Endorex Corp.
Robert Brey 900 North Shore Drive
255 Dunhill Way Drive Lake Bluff, Illinois 60044
Alpharetta, Georgia 33202 Attn: Michael Rosen
President
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
12. Miscellaneous
No provisions of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing signed by the
parties hereto. No waiver by either party hereto any time of any breach by
the other party hereto of, or in compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made
by either party which are not set forth expressly in this Agreement. The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of Illinois.
13. Validity
The invalidity or unenforceability of any provision or provisions of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
14. Counterparts
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, but all of which together will constitute
one and the same instrument.
15. Arbitration
Any dispute or controversy arising under or in connection with this agreement
shall be settled exclusively by arbitration, conducted before a panel of
three arbitrators, in Chicago, Illinois, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on
the arbitrator's award in any court having jurisdiction. The expense of such
arbitration shall be borne by the Company.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date and
year first above written.
By:
Attest
By: Michael Rosen, President
Endorex Corp.
Attest
By: Michael Rosen, President
Orasomal Technologies, Inc.
Robert Brey
PURCHASE AGREEMENT
AGREEMENT dated as of June 13, 1996 by and among ImmunoTherapeutics,
Inc., a Delaware corporation (the "Company"), Dominion Resources, Inc., a
Delaware corporation ("Seller") and The Aries Fund, a Series of the Aries
Trust, a Cayman Island Trust (the "Trust") and The Aries Domestic Fund, L.P.,
a Delaware limited partnership (the "Partnership") (herein the Trust and the
Fund are collectively referred to as the "Purchasers").
WITNESSETH:
WHEREAS, the Seller desires to sell to Purchasers, at a price of $.10 per
share, 4,000,000 shares of the Company's Common Stock (the "Shares"); and
WHEREAS, the Purchasers desire to purchase the Shares upon and
subject to the terms and conditions hereinafter set forth; and
WHEREAS, such shares were purchased by the Seller from the Company
pursuant to a Purchase Agreement dated March 1, 1996 (the "March Purchase
Agreement") (a copy of which is attached hereto as Exhibit "All); and
WHEREAS, the Company has been joined with and made a party to this
Agreement for the purpose of confirming the transfer of the Shares and the
assignment by the Seller to the Purchasers of certain rights (the "Rights")
under the March Purchase Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto hereby agree as follows:
l. Purchase and Sale of the Shares. Subject to the terms and conditions
set forth herein, the Seller hereby agrees to sell and transfer to Purchasers,
and Purchasers hereby agree to purchase from the Seller, in the amounts set
forth on Exhibit "B" hereto, the Shares at the Closing (as such term is
defined in Section 2.1 hereof). The purchase price for the Shares sold
pursuant to this Agreement shall be $.10 per Share, together with the
assignment of the Rights.
2. Closing; Termination.
2.1 Closing. The closing of the purchase and sale of the Shares will
take place at the offices of Purchasers at 375 Park Avenue, Suite 1501, New
York, New York. Such closing (the "Closing") will take place at 11:00 A.M.,
local time, on June 13, 1996. Such Closing may take place at such other time
and place or on such later date as may be mutually agreeable to the parties
hereto. At such Closing, the Seller will deliver to Purchasers certificates
for the Shares purchased as not forth in Section I hereof, against payment of
the purchase price therefor by Purchasers, by wire transfer or certified check
payable to the Seller. The Shares shall be registered in Purchasers, name or
the name of the nominee of Purchasers in such denominations as Purchasers
shall request according to their instructions delivered to the Seller not less
than two (2) days prior to the Closing.
<PAGE>
2.2 Termination. In the event that the transactions contemplated by
this Agreement to take place at or prior to the Closing have not been
consummated by June 29, 1996, this Agreement shall, at the option of
Purchasers, terminate and be of no further force and effect, and any payment
made by Purchasers to Seller shall be refunded to Purchasers by Seller, and
there shall be no further liability on the part of any party hereto except for
breaches of this Agreement prior to the time of such termination.
3. Conditions to the Obligations of Purchasers at the Closing. The
obligation of Purchasers to purchase and pay for the Shares to be purchased by
Purchasers at the Closing is subject to the satisfaction on or prior to June
29, 1996 of the following conditions, satisfaction of which conditions shall
not be deemed waived unless waived in writing by Purchasers:
3.1 Opinion of Counsel to the Company. Purchasers shall have
received from William S. Clarke, P.A., counsel for the Company, its opinion
dated the date of the Closing substantially in the form of Exhibit B hereto.
3.2 Representations And Warranties. All of the representations and
warranties of the Company contained in the March Purchase Agreement shall
continue to be true and correct on the Closing as of the date made.
3.3 Performance of Covenants. All of the covenants and agreements of
the Seller contained in this Agreement and required to be performed on or
prior to the date of the Closing shall have been performed in a manner
reasonably satisfactory in all respects to Purchasers.
3.4 Legal Action. No action or proceeding before any court or
governmental body shall be pending or threatened wherein an unfavorable
judgment, decree or order would prevent the carrying out of this Agreement or
any of the transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be rescinded.
3.5 Consent. The Seller and the Company shall have obtained in
writing all consents required to enable each of them to observe and comply
with all of their respective obligations under this Agreement and to
consummate the transactions contemplated hereby.
3.6 Board and committee Representation. The person designated by
Purchasers shall have been elected as a member of the Company's Board of
Directors and William McManus shall have resigned as a Director of the
Company.
3.7 Closing Documents.
(a) The Company shall have delivered to Purchasers a
certificate executed by the President of the Company dated the date of the
Closing stating that the conditions set forth in Sections 3.2 through 3.6
hereof as applicable to the Company have been satisfied, and
(b) the Seller shall have delivered to Purchasers a certificate
executed by the President of the Seller dated the date of the Closing stating
that the conditions set forth in Sections 3.2 through 3.6 hereof am applicable
to the Sellers have been satisfied, and
(c) Purchasers shall have received such certificates,
assignments of the Rights, other documents and instruments as Purchasers may
reasonably request in connection with, and to effect, the
<PAGE>
transactions contemplated by this Agreement.
3.8 Proceedings. All corporate and other proceedings taken or to be
taken in connection with the transactions contemplated hereby to be
consummated at the Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to Purchasers.
3.9 Redemption of Rights. The Board of Directors shall redeem prior
to the Closing all of the Company' a outstanding rights pursuant to Section
24(a)(i) of the Rights Agreement dated as of September 23, 1994 between the
Company and American Stock Transfer and Trust Company.
4. Conditions to the Obligations of the Seller, at the Closing. The
obligation of the Seller to sell the Shares to Purchasers as set forth herein
at the Closing is subject to the satisfaction on or prior to the date of the
Closing of the following conditions, any of which may be waived by the
Company:
4.1 Representations and Warranties. The representations and
warranties of Purchasers contained in this Agreement shall be true and correct
at and as of the date of the Closing with the same effect as if made on the
date of the Closing, except to the extent of changes caused by the
transactions contemplated hereby.
4.2 Legal Action. No action or proceeding before any court or
governmental body shall be pending or threatened wherein an unfavorable
judgment, decree or order would prevent the carrying out of this Agreement or
any of the transactions contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be rescinded.
4.3 Proceedings. All proceedings taken or to be taken by Purchasers
in connection with the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to the Company.
5. Conditions to the Obligations of the Company at the Closing. The
obligation of the Company to fulfill the conditions to the Closing at the
Closing is subject to the satisfaction on or prior to the date of the Closing
of the following conditions, any of which may be waived by the Company:
5.1 Representations and Warranties. The representations and
warranties of Purchasers contained in this Agreement shall be true and correct
at and as of the date of the Closing with the same effect au if made on the
date of the Closing, except to the extent of changes caused by the
transactions contemplated hereby.
5.2 Performance of Covenants. All of the covenants and agreements of
the Purchasers and the Seller contained in this Agreement and required to be
performed an or prior to the date of the Closing shall have been performed in
a manner reasonably satisfactory in all respects to the Company.
5.3 Board and Committee Representation. The person designated by
Purchasers shall have been elected as a member of the Company's Board of
Directors and William McManus shall have resigned as a Director of the
Company.
5.4 Legal Action. No action or proceeding before any court or
governmental body shall be pending or threatened wherein an unfavorable
judgment, decree or order would prevent the carrying out
<PAGE>
of this Agreement or any of the transactions contemplated hereby, declare
unlawful the transactions contemplated by this Agreement or cause such
transactions to be rescinded.
5.5 Proceedings. All proceedings taken or to be taken by Purchasers
in connection with the transactions contemplated hereby to be consummated at
the Closing and all documents incident thereto shall be reasonably
satisfactory in form and substance to the Company.
6. Representation and Warranties of the Seller. The Seller hereby
represents and warrants to Purchasers au follows:
6.1 Organization of Seller. The Seller is duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
6.2 Authorization. The Seller has full corporate power and authority
to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller, enforceable in accordance with its terms and conditions. The
Seller need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated by this Agreement.
6.3 Non-Contravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any provision of Seller's charter or by-laws, or (b) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Seller is a party or by
which it is bound or to which any of its assets is subject.
6.4 Brokers' Fees. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this agreement for which the Purchasers could
become liable or obligated.
6.5 Shares. The Seller holds of record and owns -beneficially the
Shares, free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), taxes,
security interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Seller is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require the Seller to sell, transfer, or otherwise dispose of any capital
stock of the Company (other than this Agreement) . The Seller is not a party
to any voting trust, proxy, or other agreement or understanding with respect
to the voting of any capital stock of the Company. All of the Shares are
validly issued, fully paid and non-assessable.
7. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Purchasers as follows:
7.1 Organization of the Company. The Company is duly organized,
validly existing, and in good standing under the laws of the jurisdiction of
its incorporation.
<PAGE>
7.2 Authorization. The Company has full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the company, enforceable in accordance with its terms and conditions.
The Company need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
7.3 Non-Contravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any provision of the Company's charter to by-laws, or (b)
conflict with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Company is a party or
by which it is bound or to which any of its assets is subject.
7.4 March Purchase Agreement. All of the representations and
warranties of the company contained in Section 6 of the March Purchase
Agreement are true and correct on the date of this Agreement.
7.5 Assignment of Rights. The Rights assigned and transferred by
Seller to the Purchasers pursuant to this Agreement will be, upon consummation
with the Closing, enforceable against the Company by the Purchasers as
assignee of Seller after the date of the Closing in accordance with the terms
thereof.
8. Representations and Warranties of the Purchasers. The Purchasers
jointly and severally represent and warrant to Seller and the Company as
follows:
8.1 Organization of the Purchasers. Each of the Purchasers are
entities duly organized or created, validly existing, and in good standing
under the laws of the jurisdiction of its incorporation.
8.2 Authorization. Each of the Purchasers has full corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of each of the Purchasers, enforceable in accordance with
its terms and conditions. Each of the Purchasers need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
8.3 Non-Contravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (a) violate any provision of either of Purchasers' organizational
documents (which includes all documents pursuant to which Purchasers were
organized or created), or (b) conflict with, result in a beach of, constitute
a default under, result in the acceleration of, crate in any party the right
to accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
either of Purchasers is a party or by which either is bound or to which any of
its assets is subject.
8.4 Brokers' Fees. Neither of the Purchasers has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Seller
could become liable or obligated.
<PAGE>
8.5 Investment. Purchasers are not acquiring the Shares with a view
to or for sale in connection with any distribution thereof within the meaning
of the Securities Act of 1933. Each of Purchasers is acquiring the Shares to
be purchased by it for its own account, beneficially and not as a nominee for
or for the account of any other person.
9. Covenants of the Seller. The Seller covenants and agrees with
Purchasers and the Company as follows:
9.1 Assignment of Rights. Concurrently with and subject to
consummation of the Closing, the Seller has assigned to the Purchasers the
following Rights under the March Purchase Agreement: (i) all rights of
Dominion to the performance of those obligations of the Company set forth in
Section 8 of the March Purchase Agreement, (ii) all rights of Dominion, if
any, to enforce any claims of Dominion against the Company for breach of any
representation or warranty against the Company set forth in Section 6 of the
March Purchase Agreement, and (iii) the rights, as a holder of Securities
under Section 9 of the March Purchase Agreement, to registration of the shares
under the Securities Act of 1933, as amended.
10. Covenants of the Company. The Company covenants and agrees with
the Seller and the Purchasers as follows:
10.1 Consent to Assignment of the Rights. The Company herewith
consents to the assignment of the Rights and agrees that such Rights shall be
enforceable by the Purchasers as set forth in Section 9.1 hereof.
11. Miscellaneous.
11.1 Survival of Representations, warranties and Covenants. All
representations, warranties, covenants and agreements contained in this
Agreement, or in any document, exhibit, schedule or certificate by any party
delivered in connection herewith shall survive the execution and delivery of
this Agreement and the date of each Closing and the consummation of the
transactions contemplated hereby, regardless of any investigation made by any
party or on its behalf, provided that, such representations and warranties
shall survive until December 31, 1996.
11.2 Expenses. The Seller agrees to pay, and save Purchasers
harmless against liability for the payment of (a) fees and expenses
(including, without limitation, attorneys' fees) incurred with respect to any
amendments or waivers (whether or not the same shall become effective) under
or with respect to this Agreement and the transactions contemplated hereby,
(b) stamp and other taxes which may be payable in respect of the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby including the issuance, delivery and acquisition of the
Shares, and (c) fees and expenses (including, without limitation, reasonable
attorneys' fees) incurred in respect of the enforcement of the rights granted
under this Agreement and the transactions contemplated hereby.
11.3 Amendments and Waivers. This Agreement and all exhibits and
schedules hereto set forth the entire agreement and understanding among the
parties as to the subject matter hereof and merges and supersedes all prior
discussions, agreements and understandings of any and every nature among them.
This Agreement may be amended, the Company may take any action herein
prohibited or omit to take any action herein required to be performed by it,
and any breach of any covenant, agreement, warranty or representation may be
waived, only if the Company has obtained the written consent or waiver of (a)
Purchasers, if the amendment, action, omission or waiver is one which affects
their rights or obligations under this Agreement and (b) the holders of 51% of
the Shares then
<PAGE>
outstanding if the amendment, action, omission or waiver is one which affects
their rights or obligations under this Agreement. No course of dealing between
or among any persons having any interest in this Agreement will be deemed
effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this Agreement.
11.4 Successors and Assigns. This Agreement may not be assigned by
the Company except with the prior written consent of the holders of 51% of the
Shares then outstanding. This Agreement shall be binding upon and inure to the
benefit of each of the Company and Seller and their respective permitted
successors and assigns and Purchasers and their successors and assigns. The
provisions hereof which are for Purchasers, benefit as purchasers or holders
of the Shares, are also for the benefit of, and enforceable by, any subsequent
holder of such Shares.
<PAGE>
11.5 Notices. All notices, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement
shall be in writing and shall be deemed to have been given personally or when
mailed by certified or registered mail, return receipt requested and postage
prepaid, and addressed to the addresses of the respective parties set forth
below or to such changed addresses as such parties may have fixed by notice;
provided, however, that any notice of change of address shall be effective
only upon receipt:
To the Purchasers:
Aries Financial Services, inc.
375 Park Avenue - Suite 1501
New York, New York 10152
With a Copy to:
David Walner, Esquire
375 Park Avenue - Suite 1501
New York, New York 10152
To the Company:
ImmunoTherapeutics, Inc.
3233 Fifteenth Street South
Fango, North Dakota 58104
Attention: Dr. Gerald Vesica
With a Copy to:
William S. Clarke, P.A.
5 Independence way
Princeton, New Jersey 08540
To the Seller:
Dominion Resources, inc.
The Abbey
355 Madison Avenue
Morristown, New Jersey 07960
With a Copy to:
William E. McManus, III, Esquire Spencer's Corner
90 Main Street - Suite 211
Centerbrook, Connecticut 06409-1058
11.6 Governing Law. The validity, performance, construction and
effect of this Agreement shall be governed by the internal laws of the State
of New Jersey without giving effect to principles of conflicts of law.
11. 7 Counterparts. This Agreement may be executed in any number of
counterparts and, notwithstanding that any of the parties did not execute the
same counterpart, each of such counterparts shall, for all purposes, be deemed
an original, and all such counterparts shall constitute one and the same
instrument binding on all of the parties thereto.
<PAGE>
11.8 Headings. The headings of the Sections hereof are inserted as a
matter of convenience and for reference only and in no way define, limit or
describe the scope of this Agreement or the meaning of any provision hereof.
11.9 Severability. In the event that any provision of this Agreement
or the application of any provision hereof is declared to be illegal, invalid
or otherwise unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall not be affected except to the extent necessary to
delete such illegal, invalid or unenforceable provision unless the provision
held invalid shall substantially impair the benefit of the remaining portion
of this Agreement.
<PAGE>
EXHIBIT "B"
The ARIES Fund, 3,000,000
A Series of the ARIES TRUST
The Aries Domestic Fund, L.P. 1,000,000
PURCHASE AGREEMENT
AGREEMENT dated as of June 26, 1996 by and among
ImmunoTherapeutics, Inc., a Delaware corporation (the "Company"),
the Aries Fund, a Series of the Aries Trust, a Cayman Island
Trust (the "Trust") and the Aries Domestic Fund, L.P., a Delaware
limited partnership (the "Partnership, and collectively with the
Trust, the "Purchasers").
WITNESSETH:
WHEREAS, the Company desires to issue and sell to
Purchasers, at a price of $.20 per share, 5,000,000 shares of the
Company's Common Stock (the "Shares"); and
WHEREAS, Purchasers desire to purchase the Shares upon and
subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements contained herein, the parties hereto hereby
agree as follows:
1. Purchase and Sale of the Shares. Subject to the terms
and conditions set forth herein, the Company hereby agrees to
issue and sell to Purchasers, and Purchasers hereby agree to
purchase from the Company, the Shares at the Closing (as such
term is defined in Section 2.1 hereof). The purchase price for
the Shares sold pursuant to this Agreement shall be $.20 per
Share.
2. Closing; Termination.
2.1. Closing. The closing of the purchase and sale of
the Shares will take place at the offices of Purchasers at 375
Park Avenue, Suite 1501, New York, New York. Such closing (the
"Closing") will take place at 10:00 A.M., local time, on June 17,
1996. Such Closing may take place at such other time and place
or on such later date as may be mutually agreeable to the parties
hereto. At such Closing, the Company will deliver to Purchasers
certificates for the Shares purchased as set forth in Section 1
hereof, against payment of the purchase price therefor by
Purchasers, by wire transfer or check payable to the Company.
The Shares shall be registered in Purchasers' name or the name of
the nominee of Purchasers in such denominations as Purchasers
shall request according to their instructions delivered to the
Company not less than two (2) days prior to the Closing.
2.2. Termination. In the event that the transactions
contemplated by this Agreement to take place at or prior to the
Closing have not been consummated by June 29, 1996, this
Agreement shall, at the option of Purchasers, terminate and be of
no further force and effect, any amounts paid by Purchasers to
the Company will be immediately refunded to Purchasers, and there
shall be no further liability on the part of any party hereto
except for breaches of this Agreement prior to the time of such
termination.
3. Conditions to the Obligations of Purchasers at the
Closing. The obligation of Purchasers to purchase and pay for the
Shares to be purchased by Purchasers at the Closing is subject to
the satisfaction on or prior to the date of the Closing of the
following conditions, which may only be waived by written consent
of Purchasers:
3.1. Opinion of Counsel to the Company. Purchasers
shall have received from William S. Clarke, P.A., counsel for the
Company, its opinion dated the date of the Closing substantially
in the form of Exhibit A hereto.
3.2. Representations and Warranties. All of the
representations and warranties of the Company contained in this
Agreement shall be true and correct at and as of the date of the
Closing with the same effect as if made on the date of the
Closing, except to the extent of changes caused by the
transactions contemplated hereby.
3.3. Performance of Covenants. All of the covenants
and agreements of the Company contained in this Agreement and
required to be performed on or prior to the date of the Closing
shall have been performed in a manner reasonably satisfactory in
all respects to Purchasers.
3.4. Legal Action. No action or proceeding before any
court or governmental body shall be pending or threatened wherein
an unfavorable judgment, decree or order would prevent the
carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be
rescinded.
3.5. Consents. The Company shall have obtained in
writing all consents required to enable it to observe and comply
with all of its obligations under this Agreement and to
consummate the transactions contemplated hereby.
3.6. Closing Documents. The Company shall have
delivered to Purchasers (a) a certificate executed by the
President of the Company dated the date of the Closing stating
that the conditions set forth in Sections 3.2 through 3.5 hereof
have been satisfied and (b) such certificates, other documents
and instruments as Purchasers may reasonably request in
connection with, and to effect, the transactions contemplated by
this Agreement.
3.7. Proceedings. All corporate and other proceedings
taken or to be taken in connection with the transactions
contemplated hereby to be consummated at the Closing and all
documents incident thereto shall be reasonably satisfactory in
form and substance to Purchasers.
4. Conditions to the Obligations of the Company at the
Closing. The obligation of the Company to issue and sell the
Shares to Purchasers as set forth herein at the Closing is
subject to the satisfaction on or prior to the date of the
Closing of the following conditions, any of which may be waived
by the Company:
4.1. Representations and Warranties. The
representations and warranties of Purchasers contained in this
Agreement shall be true and correct at and as of the date of the
Closing with the same effect as if made on the date of the
Closing, except to the extent of changes caused by the
transactions contemplated hereby.
4.2. Legal Action. No action or proceeding before any
court or governmental body shall be pending or threatened wherein
an unfavorable judgment, decree or order would prevent the
carrying out of this Agreement or any of the transactions
contemplated hereby, declare unlawful the transactions
contemplated by this Agreement or cause such transactions to be
rescinded.
4.3. Proceedings. All proceedings taken or to be taken
by Purchasers in connection with the transactions contemplated
hereby to be consummated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and
substance to the Company.
4.4. Redemption of Poison Pill. The Company's
Shareholder Rights Plan dated as of September 23, 1994 between
the Company and American Stock Transfer and Trust Company shall
have been redeemed by the Board of Directors and satisfactory
evidence of such redemption shall have been provided to counsel
for Purchasers.
5. Representations and Warranties of the Company. The
Company hereby represents and warrants to Purchasers as follows:
5.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. The Company has all requisite
corporate power and authority, and holds all licenses, permits
and other required authorizations from governmental authorities,
necessary to conduct its business as it is now being conducted or
proposed to be conducted and to own or lease the properties and
assets it now owns or holds under lease. The Company is duly
qualified or licensed and in good standing as a foreign
corporation in each jurisdiction wherein the character of its
properties or the nature of the activities conducted by it makes
such qualification or licensing necessary.
5.2. Charter Documents. The Company has heretofore
delivered to Purchasers true, correct and complete copies of the
Company's Certificate of Incorporation and By-Laws as in full
force and effect on the date hereof. Except as expressly
contemplated by this Agreement, there will be no changes or
amendments to such Certificate of Incorporation or By-laws
between the date hereof and the date of the Closing.
5.3. Capitalization. As of the date hereof and the
Closing, the Company's authorized capitalization consists of
50,000,000 shares of Common Stock, of which 9,122,047 shares are
presently issued and outstanding and 2,089,140 shares are
reserved for issuance upon the conversion or exercise of
presently outstanding convertible securities, options, warrants
or other rights to purchase Common Stock. All outstanding shares
of the Company are validly issued, fully paid and nonassessable.
No stockholder of the Company is, or as of the Closing will be,
entitled to any preemptive rights with respect to the purchase or
sale of any securities by the Company. Except as has been set
forth in Schedule 5.3 hereto, there are no outstanding options,
warrants or other rights, commitments or arrangements, written or
oral, to purchase or otherwise acquire any authorized but
unissued shares of capital stock of the Company or any security
directly or indirectly convertible into or exchangeable for any
capital stock of the Company or under which any such option,
warrant or convertible security may be issued in the future. None
of the shares of Common Stock is reserved for any purpose, and
the Company is neither subject to any obligation (contingent or
otherwise), nor has any option to repurchase or otherwise acquire
or retire any shares of its capital stock.
5.4. Subsidiaries. The Company has no wholly or
partially owned subsidiaries and does not control, directly or
indirectly, any other corporation, business trust, firm,
partnership, association, joint venture, entity or organization.
The Company does not own any shares of stock, partnership
interest, joint venture interest or any other security or
interest in any other corporation or other organization or entity.
5.5. Authorization; No Breach. The Company has the
full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder, and the execution,
delivery and performance of this Agreement and all other
transactions contemplated hereby have been duly authorized by the
Company, and this Agreement constitutes a legal, valid and
binding obligation of the Company, enforceable in accordance with
its terms, except as the enforceability hereof may be limited by
(a) bankruptcy, insolvency, moratorium and similar laws affecting
creditors' rights generally and (b) the availability of remedies
under general equitable principles. The execution and delivery
by the Company of this Agreement, the offering, sale and issuance
of the Shares pursuant to this Agreement, and the performance and
fulfillment of the Company, do not and will not (i) conflict with
or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under, or event which, with notice or
lapse of time or both, would constitute a breach of or default
under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the capital stock or assets
of the Company pursuant to, (iv) give any third party the right
to accelerate any obligation under or terminate, (v) result in a
violation of, (vi) result in the loss of any license,
certificate, legal privilege or legal right enjoyed or possessed
by the Company under, or (vii) require any authorization,
consent, approval, exemption or other action by or notice to any
court or administrative or governmental body pursuant to or
require the consent of any other person under, the Certificate of
Incorporation or By-Laws of the Company or any law, statute, rule
or regulation to which the Company is subject or by which any of
its properties are bound, or any agreement, instrument, order,
judgment or decree to which the Company is subject or by which
its properties are bound.
5.6. Financial Statements. Annexed hereto as
Schedule 5.6 are (a) the audited financial statements of the
Company for the fiscal year ended January 31, 1996, including
balance sheet as at the end of such fiscal year and the related
statements of income and cash flow statements for such fiscal
year, reported on by Mortenson & Associates, and (b) the
unaudited financial statements of the Company for the three (3)
month period ended April 30, 1996, including a balance sheet as
at the end of such period (together with any related notes, the
"Company Balance Sheet") and the related statements of income and
retained earnings and cash flow statements for such three (3)
month period (the financial statements referred to in Clauses (a)
and (b) collectively, the "Financial Statements"). For purposes
of this Agreement, April 30, 1996, shall be hereinafter referred
to as the "Balance Sheet Date." The Financial Statements have
been prepared in accordance with generally accepted accounting
principles, applied consistently with the past practices of the
Company (except as otherwise noted in such Financial Statements),
reflect all known liabilities of the Company, including all known
contingent liabilities, as of their respective dates, and present
fairly the financial position of the Company and the results of
its operations as of the time and for the period indicated
therein.
5.7. No Material Adverse Changes. Except as set forth
on Schedule 5.7 hereto, since the Balance Sheet Date there has
not at any time been (a) any material adverse change in the
financial condition, operating results, business prospects,
employee relations or customer relations of the Company, or (b)
other adverse changes, which in the aggregate have been
materially adverse to the Company.
5.8. Absence of Certain Developments. Except as
contemplated by this Agreement, and except as set forth in
Schedule 5.8 hereto, since the Balance Sheet Date, the Company
has not, nor will have prior to the Closing; (a) issued any
corporate securities; (b) borrowed any amount or incurred or
became subject to any liabilities (absolute or contingent), other
than liabilities incurred in the ordinary course of business and
liabilities under contracts entered into in the ordinary course
of business, none of which are or shall be material; (c)
discharged or satisfied any lien or encumbrance or paid any
obligation or liability (absolute or contingent), other than
current liabilities paid in the ordinary course of business; (d)
declared or made any payment or distribution of cash or other
property to the stockholders of the Company with respect to the
Common Stock or purchased or redeemed any shares of Common Stock;
(e) mortgaged, pledged or subjected to any lien, charge or any
other encumbrance, any of its properties or assets, except for
liens for taxes not yet due and payable; (f) sold, assigned or
transferred any of its assets, tangible or intangible, except in
the ordinary course of business, or disclosed any proprietary
confidential information to any person, firm or entity; (g)
suffered any extraordinary losses or waived any rights of
material value; (h) made any capital expenditures or commitments
therefor; (i) entered into any other transaction other than in
the ordinary course of business or entered into any material
transaction, whether or not in the ordinary course of business;
(j) made any charitable contributions or pledges; (k) suffered
damages, destruction or casualty loss, whether or not covered by
insurance, affecting any of the properties or assets of the
Company or any other properties or assets of the Company which
could have a material adverse effect on the business or
operations of the Company; or (l) made any change in the nature
or operations of the business of the Company.
5.9. Properties. The Company has good and marketable
title to all of the real property and good title to all of the
personal property and assets it purports to own, including those
reflected as owned on the Company Balance Sheet or acquired
thereafter, and a good and valid leasehold interest in all
property indicated as leased on the Company Balance Sheet,
whether such property is real or personal, free and clear of all
liens, charges, encumbrances or restrictions of any nature
whatsoever, except (a) such as are reflected on the Company
Balance Sheet or described in Schedule 5.9 hereto and (b) for
receivables and charges collected in the ordinary course of
business. Except as disclosed in Schedule 5.9 hereto, the Company
owns or leases all such properties as are necessary to its
operations as now conducted and as presently proposed to be
conducted and all such properties are, in all material respects,
in good operating condition and repair.
5.10. Taxes. Except as referred to in Schedule 5.10
hereto, the Company has filed all federal, state, local and
foreign tax returns and reports required to be filed, and all
taxes, fees, assessments and governmental charges of any nature
shown by such returns and reports to be due and payable have been
paid except for those amounts being contested in good faith and
for which appropriate amounts have been reserved in accordance
with generally accepted accounting principles and are reflected
on the Company Balance Sheet. There is no tax deficiency which
has been, or, to the knowledge of the Company might be, asserted
against the Company which would adversely affect the business or
operations, or proposed business or operations, of the Company.
All such tax returns and reports were prepared in accordance with
the relevant rules and regulations of each taxing authority
having jurisdiction over the Company and are true and correct.
The Company has neither given nor been requested to give any
waiver of any statute of limitations relating to the payment of
federal, state, local or foreign taxes. The Company has not
been, nor is it now being, audited by any federal, state, local
or foreign tax authorities. The Company has made all required
deposits for taxes applicable to the current tax year.
5.11. Litigation. Except as set forth on Schedule 5.11
hereto, there are no actions, suits, proceedings, orders,
investigations or claims pending or threatened against or
affecting the Company, at law or in equity or before or by any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality; there are
no arbitration proceedings pending under collective bargaining
agreements or otherwise; and, to the knowledge of the Company,
there is no basis for any of the foregoing.
5.12. Compliance with Law. The Company has complied
in all respects with all applicable statutes and regulations of
the United States and of all states, municipalities and agencies
in respect of the conduct of its business and operations, and the
failure, if any, by the Company to have fully complied with any
such statute or regulation does not and will not materially
adversely affect the business or operations of the Company.
5.13. Trademarks and Patents. Schedule 5.13 annexed
hereto contains a true and correct list of all trademarks, trade
names, patents and copyrights (and applications therefor) if any,
heretofore or presently used or required to be used by the
Company in connection with its business; and each such trademark,
trade name, patent and copyright (and application therefor)
listed in Schedule 5.13 as being owned by the Company is not
subject to any license, royalty arrangement or dispute. To the
knowledge of the Company, none of the trademarks, trade names,
patents or copyrights used by the Company in connection with its
business infringe any trademark, trade name, patent or copyright
of others in the United States or in any other country, in any
way which materially adversely affects or which in the future may
materially adversely affect the business or operations of the
Company. Except as set forth in Schedule 5.13, no stockholder,
officer or director of the Company or any other person owns or
has any interest in any trademark, trade name, patent, copyright
or application therefor, or trade secret, invention or process,
if any, used by the Company in connection with its business. To
the knowledge of the Company, the business of the Company does
not and will not cause the Company to violate any trademark,
trade name, patent, copyright, trade secret, license or
proprietary interest of any other person, in any way which
materially adversely affects or which in the future may
materially adversely affect the business or operations of the
Company. Except as disclosed in Schedule 5.13 hereto, the
Company possesses all proprietary technology necessary for the
conduct of business by the Company, both as presently conducted
and as presently proposed to be conducted.
5.14. Insurance. Schedule 5.14 annexed hereto
contains a brief description of each insurance policy maintained
by the Company with respect to its properties, assets and
business; each such policy is in full force and effect; and the
Company is not in default with respect to its obligations under
any of such insurance policies. The insurance coverage of the
Company is in amounts not less than is customarily maintained by
corporations engaged in the same or similar business and
similarly situated, including, without limitation, insurance
against loss, damage, fire, theft, public liability and other
risks. The activities and operations of the Company have been
conducted in a manner so as to conform to all applicable
provisions of these insurance policies and the Company has not
taken or failed to take any action which would cause any such
insurance policy to lapse.
5.15. Agreements. Except as set forth in Schedule
5.15 hereto, the Company is neither a party to nor bound by any
agreement or commitment, written or oral, which obligates the
Company to make payments to any person, or which obligates any
person to make payments to the Company, in the case of each such
agreement in an amount exceeding $5,000, or in the aggregate in
an amount exceeding $10,000, or which is otherwise material to
the conduct and operation of the Company's business or proposed
business or any of its properties or assets, including, without
limitation, all shareholder, employment, non-competition and
consulting agreements and employee benefit plans and arrangements
and collective bargaining agreements to which the Company is a
party or by which it is bound. All such agreements are legal,
valid and binding obligations of the Company, in full force and
effect, and enforceable in accordance with their respective
terms, except as the enforceability thereof may be limited by (a)
bankruptcy, insolvency, moratorium, and similar laws affecting
creditors' rights generally and (b) the availability of remedies
under general equitable principles. The Company has performed
all obligations required to be performed by it, and is not in
default, or in receipt of any claim, under any such agreement or
commitment, and the Company has no present expectation or
intention of not fully performing all of such obligations, nor
does the Company have any knowledge of any breach or anticipated
breach by the other parties to any such agreement or commitment.
The Company is not a party to any contract, agreement, instrument
or understanding which materially adversely affects the business,
properties, operations, assets or condition (financial or
otherwise) of the Company. Purchasers has been furnished with a
true and correct copy of each written agreement referred to in
Schedule 5.15, together with all amendments, waivers or other
changes thereto.
5.16. Undisclosed Liabilities. Except as set forth on
Schedule 5.16 hereto, the Company has no obligation or liability
(whether accrued, absolute, contingent, unliquidated, or
otherwise, whether or not known to the Company, whether due or to
become due) arising out of transactions entered into at or prior
to the Closing of this Agreement, or any action or inaction at or
prior to the Closing of this Agreement, or any state of facts
existing at or prior to the Closing of this Agreement, except (a)
liabilities reflected on the Company Balance Sheet; (b)
liabilities incurred in the ordinary course of business since the
Balance Sheet Date (none of which is a liability for breach of
contract, breach of warranty, torts, infringements, claims or
lawsuits); and (c) liabilities or obligations disclosed in the
schedules hereto.
5.17. Conflicting Agreements. Except as set forth on
Schedule 5.17, no stockholder, director, officer or key employee
of the Company is a party to or bound by any agreement, contract
or commitment, or subject to any restrictions in connection with
any previous or current employment of any such person, which
adversely affects, or which in the future may adversely affect,
the business or the proposed business of the Company.
5.18. Disclosure. Neither this Agreement nor any of
the schedules, exhibits, written statements, documents or
certificates prepared or supplied by the Company with respect to
the transactions contemplated hereby contain any untrue statement
of a material fact or omit a material fact necessary to make the
statements contained herein or therein not misleading. Except as
disclosed in Schedule 5.18 hereto, there exists no fact or
circumstance which, to the knowledge of the Company, materially
adversely affects, or which could reasonably be anticipated to
have a material adverse effect on, the existing or expected
financial condition, operating results, assets, customer
relations, employee relations or business prospects of the
Company.
5.19. Closing Date. The representations and
warranties of the Company contained in this Agreement, and all
information contained in any exhibit, schedule or attachment
hereto or in any writing delivered by the Company to Purchasers,
will be true and correct in all material respects on the date of
the Closing as though then made and as though the date of the
Closing were substituted for the date of this Agreement
throughout this Agreement, except as affected by the transactions
expressly contemplated by this Agreement.
5.20. Compliance with the Securities Laws. Except as
set forth on Schedule 5.20 hereto, neither the Company nor anyone
acting on its behalf has directly or indirectly offered the
Shares or any part thereof or any similar security of the Company
(or any other securities convertible or exchangeable for the
Shares or any similar security), for sale to, or solicited any
offer to buy the same from, anyone other than Purchasers. All
securities of the Company heretofore sold and issued by it were
sold and issued, and the Shares were offered and will be sold and
issued, in compliance with all applicable federal and state
securities laws.
5.21. Brokers. No finder, broker, agent, financial
person or other intermediary has acted on behalf of the Company
in connection with the offering of the Shares or the consummation
of this Agreement or any of the transactions contemplated hereby.
6. Representations and Warranties of Purchasers.
Purchasers hereby severally represent and warrant to the Company
as follows:
6.1. Investment Intent. Purchasers are acquiring the
Shares for their own account and not with a present view to, or
for sale in connection with, any distribution thereof in
violation of the registration requirements of the Securities Act.
Purchasers consent to the placing of a legend on the certificates
representing the Shares to the effect that such shares of Common
Stock have not been registered under the Securities Act and may
not be transferred unless (a) a registration statement under such
Act shall have become effective with respect thereto, (b) a
written opinion of William S. Clarke, P.A., or counsel for the
holder reasonably acceptable to the Company, has been obtained to
the effect that no such registration is required or (c) a
no-action letter or its equivalent has been issued by the staff
of the Securities and Exchange Commission to the effect that
registration under such Act is not required in connection with
such proposed transfer.
6.2. Authorization. Each of Purchasers has the power
and authority to execute and deliver this Agreement and to
perform all of its obligations hereunder, having obtained all
required consents, if any.
6.3. Brokers. No finder, broker, agent, financial
person or other intermediary has acted on behalf of Purchasers in
connection with the offering of the Shares or the consummation of
this Agreement or any of the transactions contemplated hereby.
6.4. Closing Date. The representations and warranties
of Purchasers contained in this Agreement or in any writing
delivered by Purchasers to the Company will be true and correct
on the date of the Closing as though then made and as though the
date of the Closing were substituted for the date of this
Agreement throughout this Agreement, except as affected by the
transactions expressly contemplated by this Agreement.
7. Covenants of the Company. The Company covenants and
agrees with Purchasers as follows:
7.1. Books and Accounts. The Company will and will
cause each Subsidiary hereafter formed or acquired to: (a) make
and keep books, records and accounts, which, in reasonable
detail, accurately and fairly reflect its transactions and
dispositions of its assets; and (b) devise and maintain a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization, (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting
principles and in accordance with the Company's past practices or
any other criteria applicable to such statements, and to maintain
accountability for assets, (iii) access to assets is permitted
only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
7.2. Periodic Reports.
(a) The Company will furnish to Purchasers as soon
as practicable, and in any event within ninety (90) days after
the end of each fiscal year of the Company (commencing with the
fiscal year ended January 31, 1996), a consolidated and
consolidating annual report of the Company and its Subsidiaries,
including a consolidated and consolidating balance sheet as at
the end of such fiscal year and consolidated and consolidating
statements of income and retained earnings, and changes in
consolidated financial position for such fiscal year, together
with the related notes thereto, setting forth in each case in
comparative form corresponding figures for the preceding fiscal
year, all of which will be correct and complete and will present
fairly the consolidated financial position of the Company and its
Subsidiaries and the consolidated results of their operations and
changes in their financial position as of the time and for the
period then ended. The consolidated portions of such financial
statements shall be accompanied by an unqualified report (other
than qualifications contingent upon the Company's ability to
obtain additional financing), in form and substance reasonably
satisfactory to Purchasers, of independent public accountants
reasonably satisfactory to Purchasers to the effect that such
financial statements have been prepared in accordance with
generally accepted accounting principles applied on a basis
consistent with prior years (except as otherwise specified in
such report), and present fairly the consolidated financial
position of the Company and its Subsidiaries and the consolidated
results of their operations and changes in their consolidated
financial position as of the time and for the period then ended.
The Company will use its best efforts to conduct its business so
that such report of the independent public accountants will not
contain any qualifications as to the scope of the audit, the
continuance of the Company and its Subsidiaries, or with respect
to the Company's compliance with generally accepted accounting
principles consistently applied, except for changes in methods of
accounting in which such accountants concur.
(b) The Company will furnish to Purchasers, as
soon as practicable and in any event within forty-five (45) days
after the end of each of the first three (3) fiscal quarters of
the Company, a quarterly report of the Company and its
Subsidiaries consisting of an unaudited consolidated and
consolidating balance sheet as at the end of such quarter and an
unaudited consolidated and consolidating statement of income and
retained earnings and changes in consolidated financial position
for such quarter and the portion of the fiscal year then ended,
setting forth in each case in comparative form corresponding
figures for the preceding fiscal year. All such reports shall be
certified by the chief financial officer of the Company to be
correct and complete, to present fairly the consolidated
financial position of the Company and its Subsidiaries and the
consolidated results of their operations and changes in their
consolidated financial position as of the time and for the period
then ended and to have been prepared in accordance with generally
accepted accounting principles.
7.3. Certificates of Compliance. Concurrently with
the furnishing of the reports pursuant to Sections 7.2(a) and
7.2(b) hereof, the Company will furnish to Purchasers an
Officer's Certificate stating that neither the Company nor any
Subsidiary is in default under, or has breached, any material
agreement or obligation, including, without limitation, this
Agreement, or if any such default or breach exists, specifying
the nature thereof and what actions the Company has taken and
proposes to take with respect thereto. The Company covenants
that promptly after the occurrence of any default hereunder or
any default under or breach of any material agreement, or any
other material adverse event or circumstance affecting the
Company or any of its Subsidiaries, it will deliver to Purchasers
an Officers' Certificate specifying in reasonable detail the
nature and period of existence thereof, and what actions the
Company has taken and proposes to take with respect thereto.
7.4. Other Reports and Inspection. The Company will
furnish to Purchasers (a) as soon as practicable after issuance,
copies of any financial statements or reports prepared by the
Company or its Subsidiaries for, or otherwise furnished to, its
stockholders or the Securities and Exchange Commission and (b)
promptly, such other documents, reports and financial data as
Purchasers may reasonably request. In addition the Company will,
upon reasonable prior notice, make available during regular
business hours to Purchasers or its representatives or designees
(a) all assets, properties and business records of the Company
and its Subsidiaries for inspection and/or copying and (b) the
directors, officers and employees of the Company and its
Subsidiaries for interviews concerning the business, affairs and
finances of the Company and its Subsidiaries, provided, however,
nothing herein shall require the Company to provide Purchasers
with copies of or access to its scientific data.
7.5. Insurance. The Company will at all times maintain
valid policies of worker's compensation insurance and such
insurance with respect to its properties and business and the
properties and business of its Subsidiaries of the kinds and in
amounts not less than is customarily maintained by corporations
engaged in the same or similar business and similarly situated,
including, without limitation, insurance against fire, loss,
damage, theft, public liability and other risks.
7.6. Use of Proceeds. After the date of each
respective Closing, the Company will use the proceeds from the
sale of the Shares for the general corporate purposes.
7.7. Material Changes. The Company will promptly
notify Purchasers of any material adverse change in the business,
properties, assets or condition, financial or otherwise, of the
Company or any of its Subsidiaries, or any other material adverse
event or circumstance affecting the Company or any of its Subsidiaries,
and of any litigation or governmental proceeding pending or, to the
knowledge of the Company or any Subsidiary, threatened against the
Company or any of its Subsidiaries or against any director or officer
of the Company or any of its Subsidiaries.
7.8. Transactions with Affiliates. Except for the
transactions contemplated by this Agreement, neither the Company
nor any Subsidiary shall (a) engage in any transaction with, (b)
make any loans to, nor (c) enter into any contract, agreement or
other arrangement (i) providing for (x) the employment of, (y)
the furnishing of services by, or (z) the rental of real or
personal property from, or (ii) otherwise requiring payments to,
any officer, director or key employee of the Company or any
Subsidiary or any relative of such persons or any other
"affiliate" or "associate" of such persons (as such terms are
defined in the rules and regulations promulgated under the
Securities Act), without the prior approval of the Company's
Board of Directors.
7.9. Corporate Existence, Licenses and Permits;
Maintenance of Properties; New Businesses. The Company will at
all times conduct its business in the ordinary course and cause
to be done all things necessary to maintain, preserve and renew
its existence and the corporate existence of each of its
Subsidiaries and will preserve and keep in force and effect, and
cause each Subsidiary to preserve and keep in force and effect,
all licenses, permits and authorizations necessary to the conduct
of its and their respective businesses. The Company will also
maintain and keep, and cause each Subsidiary to maintain and
keep, its and their respective properties in good repair, working
order and condition, and from time to time, to make all needful
and proper repairs, renewals and replacements, so that the
business carried on in connection therewith may be properly
conducted at all times.
7.10. Other Material Obligations. The Company will
comply with, and will cause each Subsidiary to comply with, (a)
all material obligations which it or its Subsidiaries are subject
to, or become subject to, pursuant to any contract or agreement,
whether oral or written, as such obligations are required to be
observed or performed, unless and to the extent that the same are
being contested in good faith and by appropriate proceedings and
the Company and its Subsidiaries have set aside on their books
adequate reserves with respect thereto, and (b) all applicable
laws, rules, and regulations of all governmental authorities, the
violation of which could have a material adverse effect upon the
business of the Company or any Subsidiary.
7.11. Amendment to the Certificate of Incorporation
and the By-Laws. The Company will perform and be in compliance
with and observe all of the provisions set forth in its
Certificate of Incorporation and By-Laws to the extent that the
performance of such obligations is legally permissible; provided
that the fact that performance is not legally permissible will
not prevent such nonperformance from constituting an event of
default under this Agreement. The Company will not amend its
Certificate of Incorporation or By-Laws so as to adversely affect
the rights of Purchasers under this Agreement, the Certificate of
Incorporation or the By-Laws.
7.12. Merger; Sale of Assets. Neither the Company nor
any Subsidiary will become a party to any merger or
consolidation, or sell, lease or otherwise dispose of any of its
assets, other than sales and leases of assets in the ordinary
course of business, without the prior approval of Purchasers,
except that (a) any Subsidiary may merge or consolidate with any
other Subsidiary or Subsidiaries, (b) any Subsidiary may merge or
consolidate with the Company so long as the Company is the
surviving entity of such merger or consolidation, and (c) any
Subsidiary may lease, sell, transfer or otherwise dispose of all
or any part of its properties and assets to the Company or any
other Subsidiary.
7.13. Acquisition. The Company will not acquire, or
permit any Subsidiary to acquire, any interest in any business
from any person, firm or entity (whether by a purchase of assets,
purchase of stock, merger or otherwise) without the prior
approval of Purchasers, except the acquisition of 1% or less of
any class of outstanding securities of a company whose securities
are listed on a national securities exchange or which has not
fewer than 1,000 stockholders and except as otherwise
specifically permitted pursuant to the provisions of this
Agreement.
7.14. Dividends; Distributions; Repurchases of Common
Stock; Treasury Stock. The Company shall not declare or pay any
dividends on, or make any other distribution with respect to, its
capital stock, whether now or hereafter outstanding, other than
dividends payable in shares of such stock, or purchase, acquire,
redeem or retire any shares of its capital stock, without the
consent of Purchasers, provided, however, the foregoing shall not
prohibit the Company from repurchasing any shares of its Common
Stock from any present or former officer, Director or employee of
the Company.
7.15. Consents. Prior to the Closing the Company
shall obtain all consents needed to enable it to perform all of
its obligations under this Agreement and the transactions
contemplated hereby.
7.16. Taxes and Liens. The Company will duly pay and
discharge, and will cause each of its Subsidiaries to duly pay
and discharge, when payable, all taxes, assessments and
governmental charges imposed upon or against the Company or its
Subsidiaries or their respective properties, or any part thereof
or upon the income or profits therefrom, in each case before the
same become delinquent and before penalties accrue thereon, as
well as all claims for labor, materials or supplies which if
unpaid might by law become a lien upon any of its property or any
property of any Subsidiary, unless and to the extent that the
same are being contested in good faith and by appropriate
proceedings and the Company and its Subsidiaries have set aside
on their books adequate reserves with respect thereto.
7.17. Restrictive Agreement. The Company covenants
and agrees that subsequent to the Closing, neither it nor any of
its Subsidiaries will be a party to any agreement or instrument
which by its terms would restrict the Company's performance of
its obligations pursuant to this Agreement.
8. Registration of Common Stock.
8.1. Demand Registration. Upon the written request
of one or more registered holders of Securities, which request
will state the intended method of disposition by such holders and
will request that the Company effect the registration under the
Securities Act of all or part of the Registrable Common Stock (as
defined in Section 9.5 hereof) of such holders, the Company will,
within ten (10) days after the receipt of such request give
written notice of such requested registration to all registered
holders of Securities and thereupon (except as expressly provided
herein) will use reasonable efforts to effect the registration
("Demand Registration") under the Securities Act of (x) the
shares of Registrable Common Stock included in the initial
request for registration (for disposition in accordance with the
intended method of disposition stated in such request) and (y)
all other shares of Registrable Common Stock the holders of which
have made written request to the Company for registration thereof
within 15 days after the receipt of such written notice from the
Company, provided that:
(a) the Company shall be required to effect only
two Demand Registrations hereunder, each of which shall have been
initially requested by holders of at least 60% of the Securities
outstanding at the time of such request, except that, upon
request of any holder of Securities (regardless of the number of
Securities held by such holder), the Company shall be required to
effect an unlimited number of registrations on Form S-3, or a
similar short form registration statement, which registrations
(hereinafter referred to as "Short Form Registrations") shall not
be included for purposes of this Section 8.1(a) in the total of
two Demand Registrations which the Company is required to effect;
(b) if a Demand Registration is in connection
with an underwritten public offering, the underwriters will be
selected by holders of a majority of Registrable Common Stock
being included in such offering, subject to the approval of the
Company (which approval shall not be unreasonably withheld), and
each holder of Securities agrees by acquisition of such
Securities not to effect any public sale or distribution of such
Securities or Registrable Common Stock (other than as part of
such underwritten public offering) during the period commencing
seven days prior to, and expiring ninety (90) days after, such
underwritten public offering has become effective;
(c) the Company shall not include and shall not
permit third parties to include additional securities in any
Demand Registration without the consent of the holders of a
majority of the shares of Registrable Common Stock sought to be
included in such Demand Registration;
(d) if a Demand Registration is in connection
with an underwritten public offering, and if the managing
underwriters advise the Company in writing that in their opinion
the amount of Registrable Common Stock requested to be included
in such registration exceeds the amount of such Registrable
Common Stock which can be sold in such offering, the Company will
nevertheless include such Registrable Common Stock in such
registration prior to the inclusion of any securities which are
not Registrable Common Stock (notwithstanding any consent
obtained in accordance with Section 8.1(c) hereof) pro rata among
the holders of Registrable Common Stock requesting inclusion on
the basis of the number of shares of Registrable Common Stock of
such holders; and
(e) registrations under this Section 8.1 will be
on a form permitted by the rules and regulations of the
Securities and Exchange Commission selected by the underwriters
if the Demand Registration is in connection with an underwritten
public offering or otherwise by the Company.
8.2. Incidental Registrations.
(a) If the Company at any time proposes to
register any of its securities under the Securities Act (other
than pursuant to Section 8.1) whether of its own accord or at the
demand of any holder of such securities pursuant to an agreement
with respect to the registration thereof, and if the form of
registration statement proposed to be used may be used for the
registration of Registrable Common Stock, the Company will give
notice to all holders of Securities not less than fifteen (15)
days prior to the filing of such registration statement of its
intention to proceed with the proposed registration (the
"Incidental Registration"), and, upon the written request of any
such holder made within ten (10) days after the receipt of any
such notice (which request will specify the Registrable Common
Stock intended to be disposed of by such holder and state the
intended method of disposition thereof), the Company will use
reasonable efforts to cause all Registrable Common Stock as to
which registration has been requested to be registered under the
Securities Act, provided that if such registration is in
connection with an underwritten public offering, such holder's
Securities to be included in such registration shall be offered
upon the same terms and conditions as apply to any other
securities included in such registration.
(b) If an Incidental Registration is a primary
registration on behalf of the Company and is in connection with
an underwritten public offering, and if the managing underwriters
advise the Company in writing that in their opinion the amount of
securities requested to be included in such registration (whether
by the Company, the holders of Securities pursuant to
Section 8.2(a) or other holders of its securities pursuant to any
other rights granted by the Company to demand inclusion of any
such securities in such registration) exceeds the amount of such
securities which can be sold in such offering, the Company will
include in such registration the amount of securities requested
to be included which in the opinion of such underwriters can be
sold, in the following order (i) first, all of the securities the
Company proposes to sell, (ii) second, subject to the terms of
any other agreement to which the Company is a party, all of the
Registrable Common Stock requested to be included in such
registration, pro rata among the holders thereof on the basis of
the number of shares of Registrable Common Stock then owned by
such holders, and (iii) third, any other securities requested to
be included in such registration, pro rata among the holders
thereof on the basis of the amount of such securities then owned
by such holders.
(c) If an Incidental Registration is a secondary
registration on behalf of holders of securities of the Company
and is in connection with an underwritten public offering, and if
the managing underwriters advise the Company in writing that in
their opinion the amount of securities requested to be included
in such registration (whether by such holders, by holders of
Securities pursuant to Section 8.2(a) or by holders of its
securities pursuant to any other rights granted by the Company to
demand inclusion of securities in such registration) exceeds the
amount of such securities which can be sold in such offering, the
Company will include in such registration, the amount of
securities requested to be included which in the opinion of such
underwriters can be sold, in the following order (i) first, all
of the securities requested to be included by holders demanding
or requesting such registration, (ii) second, subject to the
terms of any other agreement to which the Company is a party, all
of the Registrable Common Stock requested to be included in such
registration, pro rata among the holders thereof on the basis of
the number of shares of Registrable Common Stock then owned by
such holders; and (iii) third, any other securities requested to
be included in such registration, pro rata among the holders
thereof on the basis of the amount of such securities then owned
by such holders.
8.3. Registration Procedures. If and whenever the
Company is required to use reasonable efforts to effect or cause
the registration of any Registrable Common Stock under the
Securities Act as provided in this Section 8, the Company will,
as expeditiously as possible:
(a) prepare and file with the Securities and
Exchange Commission a registration statement with respect to such
Registrable Common Stock and use reasonable efforts to cause such
registration statement to become effective;
(b) prepare and file with the Securities and
Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement
effective for a period of not less than nine (9) months or such
shorter period in which the disposition of all securities in
accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement shall
be completed, and to comply with the provisions of the Securities
Act (to the extent applicable to the Company) with respect to
such dispositions;
(c) furnish to each seller of such Registrable
Common Stock such number of copies of such registration statement
and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus
included in such registration statement (including each
preliminary prospectus), in conformity with the requirements of
the Securities Act, and such other documents, as such seller may
reasonably request, in order to facilitate the disposition of the
Registrable Common Stock owned by such seller;
(d) use its reasonable efforts to register or
qualify such Registrable Common Stock covered by such
registration statement under such other securities or blue sky
laws of such jurisdictions as any seller reasonably requests, and
do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Common Stock
owned by such seller, except that (i) the Company will not be
required to register or qualify such Registrable Common Stock in
any jurisdiction in which the officers or Directors of the
Company would be required by the relevant securities commission
or its equivalent in such jurisdiction to enter into an agreement
restricting their rights to transfer their shares of Common
Stock, and (ii) the Company will not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not, but for the
requirements of this Section 8.3(d) be obligated to be qualified,
to subject itself to taxation in any such jurisdiction, or to
consent to general service of process in any such jurisdiction;
(e) provide a transfer agent and registrar for
all such Registrable Common Stock covered by such registration
statement not later than the effective date of such registration
statement;
(f) notify each seller of such Registrable Common
Stock at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any
event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material
fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus
so that, as thereafter delivered to the purchasers of such
Registrable Common Stock, such prospectus will not contain an
untrue statement of a material fact or omit to state any fact
necessary to make the statements therein not misleading;
(g) cause all such Registrable Common Stock to be
listed on each securities exchange or automated over-the-counter
trading system on which similar securities issued by the Company
are then listed;
(h) enter into such customary agreements
(including an underwriting agreement in customary form) and take
all such other actions as reasonably required in order to
expedite or facilitate the disposition of such Registrable Common
Stock; and
(i) make available for inspection by any seller
of Registrable Common Stock, any underwriter participating in any
disposition pursuant to such registration statement, and any
attorney, accountant or other agent retained by any such seller
and/or representative of such seller or underwriter, all
financial and other records, pertinent corporation documents and
properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant
or agent in connection with such registration statement,
provided, however, nothing herein shall require the Company to
provide Purchasers with copies of or access to its scientific data.
8.4. Registration and Selling Expenses.
(a) All expenses incurred by the Company in
connection with the Company's performance of or compliance with
this Section 8, including, without limitation (i) all
registration and filing fees (including all expenses incident to
filing with the National Association of Securities Dealers,
Inc.), (ii) blue sky fees and expenses, (iii) all necessary
printing and duplicating expenses and (iv) all fees and
disbursements of counsel and accountants for the Company
(including the expenses of any audit of financial statements),
retained by the Company (all such expenses being herein called
"Registration Expenses"), will be paid by the Company except as
otherwise expressly provided in this Section 8.4.
(b) The Company will, in any event, in connection
with any registration statement, pay its internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal, accounting or other
duties in connection therewith and expenses of audits of year-end
financial statements), the expense of liability insurance and the
expenses and fees for listing the securities to be registered on
one or more securities exchanges or automated over-the-counter
trading systems on which similar securities issued by the Company
are then listed.
(c) The Company shall bear the Registration
Expenses of the first Demand Registration (which is not a Short
Form Registration) and of each Short Form Registration hereunder.
Nothing herein shall be construed to prevent any holder or
holders from retaining such counsel as they shall choose, the
expenses of which shall be borne by such holder or holders.
(d) The holders of Registrable Common Stock
covered by the second Demand Registration (which is not a Short
Form Registration) shall pay or reimburse the Company for the
Registration Expenses in connection therewith, provided that they
shall not be liable for expenses which would otherwise have been
incurred by the Company in the ordinary course of business or in
excess of an aggregate of $60,000; and provided further that to
the extent securities of the Company or third parties are
included in such registration, the Registration Expenses of such
registration shall be borne pro rata by the Company and selling
security holders in proportion to the dollar value of the
securities being sold by each such person.
(e) The holders of Registrable Common Stock
covered by any Incidental Registration shall pay or reimburse the
Company for any incremental Registration Expenses incurred by
reason of the inclusion of such Registrable Common Stock in such
registration.
(f) Notwithstanding any of the foregoing, all
underwriting discounts, selling commissions and stock transfer
taxes applicable to sales of Registrable Common Stock in
connection with any Demand Registration or Incidental
Registration shall be borne by all persons who are selling
Registrable Common Stock pursuant to such Registration Statement
in proportion to the dollar value of the securities being sold by
each such person, or in such other proportion as they may agree.
(g) All fees and expenses required to be paid by
the holders of Registrable Common Stock in connection with any
Demand Registration or Incidental Registration hereunder shall be
borne by said holders in proportion to the dollar value of the
securities of such holder covered by such Demand Registration or
Incidental Registration.
8.5. Other Public Sales and Registrations. The
Company agrees that if it has previously filed a registration
statement with respect to Registrable Common Stock in connection
with a Demand Registration or Incidental Registration hereunder,
and if such previous registration has not been withdrawn or
abandoned, the Company will not file or cause to become effective
any other registration of any of its securities under the
Securities Act or otherwise effect a public sale or distribution
of its securities (except pursuant to registration on Form S-8 or
any successor form relating to a special offering to the
employees or security holders of the Company or any Subsidiary),
whether on its own behalf or at the request of any holder of such
securities, until at least ninety (90) days have elapsed after
the effective date of such previous registration.
8.6. Transferees of Securities. Notwithstanding
anything else set forth in this Section 8, no person to whom
Securities are transferred shall have any rights under this
Section 9 as a holder of such Securities unless such person
agrees to be bound by the terms and conditions of this Agreement.
8.7. Indemnification.
(a) The Company hereby agrees to indemnify, to
the extent permitted by law, each holder of Registrable Common
Stock, its officers and directors, if any, and each person, if
any, who controls such holder within the meaning of the
Securities Act, against all losses, claims, damages, liabilities
and expenses (under the Securities Act or common law or
otherwise) caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement or prospectus (and as amended or supplemented if the
Company has furnished any amendments or supplements thereto) or
any preliminary prospectus, which registration statement,
prospectus or preliminary prospectus shall be prepared in
connection with a Demand Registration or Incidental Registration,
or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make
the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or expenses are caused by
any untrue statement or alleged untrue statement contained in or
by any omission or alleged omission from information furnished to
the Company by such holder in connection with a Demand
Registration or Incidental Registration, provided the Company
will not be liable pursuant to this Section 8.7 if such losses,
claims, damages, liabilities or expenses have been caused by any
selling security holder's failure to deliver a copy of the
registration statement or prospectus, or any amendments or
supplements thereto, after the Company has furnished such holder
with a sufficient amount of copies of the same.
(b) In connection with any registration statement
in which a holder of Registrable Common Stock is participating,
each such holder shall furnish to the Company in writing such
information as is reasonably requested by the Company for use in
any such registration statement or prospectus and shall
indemnify, to the extent permitted by law, the Company, its
directors and officers and each person, if any, who controls the
Company within the meaning of the Securities Act, against any
losses, claims, damages, liabilities and expenses resulting from
any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact
required to be stated in the registration statement or prospectus
or any amendment thereof or supplement thereto or necessary to
make the statements therein not misleading, but only to the
extent such losses, claims, damages, liabilities or expenses are
caused by an untrue statement or alleged untrue statement
contained in or by an omission or alleged omission from
information so furnished by such holder in connection with the
Demand Registration or Incidental Registration. If the offering
pursuant to any such registration is made through underwriters,
each such holder agrees to enter into an underwriting agreement
in customary form with such underwriters and to indemnify such
underwriters, their officers and directors, if any, and each
person who controls such underwriters within the meaning of the
Securities Act to the same extent as hereinabove provided with
respect to indemnification by such holder of the Company.
(c) Promptly after receipt by an indemnified
party under Section 8.7(a) or Section 8.7(b) of notice of the
commencement of any action or proceeding, such indemnified party
will, if a claim in respect thereof is made against the
indemnifying party under such Section, notify the indemnifying
party in writing of the commencement thereof; but the omission so
to notify the indemnifying party will not relieve it from any
liability which it may have to any indemnified party otherwise
than under such Section. In case any such action or proceeding is
brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein, and, to the extent
that it wishes, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
approved by such indemnified party, and after notice from the
indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under such Section for any legal
or any other expenses subsequently incurred by such indemnified
party in connection with the defense thereof (other than
reasonable costs of investigation) unless incurred at the written
request of the indemnifying party. Notwithstanding the above, the
indemnified party will have the right to employ counsel of its
own choice in any such action or proceeding if the indemnified
party has reasonably concluded that there may be defenses
available to it which are different from or additional to those
of the indemnifying party, or counsel to the indemnified party is
of the opinion that it would not be desirable for the same
counsel to represent both the indemnifying party and the
indemnified party because such representation might result in a
conflict of interest (in either of which cases the indemnifying
party will not have the right to assume the defense of any such
action or proceeding on behalf of the indemnified party or
parties and such legal and other expenses will be borne by the
indemnifying party). An indemnifying party will not be liable to
any indemnified party for any settlement of any such action or
proceeding effected without the consent of such indemnifying party.
(d) If the indemnification provided for in
Section 8.7(a) or Section 8.7(b) is unavailable under applicable
law to an indemnified party in respect of any losses, claims,
damages or liabilities referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of the holders
of Registrable Common Stock on the other in connection with the
statements or omissions which resulted in such losses, claims,
damages, or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand
and of the holders of Registrable Common Stock on the other shall
be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied
by the Company or by the holders of Registrable Common Stock and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed
to include, subject to the limitations set forth in
Section 9.7(c), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or
defending any action or claim. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person
who is not guilty of such fraudulent misrepresentation.
(e) Promptly after receipt by the Company or any
holder of Securities of notice of the commencement of any action
or proceeding, such party will, if a claim for contribution in
respect thereof is to be made against another party (the
"contributing party"), notify the contributing party of the
commencement thereof; but the omission so to notify the
contributing party will not relieve it from any liability which
it may have to any other party other than for contribution
hereunder. In case any such action, suit, or proceeding is
brought against any party, and such party notifies a contributing
party of the commencement thereof, the contributing party will be
entitled to participate therein with the notifying party and any
other contributing party similarly notified.
9. Certain Definitions. For the purposes of this
Agreement the following terms have the respective meanings set
forth below:
9.1. "Affiliate" means any person, corporation, firm or
entity which directly or indirectly controls, is controlled by,
or is under common control with the indicated person,
corporation, firm or entity.
9.2. "Common Stock" means the Company's Common Stock.
9.3. "Generally Accepted Accounting Principles" means
generally accepted accounting principles consistently applied.
9.4. "Officers' Certificate" means a certificate
executed on behalf of the Company by its President, Chairman of
the Board, Chief Financial Officer, Secretary or one of its Vice-
Presidents.
9.5. "Registrable Common Stock" means any Common Stock
owned by, or any Common Stock issuable upon exercise of any
options, warrants or other rights to purchase Common Stock owned
by, a holder of Securities.
9.6. "Securities" means the Shares, whether issued at
the Closing or thereafter, but shall not include any such Shares
or Common Stock sold or distributed by the Company in any public
offering.
9.7. "Securities Act" means, as of any given time, the
Securities Act of 1933, as amended, or any similar federal law
then in force.
9.8. "Securities Exchange Act" means, as of any given
time, the Securities Exchange Act of 1934, as amended, or any
similar federal law then in force.
9.9. "Securities and Exchange Commission" includes any
governmental body or agency succeeding to the functions thereof.
9.10. "Subsidiary" means any person, corporation, firm
or entity at least the majority of the equity securities (or
equivalent interest) of which are, at the time as of which any
determination is being made, owned of record or beneficially by
the Company, directly or indirectly, through any Subsidiary or
otherwise.
10. Miscellaneous.
10.1. Survival of Representations, Warranties and
Covenants. All representations, warranties, covenants and
agreements contained in this Agreement, or in any document,
exhibit, schedule or certificate by any party delivered in
connection herewith shall survive the execution and delivery of
this Agreement and the date of the Closing and the consummation
of the transactions contemplated hereby, regardless of any
investigation made by Purchasers or on their behalf, provided
that, except as otherwise provided herein, the obligations of the
Company to perform the covenants and agreements set forth in
Section 7 hereof will continue only so long as any Purchaser owns
in excess of 10% of the Securities or until the Securities have
been registered under the Securities Act and distributed to the
public, and, further provided that, such representations and
warranties shall survive until December 31, 1996.
10.2. Expenses. The Company agrees to pay, and save
Purchasers harmless against liability for the payment of (a) fees
and expenses (including, without limitation, attorneys' fees)
incurred with respect to any amendments or waivers (whether or
not the same shall become effective) under or with respect to
this Agreement and the transactions contemplated hereby, (b)
stamp and other taxes which may be payable in respect of the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby including the issuance,
delivery and acquisition of the Shares, and (c) fees and expenses
(including, without limitation, reasonable attorneys' fees)
incurred in respect of the enforcement of the rights granted
under this Agreement and the transactions contemplated hereby.
10.3. Amendments and Waivers. This Agreement and all
exhibits and schedules hereto set forth the entire agreement and
understanding among the parties as to the subject matter hereof
and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them. This
Agreement may be amended, the Company may take any action herein
prohibited or omit to take any action herein required to be
performed by it, and any breach of any covenant, agreement,
warranty or representation may be waived, only if the Company has
obtained the written consent or waiver of (a) Purchasers, if the
amendment, action, omission or waiver is one which affects its
rights or obligations under this Agreement and (b) the holders of
51% of the Securities then outstanding if the amendment, action,
omission or waiver is one which affects their rights or
obligations under this Agreement. No course of dealing between
or among any persons having any interest in this Agreement will
be deemed effective to modify, amend or discharge any part of
this Agreement or any rights or obligations of any person under
or by reason of this Agreement.
10.4. Successors and Assigns. This Agreement may not
be assigned by the Company except with the prior written consent
of the holders of 51% of the Securities then outstanding. This
Agreement shall be binding upon and inure to the benefit of the
Company and its permitted successors and assigns and Purchasers
and their successors and assigns. The provisions hereof which
are for Purchasers' benefit as purchasers or holders of the
Shares, are also for the benefit of, and enforceable by, any
subsequent holder of such Shares.
10.5. Notices. All notices, demands and other
communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and shall be
deemed to have been given personally or when mailed by certified
or registered mail, return receipt requested and postage prepaid,
and addressed to the addresses of the respective parties set
forth below or to such changed addresses as such parties may have
fixed by notice; provided, however, that any notice of change of
address shall be effective only upon receipt:
To the Company:
Immunotherapeutics, Inc.
3233 Fifteenth Street South
Fargo, North Dakota 58104
Attention: Dr. Gerald Vosika
With a Copy to:
William S. Clarke, P.A.
5 Independence Way
Princeton, New Jersey 08540
To Purchasers:
Aries Financial Services, Inc.
375 Park Avenue, Suite 1501
New York, New York 10152
With a Copy to:
David R. Walner, Esquire
Aries Financial Services, Inc.
375 Park Avenue, Suite 1501
New York, New York 10152
10.6. Governing Law. The validity, performance,
construction and effect of this Agreement shall be governed by
the internal laws of the State of New York without giving effect
to principles of conflicts of law.
10.7 Counterparts. This Agreement may be executed in
any number of counterparts and, notwithstanding that any of the
parties did not execute the same counterpart, each of such
counterparts shall, for all purposes, be deemed an original, and
all such counterparts shall constitute one and the same
instrument binding on all of the parties thereto.
10.8 Headings. The headings of the Sections hereof
are inserted as a matter of convenience and for reference only
and in no way define, limit or describe the scope of this
Agreement or the meaning of any provision hereof.
10.9. Severability. In the event that any provision
of this Agreement or the application of any provision hereof is
declared to be illegal, invalid or otherwise unenforceable by a
court of competent jurisdiction, the remainder of this Agreement
shall not be affected except to the extent necessary to delete
such illegal, invalid or unenforceable provision unless the
provision held invalid shall substantially impair the benefit of
the remaining portion of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
Immunotherapeutics, Inc.
By: /s/ Gerald Vosika
___________________________________
Name: Gerald Vosika
Title: Chairman
The Aries Fund, a Series of
the Aries Trust
By its Investment Manager, Aries
Financial Services, Inc.
By: /s/ Lindsay Rosenwald
____________________________________
Name: Lindsay Rosenwald
Title: President
The Aries Domestic Fund, L.P.
By its General Partner, Aries
Financial Services, Inc.
By: /s/ Lindsay Rosenwald
__________________________________
Name: Lindsay Rosenwald
Title: President
LEASE
THIS INDENTURE OF LEASE, dated the 28th day of April 1993, by and between:
Landmark Investors, a partnership, (hereinafter referred to as the
"Landlord"), and ImmunoTherapeutics, Inc. (Hereinafter referred to as the
"Tenant").
WITNESSETH
In consideration of the sum of Ten and no/100ths Dollars ($10.00), and other
good and valuable consideration, and the mutual covenants contained herein,
Landlord and Tenant hereby agree with each other as follows:
ARTICLE I - DEMISE OF PREMISES
Section 1.01. Landlord hereby leases to Tenant, and Tenant hereby hires from
Landlord, upon and subject to the terms, conditions, covenants and provisions
hereof, that certain building and land known as 3233 South 15th Street, Fargo,
North Dakota, which consists of a free-standing building of approximately
7,500 square feet on the east side of real estate more specifically described
on Exhibit "A" attached hereto and made a part hereof, together with any and
all improvements, appurtenances, rights, privileges and easements benefitting,
belonging to or pertaining thereto (all of the foregoing hereinafter referred
to as the "Premises").
ARTICLE II - TERM
Section 2.01. The term of this lease shall be for three (3) years to commence
upon substantial completion of improvements by Tenant and the commencement by
Tenant of doing business from the premises, but in no event shall the
commencement date be later than August 1, 1993 (Tenant shall be given
possession on or about April 16, 1993, for the purpose of constructing Tenant
improvements and will pay and discharge all utilities from May 1, 1993,
through the commencement date), unless sooner terminated as hereinafter
provided. The lease term by be renewed in accordance with Article XXIII of
this lease. Tenant will pay rent July 15 to August 1, 1993 in the amount
of $1,328.13.
ARTICLE III - RENT
Section 3.01. Tenant covenants and agrees to pay Landlord for the Premises,
without offset or deduction provided Landlord is in full compliance with this
agreement, and without previous notice or demand therefore, rent as follows:
For a period commending on the commencement date of the term of this lease
and terminating three (3) years thereafter, annual rent as follows:
1. Annual rent during the first year in the amount of $31,875.00
2. For a period commencing one year from the commencement date of the term of
this lease and terminating two years thereafter, annual rent in the amount
of $39,375.00.
Section 3.02. Rent, as set forth in Section 3.01, shall be payable by Tenant
in equal monthly installments, in advance, commencing on the first day of the
period set forth in Section 3.01 and on the same day of each and every
calendar month thereafter during the term hereof in the sum of $2,656.25 in
the first year, and $3,281.25 during the second and third year of the term of
this lease. All payments of rent shall be made by Tenant to Landmark
Investors, at 3341 15th Street South, Box 7189, Fargo, North Dakota, 58109, or
such other place as Landlord may, from time to time designate. In the event
that the commencement date of this Lease is on a date other than the 1st day
of the month, any resulting partial month's lease payment shall be calculated
and paid by Tenant to Landlord for said partial month. Said partial month
shall not be included in determining the commencement date for annual rent
pursuant to Section 3.01 or the monthly rent set forth in this Section.
Section 3.03. Monthly payments as set forth in Section 3.02 shall be subject
to a late payment charge of 10% of the monthly rent, or the maximum rate
allowable by law, whichever is less.
ARTICLE IV - NET LEASE
CONSTRUCTION: TAXES, UTILITY EXPENSES AND OTHER CHARGES
Section 4.01. It is the intention of the parties that the rent payable
hereunder shall be net to the Landlord, so that this lease shall yield to
Landlord the rent per annum specified in Section 3.01 during the term of this
lease. The Landlord shall receive the rent free from, and Tenant shall pay,
all costs, expenses and obligations of every kind and nature whatsoever
relating to the Premises except as specified under this Lease.
Section 4.02. Landlord shall be responsible for the "base amount" of all real
estate taxes, special and general assessments (including assessments for
benefits for public works or improvements, whether or not commenced or
completed prior to the term of this lease) and building insurance. The "base
amount" equals the taxes, specials and insurance for the year 1992. Any
increase over the "base amount" from year to your shall be paid by the Tenant.
In determining increases to the "base amount", it is understood that Tenant
shall be responsible only for a percentage of the increases. The percentage
of the increases Tenant shall be responsible for shall equal 28% of the total
increases to the base amount. In the event the Landlord fails to pay the
amounts required of him, Tenant, at his option, may pay said amounts and shall
be entitled offset said amounts, with 10% interest, or the maximum rate
allowed by law, from future rent payments. Failure by Tenant to pay amounts
due to Landlord, after thirty (30) days written notice to Tenant, notifying
Tenant of the amount and date due shall constitute a default under this Lease.
Said additional amounts shall be treated as additional rent and shall be
subject to the same late payment charge as set forth in Section 3.03 above.
Tenant shall, during the term of this Lease, pay and discharge punctually, as
and when the same shall become due and payable, and before any fine, penalty,
interest or cost may be added thereto for the nonpayment thereof, and before
the same shall become a lien upon the Premises, to the public officers or
others charged with the collection thereof, all water rents, rates and
charges, sewer rents, rates and charges; charges for heat, gas, hot water,
electricity, light and power and other services furnished to the Premises,
and other governmental impositions and charges of every kind and nature
whatsoever, extraordinary and ordinary, unforeseen as well as foreseen.
ARTICLE V - USE OF PREMISES COMPLIANCE WITH LAW
Section 5.01. Tenant may use or suffer the use of the Premises for its
general business purposes, and other purposes, but shall not use the premises
for the operation of a retail food and/or liquor establishment.
Section 5.02. Except to the extent of Landlord's responsibility under this
Lease, during the term of this lease, Tenant shall, at its own cost and
expense, promptly observe and comply with all present and future laws,
ordinances, requirements, orders, directives, rules and regulations of the
Federal, State, County and Municipal Governments and of all other governmental
authorities affecting the Premises or appurtenances thereto, or any part
thereof, of the use thereof, whether the same are in force at the commencement
of the term of this lease or may in the future be passed, enacted or directed.
Tenant shall pay all costs, expenses, liabilities, losses, damages, fines,
penalties, claims and demands, including reasonable counsel fees, that may in
any manner arise out of or be imposed because of the failure of Tenant to
comply with the covenants herein.
Section 5.03. Tenant shall comply with and execute all rules, requirements
and regulations of the Board of Fire Underwriters, and all insurance companies
with policies of insurance at any time in force with respect to the Premises.
ARTICLE VI - IMPROVEMENTS, REPAIRS, ADDITION, REPLACEMENTS
Section 6.01. Tenant shall have the right, at its own cost and expense, to
construct on any part or all of the Premises, at any time and from time to
time during the term of this lease, buildings and other improvements, and to
make alterations, changes, improvements and additions thereto (hereinafter
referred to as the "Work"), provided that the written consent of the Landlord
therefor shall be first obtained, which consent shall not be unreasonably
withheld.
Section 6.02. Landlord shall be responsible for the maintenance of roof
structure, parking lot and all other major components of the building as well
as parking lot maintenance and yard maintenance and Tenant will be allocated
parking spaces by the Landlord on the west side of the structure, for Tenant's
exclusive use. Landlord agrees that it will clean up the lot surrounding the
building and keep the parking lot and property in presentable condition.
Tenant shall be responsible for sidewalk snow removal.
Section 6.03. Except as provided in Section 6.02, Tenant shall, at Tenant's
own cost and expense, put, keep and maintain in thorough repair and good order
and safe condition (reasonable wear and tear excepted) the Premises, and any
improvements thereon, at the commencement of the term hereof or thereafter
erected upon the Premises, or forming part of the Premises, and their full
equipment and appurtenances, and each and every part thereof, both inside and
outside, and shall repair the whole and each and every part thereof in order
to keep the same at all times during the term hereof in thorough repair and
good order and safe condition (reasonable wear and tear excepted), howsoever
the necessity or desirability therefore may occur, and shall use all
reasonable precaution to prevent waste, damage or injury. Tenant shall also,
at Tenant's own cost and expense, put, keep and maintain the Premises in
thorough repair and good order and safe condition (reasonable wear and tear
excepted), and free from dirt, rubbish and other obstructions or encumbrances.
Tenant shall indemnify and save harmless Landlord from and against all costs,
expenses, claims, losses, damages, fines or penalties, including reasonable
counsel fees which Landlord is obligated to incur in the event of litigation,
because or due to Tenant's failure to comply with the foregoing, and Tenant
shall not call upon Landlord for any disbursement or outlay or money
whatsoever except as provided in Section 6.02, and hereby expressly releases
and discharges Landlord of and from any liability or responsibility whatsoever
in connection therewith.
Section 6.04. Landlord shall not be required to furnish any services or
facilities or, except as provided in Section 6.02, to made any improvements,
repairs or alterations of any kind on, in or to the Premises during the term
of this Lease, or any option term.
Section 6.05. Consent given by Landlord for any work to be dome by Tenant
shall in no event make Tenant the agent of Landlord for any purpose
whatsoever.
ARTICLE VII - COVENANT AGAINST LIENS
Section 7.01. If, because of any act or omission of Tenant, or any of
Tenant's agents, employees or contractors, any instrument which may form the
basis for any mechanic's lien or other lien, charge or oder for the payment
of money, shall be filed against Landlord or any portion of the Premises,
Tenant shall, at its own cost and expense, cause the same to be discharged of
record within thirty (30) days after written notice from Landlord to Tenant
thereof, and Tenant shall indemnify and save harmless Landlord against and
from all costs, liabilities, suits, penalties, claims and demands, including
reasonable counsel fees, resulting therefrom.
Section 7.02. Nothing contained in this lease shall be construed as a consent
on the part of Landlord to subject the estate of the Landlord in the Premises
to liability under the North Dakota Mechanic's Lien Law, it being expressly
understood that the Landlord's estate shall not be subject to such liability.
Section 7.03. Prior to commencement of any work or the delivery of any
materials to the premises by a contractor, subcontractor or materialman
(hereinafter collectively called "contractor"), Tenant shall deliver to the
Landlord a recordable Waiver of Lien Affidavit (hereinafter called
"Contractor's Waiver of Lien") from each such contractor in the form attached
hereto as Exhibit "B". The Contractor's Waiver of Lien provides, among other
things, that the Contractor waives any and all lien rights that it may have
against Landlord's interest in the premises or any portion thereof.
ARTICLE VIII - INDEMNIFICATION: NO LIABILITY OF LANDLORD
Section 8.01 Tenant shall indemnify and save harmless Landlord from and
against any and all liability, damage, penalties or judgments arising from
any breach, non-performance or violation by the Tenant, or Tenant's agents,
employees, contractors or invitees of any covenant or provision of this
lease, or arising from injury to person or property sustained by anyone on or
about the Premises resulting from any act or acts or omission or omissions or
the carelessness, negligence or improper conduct or Tenant or Tenant's agents,
employees, contractors or invitees, or arising from or out of any occurrence
in, upon, at or from the Premises, or the occupancy, condition or use of the
Premises. Tenant shall, at its own cost and expense, defend any and all suits
or actions (just or unjust) which may be brought against Landlord or in which
Landlord may be impleaded with others upon any such above-mentioned matter.
Section 8.02. Except as otherwise provided in this lease, Tenant agrees to
take such steps as it may deem necessary and adequate for the protection of
itself, and its agents, employees and invitees, and the property of each of
them, against injury, damage or loss by insurance, as a self-insurer or
otherwise. The Landlord, its agents and employees shall not be liable or
responsible for any damage or injury to any property, or any person,
including without limitation any damage or injury to any person, including
without limitation any damage or injury to the property or person of Tenant,
or any of Tenant's agents, employees or invitees, at any time on or about
the Premises, or arising from or out of any occurrence in, upon, at or from
the Premises, or the occupancy, condition or use of the Premises, or any
causes whatsoever.
ARTICLE IX - ASSIGNMENT AND SUBLETTING
Section 9.01. The Premises shall not be sublet in whole or in part,
without the written consent of the Landlord, which consent shall not be
unreasonably withheld, and such consent having been given, the Tenant shall,
nevertheless, remain primarily liable to perform all covenants and conditions
hereof and to guaranty such performance by its subtenant. This Lease may be
assigned to a purchaser, or successor in interest, provided such purchaser or
successor in interest is in a financial condition equal to, or better than,
Tenant, as reflected by Tenant's financial statement upon the execution of
this Lease. In such an event, Tenant shall not be released from further
liability under this Lease unless released, in writing, by the Landlord. At
least ten (10) days prior to the effective date thereof, Tenant shall furnish
Landlord with a conformed copy of each such assignment or sublease, together
with an agreement in writing executed by any such assignee or subtenant to
assume the obligations imposed by this lease upon the Tenant and to perform
the same in accordance with the terms hereof.
ARTICLE X - SURRENDER OF PREMISES BY TENANT: HOLDOVER
Section 10.01. Except as otherwise provided in this lease, Tenant shall on
the last day of the term, or sooner termination, of this lease peaceably and
quietly surrender the Premises to the Landlord, including any buildings and
other improvements then thereon. Any buildings and other improvements shall
be surrendered in good condition and repair, reasonable wear and tear
excepted. Before surrendering the Premises, Tenant shall remove all its
personal property therefrom. Tenant may remove any equipment, cabinets or
other installations made by Tenant, commonly known as "trade fixtures",
provided Tenant shall repair any damage to the Premises resulting from such
removal. At the option of the Landlord all property not so removed shall be
deemed abandoned by the Tenant and shall thereupon become the property of the
Landlord, or Landlord may remove the property in any manner that the Landlord
shall choose and store the said property without liability to Tenant for loss
thereof, and the Tenant agrees to pay to Landlord on demand any and all
expenses incurred in such removal, including court costs and attorney's fees
and storage charges on such property for any length of time the same shall be
in the Landlord's possession, or the Landlord, at its option, without notice,
may sell said property or any part of the same at private sale and without
legal process for such price as the Landlord may obtain and apply the proceeds
of such sale upon any amount due under this lease and upon the expense
incident to the removal and sale of said property.
Section 10.02. If Tenant shall remain on the Premises after the expiration or
sooner termination of the term of this lease, such holder over shall not
constitute a renewal or extension of this lease. Landlord may elect, at its
option, to construe such holding over as a tenancy from month to month on the
terms and conditions of this lease, or Landlord may elect to treat Tenant as
one who has not removed at the end of its term, and thereupon be entitled to
all the remedies against Tenant provided by law.
ARTICLE XI - INSURANCE
Section 11.01. Tenant shall provide at its own expense and keep in force
during the term of this lease, general liability insurance insuring against
and saving harmless the Landlord and Tenant, as their respective interests may
appear, from all liability arising from any injury or damage sustained by any
person, or the property of any person, occurring on or about the Premises in
the amount of at least One Million Dollars with respect to injury or death to
any one person and any one accident or occurrence, and One Hundred Thousand
Dollars with respect to damages to property.
Section 11.02. All policies of insurance required hereunder shall be issued
by insurance companies of recognized responsibility and duly authorized to
transact business in the State of North Dakota. Tenant agrees to deliver to
Landlord, prior to the commencement of the term of this lease, and thereafter
not less than thirty (30) days prior to the expiration of any such policy, the
originals or copies certified by the insurance companies, of all such policies
of insurance, together with proof of the payment of the premiums therefor.
Such insurance shall be non-cancelable without ten (10) days' written notice
to Landlord. All policies of insurance shall, to the extent obtainable,
provide that any loss payable shall be payable notwithstanding any act or
negligence of Tenant.
Section 11.03. All insurance policies carried by Tenant and Landlord
covering the Premises
or in any manner relating thereto, including but not limited to the insurance
required hereunder, shall expressly waive any right or subrogation on the part
of the insurer against the Landlord. Tenant agrees that its policies will
include such waiver clause or endorsement so long as the same shall be
obtainable without extra cost, or if extra cost shall be charged therefor, so
long as the Landlord pay such extra cost after notice thereof.
Section 11.04. Tenant shall not violate or permit to be violated any of the
conditions or provisions or any of the within policies, and Tenant shall so
perform and satisfy the requirements of the companies writing such policies
that at all times companies of good standing shall be willing to write and
continue such insurance.
ARTICLE XII - DESTRUCTION
Section 12.01. The complete or partial destruction or damage by fire or
other casualty, or any building or improvement now or hereafter on the
Premises shall not terminate this lease, nor entitle Tenant to surrender
possession of the Premises, or to terminate this lease. Tenant shall be
entitled to an abatement of rent for any period during which the Premises
are uninhabitable because of such casualty described above.
Section 12.02. In the event that, at any time during the term of this lease,
the buildings and improvements now or hereafter on the Premises shall be
destroyed in whole or in part by fire or other cause, Landlord shall decide
within sixty (60) days whether to rebuild said buildings and improvements. In
the event Landlord does not rebuild, this lease shall terminate. If Landlord
decides to rebuild, it shall give Tenant written notice of that decision and
the building shall be rebuilt within six (6) months of the decision to rebuild
or, the Lease shall terminate. Subject to the above, in the event that
Landlord does rebuild, the terms of this lease shall remain as set forth under
this Lease, and any period of uninhabitability shall not change the term of
this lease.
ARTICLE XIII - DEFAULT
Section 13.01. If the Tenant shall fail to pay any installment of monthly
rent by the 10th of the month, or any other charges payable by Tenant here-
under when the same shall be due and payable, or if the Tenant shall fail to
perform any of the other covenants, conditions and agreements herein contained
on Tenant's part to be kept or performed and shall continue such failure
without curing the same for a period of thirty (30) days (except for such
default with due diligence not susceptible of being cured within such thirty
(30) day period, in which event the time permitted to the Tenant to cure such
default shall be extended for as long as shall be necessary to cure such
default, provided Tenant commences promptly to cure such default, and provided
further that such period of time shall not be so extended to jeopardize the
interest of the Landlord in the Premises), or if the Tenant or any one of them
shall be adjudicated as bankrupt or adjudged to be insolvent, or a receiver or
trustee shall be applied for or appointed for the Tenant's property or
affairs, or if there shall be filed a petition in bankruptcy or insolvency, or
for an arrangement or reorganization by or against Tenant, or if the Tenant or
any one of them shall make an assignment for the benefit of creditors or shall
compound its debts and such adjudication, appointment, petition or assignment
shall not be set aside, vacated or discharged within thirty (30) days
thereafter, then in any one or more of such events, Landlord may, at
Landlord's option, have the immediate right to sole and exclusive possession
of the Premises, and Landlord, in addition to any other remedy which Landlord
may have by law, shall have the immediate right to recover possession of the
Premises by any lawful means, with or without legal process, and remove Tenant
and/or all occupants of the Premises and their effects.
Section 13.02. In any case where Landlord has recovered possession of the
Premises by reason of Tenant's default, Tenant shall nevertheless remain
liable to the Landlord as hereinafter provided in this Section 13.02 and
Section 13.02, unless Landlord has by written notice specifically elected to
terminate this Lease. Landlord may, at Landlord's option, occupy the
Premises, or may re-let the Premises or any part thereof as agent of Tenant,
for a term or terms to expire prior to, at the same time as or subsequent to
the original expiration date of this lease, at Landlord's option, and receive
the rent therefor, applying the same first to the payment of such expenses as
Landlord may have incurred in connection with the recovery of possession,
repair necessary because of the condition in which the Premises were left by
Tenant or otherwise necessary for re-letting, and the re-letting, including
brokerage and attorney's fees, and then to the payment of damages in an amount
equal to the rent hereunder and to the cost and expense of performance of the
other covenants of Tenant as herein provided. In re-letting the Premises as
aforesaid, Landlord may grant rent concessions, and Tenant shall not be
credited therewith. No such re-letting shall constitute a surrender and
acceptance or be deemed evidence thereof. If Landlord elects, pursuant
hereto, to occupy and use the Premises or any part thereof during any part of
the balance of the term as originally fixed, there shall be allowed against
Tenant's obligation for rent or damages as herein defined, during the period
of Landlord's occupancy, the reasonable value of such occupancy, not to exceed
in any event the rent herein reserved and such occupancy shall not be
construed as a release of Tenant from liability hereunder.
Section 13.03. Upon recovery of possession by Landlord on default, the Tenant
and the Tenant's creditors and representatives shall thereafter have no right,
legal or equitable, in or to the Premises or any part thereof, or in or to the
repossession of same, or in or to the lease, and the Tenant hereby waives all
right of redemption which is or may hereafter be provided by statute.
Section 13.04. If the Tenant shall fail to perform any condition or covenant
in this lease required to be performed by Tenant, the Landlord may, at its
option, perform such condition or covenant for the account and at the expense
of the Tenant. If the Landlord shall incur any such expense on behalf of the
Tenant, such expense, together with interest thereon at the highest legal rate
then permitted, shall be paid by Tenant to Landlord within ten (10) days after
demand therefor, and Landlord shall have the remedies for default in the
payment thereof provided herein.
Section 13.05. Anything contained hereinabove to the contrary notwithstanding,
in the event Tenant shall fail by pay any installment of rent or any other
charge required hereunder when due, Landlord shall have the right to bring an
action in the Courts in the State of North Dakota having jurisdiction for the
recovery of any such sums, in which event Landlord shall be entitled to
recover, in addition to such sums required to be paid, interest at t he then
highest legal rate from the date such payments were due, together with
Landlord's reasonable attorney's fees.
Section 13.06. The rights and remedies given Landlord in this lease are
distinct, separate and cumulative remedies, and no one of them, whether or
not exercised by Landlord, shall be deemed to be in exclusive of any of the
others herein or by law or equity provided.
ARTICLE XIV - SECURITY DEPOSIT
Section 14.01. The Tenant shall deposit with the Landlord on or before the
commencement date hereof one month's rent in the sum of $3,282.00. Said
deposit shall be held by Landlord as security for the faithful performance of
all the terms of this lease by Tenant to be performed.
Section 14.02. The Landlord may, but shall not be obligated to, use, apply
or retain the whole or any part of the security so deposited to the extent
required for the payment of any rent, or other charge as to which Tenant is
in default, or for any sum which Landlord may expend by reason of Tenant's
default in respect of any of the terms of this lease, and Tenant shall, upon
demand, deposit with Landlord the amount so used, applied or retained, so that
Landlord shall have the full deposit on hand during the term of this lease.
If the Tenant shall comply with all of the terms of this Lease, the security
shall be returned to the Tenant, with interest at five percent (5%) per annum,
upon termination of this lease and delivery of possession of the Premises to
the Landlord.
Section 14.03. Landlord may deliver the funds deposited hereunder by Tenant
to the purchaser of Landlord's interest in the Premises in the event that such
interest be sold and thereupon Landlord shall be discharged from any further
liability with respect to such deposit.
ARTICLE XV - NOTICES
Section 15.01. Every notice, approval, consent or other communication
required by this lease shall be in writing and shall be sent postage prepaid
by United States registered or certified mail, return receipt requested,
directed to the other party, at its address hereinabove first mentioned, or
such other address as either party may designate by notice given from time to
time in accordance with this Section 15.01, other alternative personal
service.
ARTICLE XVI - NO REPRESENTATIONS BY LANDLORD
Section 16.01. The Tenant has examined the Premises and accepts them in their
present "as is" condition with full knowledge as to their character and
quality, except that Landlord agrees that the roof, HVAC, water lines, sewer
system, electrical, and parking lot lights will be in working order prior to
the commencement of the Lease; and Tenant shall notify Landlord of any defects
therein within thirty (30) days after the execution of this Lease, and shall
have accepted any defects as to which could not reasonably be ascertained by
Tenant. Landlord shall have a continuing obligation to maintain the roof and
structure in thorough repair and good order and safe condition. No other
representations, warranties or promises of any nature have been made by
Landlord, and Tenant has not entered into this Lease in reliance on any
representations, warranties or promises made by Landlord.
ARTICLE XVII - ACCESS TO PREMISES
Section 17.01. Tenant shall permit Landlord, and Landlord's agents or
employees to enter the Premises at all reasonable hours for the purpose of
inspecting the same, or of making repairs that Tenant may neglect or refuse
to make in accordance with the terms, covenants and conditions of this lease.
This provision isnot to be construed as a increase of Landlord's obligations
under this lease; it being expressly agreed that the right and authority
hereby reserved does not impose, nor does Landlord assume, by reason thereof,
any responsibility or liability whatsoever for the repair, care or supervision
of the Premises, or any building equipment or appurtenance of the Premises.
Section 17.02. Landlord and Landlord's agents or employees shall have the
right to enter the Premises to exhibit the Premises to prospective purchasers,
prospective mortgagees and prospective tenants, but as to prospective tenants,
only during the last three (3) months of the term of this lease. Landlord
shall be permitted to place a "To Let" and "For Sale" sign on the Premises
during the last three (3) months of the term of this lease.
ARTICLE XVIII - CONDEMNATION
Section 18.01. If the Premises, or any portion thereof, shall be taken or
condemned by any governmental authority, or any other entity having powers of
eminent domain, the parties agree to cooperation in applying for and in
prosecuting any claim for such taking. All damages awarded for taking under
the power of eminent domain, whether for the whole or a part of the premises,
shall belong to and be the property of the Landlord, whether such damages
shall be awarded as compensation for diminution of value to the leasehold
estate hereby created or to the fee of the leasehold premises; provided,
however, that landlord shall not be entitled to any award made to Tenant for
loss of business, fair value of, and the cost of removal of stocks and
fixtures; nor shall the Landlord be entitled to any portion of such a award
attributable to improvements made upon the premises and paid for by the
Tenant. Amounts, if any, awarded for the stocks and fixtures, or for the
taking of improvements paid for by the Tenant, shall be paid over and the
property of the Tenant.
Section 18.02. If the entire Premises shall be so taken or condemned, this
Lease shall terminate effective as of the date of the actual taking by the
condemning authority and all rents shall be apportioned as of that date.
Proceeds of the award shall be disbursed pursuant to the provisions of
Section 18.01 of this Article.
Section 18.03. If more than twenty-five percent (25%) of the Premises shall
be so taken or condemned, or so much of the said Premises shall be taken or
condemned as shall substantially interfere with the use of the Premises at the
time of the taking (which shall be submitted to arbitration by the American
Arbitration Association in the event Landlord and Tenant do not agree
thereon), the Tenant may elect to cancel this Lease by giving thirty (30) days
notice, which cancellation shall be effective as of the date of the actual
taking by the condemning authority and all rents shall be apportioned as of
that date.
Section 18.04. Except as provided in Section 18.03, in the event of the
taking or condemnation of a part of the Premises, this Lease shall continue in
full force and effect as to the part of the Premises not so taken or
condemned. The net award shall be applied to the restoration of the premises
to as near the condition which existed immediately prior to the date of taking
as reasonably possible, and the rent shall abate during such period of time as
the Premises are untenable in the proportion that the untenable portion of the
Premises bears to the entire Premises.
Section 18.05. Tenant reserves to itself all rights to damages accruing as
the result of any such taking payable for trade fixtures or improvements
installed by Tenant, for moving expenses and for loss of business.
Section 18.06. The Premises, or any part thereof, shall be deemed condemned
or taken in condemnation within the meaning of this Lease if, after the
institution of condemnation proceedings in respect of the Premises or any part
thereof or the promulgating or official filing of any notice or declaration
serving a similar purpose, the Premises or the part sought or intended to be
condemned is sold and transferred by Landlord and Tenant to the condemnor or
its designee in or as part of a negotiated sale, and in such event title to
the Premises or such part thereof (unless previously divested) shall be deemed
divested when such transfer takes place.
ARTICLE XIX - CONSTRUCTION OF LEASE
Section 19.01. This lease shall be governed by, construed and enforced in
accordance with the laws of the State of North Dakota.
Section 19.02. In construing this lease, masculine or feminine pronouns shall
be substituted for those neuter in form and vice versa, and plural terms shall
be substituted for singular and singular for plural, in any place in which the
context so requires.
Section 19.03. The article headings in this lease are inserted only as a
matter of convenience and for reference and in no way define, limit or
describe the scope or intent of this lease, nor in any way affect this lease.
Section 19.04. This lease contains the entire agreement between the parties
and can only be modified by an agreement in writing and signed by the parties
hereto or their respective successors in interest.
Section 19.05. If any provision of this leases hall be declared invalid or
unenforceable, the remainder of the lease shall continue in full force and
effect.
Section 19.06. The waiver by Landlord or Tenant of any breach of any term,
covenant or condition herein contained, shall not be deemed a waiver of such
term, covenant or condition of any subsequent breach of the same or any other
term, covenant or condition herein contained. No covenant, term or condition
of this lease shall be deemed to have been waived by Landlord or Tenant,
unless such waiver shall be in writing signed by the Landlord or Tenant, as
the case may be.
Section 19.07. The terms, covenants and conditions contained in this lease
shall bind and inure to the benefit of Landlord and Tenant and their
respective legal representatives, successors and assigns.
ARTICLE XX - RECORDING CERTIFICATION OF LEASE STATUS.
Section 20.01. For the purpose of recording some of the basic terms,
covenants and conditions of this lease, the Landlord and Tenant shall execute,
acknowledge and deliver a memorandum of lease after the commencement of the
term, setting forth the commencement date of the term. This memorandum of
lease is not intended and shall not in any way modify, amend, supersede or
otherwise affect this lease.
Section 20.02. Each party shall, within ten (10) days after written request
by the other, certify by written instrument duly executed and acknowledged:
(a) as to whether this lease is in full force and effect; (b) as t o whether
this lease has been supplemented or amended, and if so, the substance and
manner of such supplement or amendment; (c) as to the existence of any
default hereunder; (d) as to the existence of any offsets, counterclaims or
defenses hereto on the part of either party; and (e) as to the commencement
and expiration dates of the term of this lease.
ARTICLE XXI - POSSESSION: QUIET ENJOYMENT
Section 21.01. Landlord shall deliver sole and exclusive possession of the
Premises to the Tenant at the commencement of the term hereof, free and clear
of any other lease or tenancy.
Section 21.02. Tenant, upon paying rent and performing all of the terms on
its part to be performed, shall peaceably and quietly enjoy the Premises,
subject, nevertheless, to the terms of this lease and to any mortgage or
agreement to which this lease is subordinated.
ARTICLE XXII - SIGNS
Section 22.01. The Tenant shall have the right to erect signs upon the
Premises provided such signs comply with all applicable laws, ordinances,
rules and regulations of any governmental organization having jurisdiction.
The size, location and type of sign shall be subject to the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
ARTICLE XXIII - TENANT'S OPTION TO RENEW TERM
Section 23.01. Landlord hereby grants Tenant three (3) successive options
to extend the term of this lease for three (3) years for each option, upon
the terms and conditions set forth herein. Tenant shall exercise such
options by giving written notice to Landlord not later than six (6) months
prior to the expiration of the initial term hereof or in the case of
additional option periods, or each renewal term. Any attempted exercise of
such options(s) if the Tenant was in default under any of the terms and
conditions of this Lease during the initial term, whether or not such
defaults were cured, shall, at Landlord's option, be null and void and of
no force or effect.
Section 23.02. Each of such renewal terms shall commence upon the expiration
of the preceding term and all of the terms, covenants and conditions of this
lease shall apply to such renewal term with the exception that the rent rate
shall be proportionately adjusted for the option periods so that Base Rate
will be increased for each option period according to the percentage increase
of the Consumer Price Index for all urban consumers for the north central
region for small metropolitan areas as prepared by the Bureau of Statistics,
United States Department of Labor, for the prior three (3) year term of this
lease, provided that no such increase shall exceed ten percent (10%) from the
previous base rent. Base rent, for purposes of the first renewal period, if
Tenant renews this Lease, if defined as $39,375.00 annually. It is further
agreed that if the Index shall no longer be published, then another index
generally recognized as authoritative shall be substituted.
IN WITNESS WHEREOF, the undersigned have executed this agreement the day and
year first above written.
LANDMARK INVESTORS, A PARTNERSHIP
By: Thomas M. Lavelle, Partner
By: Joyce Johnson, Partner
O F F I C E L E A S E
BETWEEN
AMERICAN NATIONAL BANK & TRUST COMPANY OF CHICAGO,
AS SUCCESSOR TRUSTEE TO
COMERICA BANK,
F/K/A AFFILIATED BANK,
& F/K/A STATE BANK OF LAKE ZURICH,
UNDER TRUST #90-0020, THE BETH CORPORATION AS AGENT,
LANDLORD
AND
ENDOREX CORP.
TENANT
DATED: SEPTEMBER 18, 1996
<PAGE>
LAKE BLUFF OFFICE CENTER
This Lease made this 18th day of September 1996, between The Beth
Corporation, Agent for American National Bank & Trust Company of
Chicago, as Successor Trustee to Comerica Bank, F/K/A Affiliated
Bank, & F/K/A State Bank of Lake Zurich, under Trust Agreement dated
April 6, 1990, Trust No. 90-0020, referred to as "Landlord" and ENDOREX
CORP. hereinafter referred to as "Tenant":
SCHEDULE
NAME OF TENANT: MICHAEL S. ROSEN
TENANT'S BUSINESS: BIOTECHNOLOGY
PRINCIPAL OR MANAGER'S
NAME: MICHAEL S. ROSEN
PRINCIPAL OR MANAGER'S
HOME PHONE: (847) 604-9458
TENANT'S BUSINESS NAME: ENDOREX CORP.
BUSINESS TELEPHONE: (847) 604-7555
PREMISES: 900 NORTH SHORE DRIVE
SUITE 224 , 685.5 SQ. FT.
LAKE BLUFF, ILLINOIS 60044
TENANT'S PERCENTAGE: 1.542%
TERM OF LEASE: ONE YEAR
COMMENCEMENT DATE: OCTOBER 1, 1996
OCCUPANCY: OCTOBER 1, 1996
TERMINATION DATE: SEPTEMBER 30, 1997
OPTIONS TO RENEW: TWO/ONE YEAR OPTIONS @ CURRENT SQUARE FOOTAGE
BASE RENT SCHEDULE:
FROM 10-1-96 TO 9-30-97 ANNUAL $11,653.50 MONTH $971.13
DAILY HOLDOVER RENT: $ 64.72
SECURITY DEPOSIT: $ 1942.26
TENANT'S BROKER (if any):
COMMISSION AGREEMENT DATED:
Initials:
LANDLORD TENANT
The foregoing Schedule is an integral part of this Lease.
<PAGE>
TABLE OF CONTENTS
Page
Preliminary Statement..................................... 1
1. Demised Premises and Term................................. 1
2. Construction of Improvements.............................. 1
3. Failure to Give Possession................................ 2
4. Condition of Premises..................................... 2
5. Base Rent................................................. 2
6. Tax and Expense Escalation................................ 3
7. Services.................................................. 6
8. Use of Premises........................................... 8
9. Care and Maintenance...................................... 10
10. Alterations............................................... 10
11. Insurance................................................. 11
12. Untenantability........................................... 12
13. Eminent Domain............................................ 13
14. Assignment and Subletting................................. 13
15. Waiver of Claims/Indemnification.......................... 13
16. Subordination of Superiority.............................. 14
17. Access and Other Rights Reserved to Landlord.............. 14
18. Holding Over.............................................. 16
19. Default by Tenant......................................... 16
20. Surrender of Possession................................... 18
21. Notices................................................... 18
22. Relocation of Tenant...................................... 18
23. Security Deposit.......................................... 19
24. Brokerage................................................. 19
25. Waiver, Remedies, Expenses, Etc........................... 19
26. Estoppel Certificate...................................... 20
27. Landlord Defined.......................................... 20
28. Separability.............................................. 21
29. Binding Effect and Survival............................... 21
30. Interpretation and Amendments............................. 21
31. Time and Payment; Interest................................ 21
32. Early Occupancy........................................... 21
33. Quiet Enjoyment........................................... 22
34. Mortgagee Modifications................................... 22
35. Signatures................................................ 22
36. Personal Guarantee........................................ 23
37. Exhibit "A" (Legal Description)........................... 24
38. Exhibit "B" (Floor Plan).................................. 25
29. Exhibit "C" (Work Letter)................................. 26
<PAGE>
OFFICE LEASE
This Lease is made as of the 18th day of September, 1996, by and between
American National Bank & Trust Company of Chicago, as Successor Trustee to
Comerica Bank, F/K/A Affiliated Bank, & F/K/A State Bank of Lake Zurich,
under Trust~#90-0020 ("Landlord" herein), by its agent, The Beth
Corporation, an Illinois Corporation, having an address in care of:
Lake Bluff Office Center
900 North Shore Drive
Suite 190
Lake Bluff, IL 60044
and
ENDOREX CORP.
("Tenant" herein)
having an address as follows:
900 North Shore Drive
Suite 224
Lake Bluff, IL 60044
("Tenant's Address" herein)
PRELIMINARY STATEMENT
Landlord owns a fee simple in the following described real estate legally
described as follows:
See Exhibit "A" attached
The land is improved by an office building ("the Office Building" herein).
Tenant desires to lease from Landlord, and Landlord desires to lease to
Tenant, a portion of the Office Building on the terms hereinafter provided.
Now, THEREFORE, the parties hereby mutually agree as follows:
1. Demised Premises and Term. Landlord hereby agrees to lease to the Tenant
and Tenant hereby agrees to lease from Landlord, upon the terms and conditions
herein provided, that portion of the Office Building outlined in red on the
floor plans affixed hereto as Exhibit~"B", ("the Premises" herein) for a term
("the Term" herein) commencing on October 1, 1996, ("the Commencement Date")
and ending, unless sooner terminated as provided herein, on September 30, 1997.
This Lease does not demise or grant any rights to light or air over the Land.
<PAGE>
2. Construction of Improvements.
(a) Landlord shall cause the Premises to be improved substantially in
accordance with the Tenant work letter affixed hereto as Exhibit "C"
("Landlord's Improvements"). Landlord agrees to cause Landlord's improvements
to be diligently constructed in an orderly manner and agrees to substantially
complete the same on or before the Commencement Date; provided, however, if
construction of Landlord's improvements is delayed directly or indirectly as
a result of changes, deletions or additions requested by Tenants in submitting
plans, supplying information, approving plans, specifications or estimates
or other delays or failures or defaults of Tenant, or by strikes, lockouts,
casualties, extraordinary weather conditions, acts of God, war, material or
labor shortages, interruptions in transportation, governmental regulations
or control, or by other causes beyond the control of Landlord, said date for
substantial completion of Landlord's improvements and the Commencement Date
shall be deferred by the duration of such delay or delays caused as aforesaid.
(b) The Premises shall be considered substantially complete when the Premises
are ready for beneficial use and occupancy by Tenant. Neither completion of
minor or insubstantial details of construction, decoration and mechanical
adjustments, nor completion of work by Tenant shall be required as a
condition of substantial completion.
(c) Upon the Commencement Date, possession of the Premises shall be tendered
to Tenant. Concurrently with the tender of possession, Landlord and Tenant
shall agree upon a punch list of incomplete items of Landlord's improvements.
Landlord will cause all unfinished Landlord's improvements reflected on such
punch list to be provided with due diligence under the weather condition and
other circumstances then prevailing.
3. Failure to Give Possession.
Landlord shall not be subject to any liability if Landlord shall be unable
to give possession of the Premises on the Commencement Date, (as that date
may be deferred pursuant to Section 2 of this Lease) by reason of the failure
or inability of Landlord to substantially complete Landlord's improvements or
otherwise, and no such failure to give possession on said date shall affect
the validity of this Lease or the obligations of Tenant hereunder, nor shall
the same extend the Term. The forgoing notwithstanding, in the event that
Landlord fails or is unable to substantially complete Landlord's improvements
and tender possession of the Premises within 60 days of the Commencement Date
(as that date may be deferred pursuant to Section 2 of this Lease), then
either Tenant or Landlord may elect by notice to the other, at any time
thereafter, to terminate this Lease, without liability on the part of either
Landlord or Tenant effective 60 days following service of such notice if the
Premises are not substantially complete and tendered to Tenant for possession
prior to such effective date of termination.
4. Condition of Premises.
Tenant's taking possession of the Premises shall be conclusive evidence
as against Tenant that Premises were in good order and satisfactory condition
when Tenant took possession, subject only to the items identified on the
punch list referred to in Section 2 (c). No promise of Landlord to alter,
remodel, decorate, clean or improve the Premises, the Land or the Office
Building and no representation respecting the condition of any of the
foregoing have been made by Landlord to Tenant unless same are contained
herein, or made a part hereof, or are contained in a written document
signed by the Landlord.
5. Base Rent.
(a) Tenant shall pay to The Beth Corporation at 900 North Shore Drive,
Lake Bluff, Illinois 60044, as agent for Landlord or to such other person
or at such other place as Landlord may from time to time designate in
writing, Annual Base Rent in an amount per year equal to the product
obtained by multiplying the number of square feet of Rentable Area within
the Premises by the Annual Base Rent Per Square Foot. For purposes hereof
(i) Rentable Area within the Premises shall be 685.5 square feet; and
(ii) the Annual Base Rent Per Square Foot shall be Seventeen dollars and
no/100.
(b) Annual Base Rent shall be payable without notice or demand, and without
offset, counter claim or deduction in advance in equal monthly installments
each in the amount of one-twelfth (1/12) of the Annual Base Rent on the
first day of each month of the Term; provided, however, that if the Term
shall commence or end on a day other than the first or last day of a month,
concurrently with the commencement or end of the Term, as the case may be,
Tenant shall pay to Landlord or Landlord shall refund (if paid) to Tenant
Base Rent for such first or last partial month of the Term the per diem
Annual Base Rent for the number of days of such month within or without
the Term, respectively.
<PAGE>
6. Tax and Expenses Escalation.
A. Definitions.
(a) "Rentable Area", with reference to the area being calculated, shall be
computed by measuring from the inside surface of the exterior glass walls
to the office side of corridors and/or other permanent partitions, and to
the center of the partitions that separate the Premises from adjoining
Rentable Areas and shall include a proportionate share of public corridors,
public toilets, air conditioning rooms, fan rooms, janitors' closets,
electrical closets and telephone closets on each floor, but shall not
include stairs, elevator shafts, flues, stacks, pipe shafts and vertical
ducts with their enclosing walls. In computing Rentable Area, no
deduction shall be made for columns and projections necessary to the
support or design of the Office Building.
(b) The First Lease Year shall be the period commencing on the Commencement
Date and ending on the immediately following December 31, and succeeding
Lease Years shall be succeeding calendar years (or portion thereof) with
the Term.
(c) "Taxes" shall mean real estate taxes, assessments, sewer rents, rates
and charges, transit taxes, taxes based upon the receipt of rent, and any
other federal, state or local governmental charge, general, special,
ordinary or extraordinary, which may now or hereafter be levied or assessed
in respect to the Land and the Office Building. In case of special Taxes
or assessments which may be payable in installments, only the amount of
each installment paid during a Lease Year shall be included in Taxes for
that year. Taxes shall also include any personal property taxes
(attributable to the year in which paid) imposed upon the furniture,
fixtures, machinery, equipment, apparatus systems and appurtenants used
in connection with the management, maintenance, operation or repair of
the Land and the Office Building. Taxes which are solely attributable
to extraordinary improvements (i.e., those which are materially above
building standard) that benefit a particular tenant rather than all tenants
of the Office Building, and which are, or can be segregated in the County
Assessor's records shall be excluded from Taxes. Nothing herein contained
shall be construed to include as a Tax which shall be the basis of real
estate taxes, any inheritance, estate, succession, transfer, gift, franchise,
corporation, income or profit tax or capital levy that is, or may be,
imposed upon Landlord; provided, however, that, if at any time during the
Lease Term the methods of taxation prevailing at the commencement of the
Lease Term shall be altered so that in lieu of, in addition to, or as a
substitute for the whole or any part of the real estate taxes now levied,
assessed or imposed on real estate as such, there shall be levied, assessed
or imposed (i) a tax or taxes on the rents received from such real estate,
or (ii) a license fee measured by the rents receivable by Landlord from
the Property or any portion thereof, or (iii) a tax or license fee imposed
upon Landlord which is otherwise measured by or based in whole or in part
upon the Property or any portion thereof, then the same shall be included
in the computation of real estate taxes hereunder, to be computed as if the
amount of such tax or fee so payable where that due if the Property were
the only property of Landlord subject thereto.
<PAGE>
(d) "Expenses" shall mean and include those costs and expenses paid or
incurred by Landlord for managing, maintaining, operating and repairing
the Land and the Office Building and the personal property used in
conjunction therewith including, but not limited to, electricity, oil,
gas, and other energy and fuel sources, steam, water and water treatment,
sewer, heating, lighting, air conditioning, ventilation, window cleaning,
janitorial service, insurance (including, but not limited to, fire,
extended coverage, all-risk, rent loss, liability, workers compensation,
elevator, pressurized vessel, machinery or any other insurance carried
in good faith by Landlord), painting, uniforms, customary management fees,
supplies, sundries, sales or use taxes on supplies or services, equipment
and plant maintenance and rental, landscaping, sign maintenance, snow
removal, security, scavenger, wages and salaries of all persons engaged
in such management, operation, maintenance and repair, employment taxes
and fringe benefits (including, but not limited to social security taxes,
unemployment insurance taxes, payroll taxes, vacation and holiday pay,
jury duty and funeral leave pay, disability and hospitalization benefits,
health and welfare benefits and contributions, pension and retirement
benefits and contributions, other employee bargaining agreement, and any
other cost or expense which Landlord pays or incurs to provide benefits
for employees), amount paid to independent contractors, legal and a
ccounting expenses (including, but not limited to, such expenses as
relate to seeking or obtaining reductions in and refunds of Taxes) and
any other expense or charge, whether or not accounting and management
principles would be considered as an expense of managing, maintaining,
operating, or repairing the Land and the Office Building. If any Expense,
though paid in one calendar year, relates to more than one calendar year,
such Expense shall be fairly allocated by Landlord among such related
calendar years. Expenses shall not include the cost of alterations to
the Premises, depreciation, interest and principal payments on mortgages
and other debt costs, ground rent, cost of capital, real estate brokers'
leasing commissions or compensation, and any cost or expenditure or portion
thereof for which Landlord has been reimbursed by insurance proceeds. Landlord
may engage affiliates of Landlord, its beneficiary, or persons interested in
its beneficiary, to provide labor, material or services in connection with
the management, maintenance, operation and/or repair of the Land, the Office
Building and the personal property used in conjunction therewith, provided
that in the engagement of such affiliates, Landlord shall secure or
purchase such labor, material or services at cost comparable to those
charged by other independent reputable purveyors or like labor, material
or services in the metropolitan Chicago area, and Expenses arising
therefrom shall be limited to such amounts generally charged by such
other purveyors.
(e) The Rentable Area in the Office Building is 44,445.0 sq. ft.
B. Tax and Expense Escalation.
(a) In the event that the aggregate amount of Taxes and Expenses
attributable to any Lease Year shall exceed Five and 00/100 Dollars
per square foot of Rentable Area of the Office Building, then Tenant
shall pay to Landlord, as additional rent, an amount for such Lease
Year determined in accordance with the following formula:
Taxes for Lease Year plus No. of Square of Feet ($5.00 x No. of
Expenses for Lease Year X of Rentable Area - Sq. Ft. of
No. of Square Feet of in Premises Rentable Area
Rentable Area in Office (Lessee's Percentage) in Premises)
Building
(b) The amount of Taxes and Expenses attributable to any Lease Year shall
initially be based upon the amount of Taxes and Expenses payable during such
Lease Year regardless of the Lease Year for which such Taxes and Expenses
were levied or assessed, subject to readjustment on the basis of the actual
Taxes and Expenses levied or assessed for such Lease Year, when known.
(c) The foregoing notwithstanding, for the first and last Lease Years,
if the same are less than 12 months in duration, the aggregate Taxes and
Expenses per square foot of Rentable Area of the Office Building attributable
to such Lease Year and the aforesaid $5.00 amount shall each be reduced
to an amount equal to the product obtained by multiplying each of said
amounts by a fraction, the numerator of which is the number of calendar
days within the first of last Lease Year (as the case may be) and the
denominator of which is 360.
(d) Tenant shall further pay to Landlord, as additional rent, all Taxes
which are solely attributable to its extraordinary leasehold improvements
(i.e., those which are materially above the initial improvements to the
Premises included in Landlord's improvements) and which are, or can be,
segregated in the County Assessor's records.
<PAGE>
(C) Billing and Payment.
(a) As soon as reasonably feasible after the expiration of each Lease Year,
Landlord will furnish to Tenant a statement showing the Expenses and Taxes
for said Lease Year and the amount of additional rent due to Landlord on
account thereof for said Lease Year. Said statement may be amended by
Landlord to reflect actual Taxes for said Lease Year when known. Tenant
shall pay said additional rent as follows:
(i) Tenant shall pay to Landlord the entire amount of said additional rent
for the preceding Lease Year, less all payments theretofore made by Tenant
on account thereof, within 30 days following receipt of such statement or
amendment thereto;
(ii) Tenant shall pay to Landlord an amount equal to one-twelfth of said
additional rent for the preceding Lease Year for each month (or portion
thereof) of the current Lease Year then elapsed, within 30 days following
receipt of such statement or amendment thereto, less all payments
theretofore made on account thereof, to apply towards anticipated
additional rent for the current Lease Year;
(iii) Tenant shall pay to Landlord an amount equal to one-twelfth of such
additional rent for the preceding Lease Year on the first day of each month
following issuance of such statement or amendment thereto, until the
statement for the current Lease Year is issued and the amount of such
monthly payment is adjusted in accordance therewith, to apply towards
anticipated additional rent for the current Lease Year; and
(iv) Tenant shall pay to Landlord an amount equal to Landlord's reasonable
estimate of such additional rent for the last Lease Year (which may not be
finally determined until after termination of the Lease) within 30 days of
being billed therefore during the last Lease Year, subject to adjustment
between the parties when the additional rent for the last Lease Year is
determinable.
(b) Tenant or its representative shall have the right to examine Landlord's
books and records at Landlord's principal offices with respect to the items
in the foregoing statement of Expenses and Taxes during normal business hours
at any time within thirty (30) days following the furnishing by Landlord to
Tenant of such statement. Unless Tenant shall take written exception to
any item within sixty (60) days after the furnishing of the foregoing
statement, such statement shall be considered as final and accepted by
Tenant.
7. Services.
(a) Provided that this Lease is in effect and Tenant's right to possession
of the Premises has not been terminated pursuant to Section 19 or
otherwise, Landlord shall furnish the services described in this Section.
(i) Heating and air-conditioning when in the judgment of Landlord it may be
necessary for the comfortable occupancy of the Premises from 8:00 a.m. to
6:00 p.m., Monday through Friday (except for all days observed by State or
Federal Government as legal holidays). Tenant will be charged for all
heating and air-conditioning requested and furnished prior to or following
these hours at rates to be established by Landlord. Any such charge
shall be deemed to be additional rental.
(ii)Electricity provided by Landlord is for common areas and heating
of office suites. Tenant shall be responsible for its own separately
metered, incidental use electricity, as under the following conditions.
<PAGE>
(iii) Electricity shall not be furnished by Landlord, but shall be
furnished by the approved electric utility company serving the area.
Landlord shall permit the Tenant to receive such service direct from
such public utility company at Tenant's cost, and shall permit Landlord's
wire and conduits, to the extent available, suitable and safely capable,
to be used for such purposes. Landlord shall not be held liable for the
lack of quality or quantity of electrical services furnished by any third
party, including the utilities companies nor shall Landlord be held
responsible for any interruption in any such service for the operation
of the Office Building's air conditioning and heating systems at times
other than as provided in paragraph (i) hereof, or the operation of any
special air conditioning systems which may be required for data processing
equipment or for other special equipment or machinery installed by Tenant
shall be paid for by Tenant. Tenant shall make no alterations or additions
to the electric equipment and/or appliances without the prior written consent
of the Landlord in each instance. Tenant also agrees to purchase from
Landlord or its agents all lamps, bulbs, ballasts and starters used in
Premises after the initial installation thereof. Tenant covenants and
agrees that at all times its use of electric current shall never exceed
the capacity of the feeders to the Office Building or the risers or wiring
installed thereon.
(iv) Cold water in common with other tenants for drinking, lavatory and
toilet purposes drawn through the fixtures installed with Landlord's prior
written consent, and hot water in common with other tenants for lavatory
purposes from regular Office Building supply. Tenant shall pay to Landlord
an additional rent at rates fixed by Landlord (not to exceed rates for like
uses charged by the Village of Lake Bluff) for water furnished for any other
purpose. Tenant shall not waste or permit the waste of water, and shall
not tie, wedge or otherwise fasten open any faucets.
(v) Janitor service and customary cleaning in and about the Premises,
Saturdays, Sundays and holidays excepted. Tenant shall not provide or
employ any janitor services or cleaning without Landlord's written consent
and then only subject to supervision of Landlord and Tenant's sole
responsibility, and by a janitor or cleaning contractor or employees at
all times satisfactory to Landlord.
(vi) Passenger elevator service in common with Landlord and other tenants,
daily. Operatorless automatic elevator service shall be deemed "elevator
service" within the meaning of this subsection.
(vii) Window washing of all windows in the Premises, both inside and out,
at such times as shall be required in Landlord's sole judgment.
(b) Landlord does not warrant that any of the services mentioned in
paragraph (a) above will be free from interruptions caused by war,
insurrection, civil commotion, riots, casualties, acts of God or enemy,
governmental action, repairs, renewals, improvements, alterations, strikes,
lockouts, picketing, whether legal or illegal, accidents, inability of
Landlord to obtain energy or supplies of any other cause or causes beyond
the reasonable control of Landlord. Any such interruption of service
shall never be deemed an eviction, constructive or otherwise, or disturbance
of Tenant's use and possession of the Premises or any part thereof, or
render Landlord liable to Tenant for damages, or relieve Tenant from
performance of Tenant's obligations under this Lease; provided, however,
in the event that one or more of the foregoing services which are essential
to the continued beneficial use and occupancy of the Premises shall be
interrupted, other than as a result of the default of Tenant, for a
continuous period of 60 days or more, Tenant shall have the right (as
its sole and exclusive remedy), after notice thereof from Tenant to
Landlord and any mortgagee of the Office Building designated to receive
notice for this purpose, to terminate this Lease effective 60 days
following notice of its election to terminate on account thereof unless
such essential service is restored within such 60-day period. If Tenant
fails to pay within five (5) days Landlord's proper charges for any of
the foregoing services chargeable to Tenant then Landlord, upon not less
than ten (10) days notice, may, in addition to any other remedy provided
in this Lease or given by law, discontinue furnishing that service and no
such discontinuance shall be deemed an eviction or disturbance of Tenant's
use of the obligations under this Lease.
<PAGE>
8. Use of Premises.
(a) Tenant shall use and occupy the Premises for general office purposes
and for no other purpose.
(b) Tenant will not make or permit to be made any use of the Premises
which, directly or indirectly, is forbidden by law, ordinance or
governmental regulation or which may be dangerous to persons or property,
or which may invalidate or increase the premium cost of any policy of
insurance carried on the Office Building or covering its operations.
Tenant shall not do, or permit to be done, any act or thing within the
Premises which will be in conflict with fire and other insurance policies
covering the Office Building. Tenant, at its sole expense, shall comply
with all rules, regulations or requirements of the Illinois Inspection and
Rating Bureau, or any similar body, and shall not do, or permit anything
to be done within the Premises, or bring or keep anything therein in
violation of, the rules, regulations or requirements of the Village of
Lake Bluff Fire Department, the Illinois Inspection and Rating Bureau,
the Fire Insurance Rating Organization or other similar authority.
(c) Tenant shall not install or erect any sign or lettering in or upon
the Office Building or the Land without the prior written consent of
Landlord, and any sign or lettering which is installed with Landlord's
consent shall be installed by Landlord at Tenant's cost and in such
manner, character and style as Landlord may designate.
(d) Tenant shall not advertise the business, profession or activities of
Tenant conducted in the Office Building in any manner which violates the
letter or spirit of any code of ethics adopted by any recognized association
or organization pertaining to such business, profession or activities, and
shall not use the name of the Office Building for any purposes other than
that of business address of Tenant, and shall never use any picture or
likeness of the Office Building in any circulars, notices, advertisements
or correspondence without Landlord's express consent in writing.
(e) Tenant shall not obstruct, or use for storage, or for any purposes
other than ingress and egress, the sidewalks, entrances, passages, courts,
corridors, vestibules, halls, elevators and stairways of the Office
Building. Tenant shall not use for storage any janitor closets or
electrical closets.
(f) Tenant shall not suffer or permit any bicycle or other vehicle or
any dog or other animal or bird to be brought or permitted to be in the
Office Building or any part thereof.
(g) Tenant shall not make or permit any noise or odor that is
objectionable to the Landlord or other occupants of the Office Building
to emanate from the Premises, and shall not create or maintain a nuisance
thereon, and shall not disturb, solicit or canvass any occupant of the
Office Building, and shall not do any act tending to injure the
reputation of the Office Building.
(h) Tenant shall not install any musical instrument or equipment in the
Office Building, or any antennae, aerial wires or other equipment inside or
outside the Office Building, without, in each and every instance, prior
approval in writing by Landlord, and the use thereof, if permitted, shall
be subject to control by Landlord to the end that others shall not be
disturbed or annoyed.
(i) Tenant shall not install or attach any additional locks or similar
devices to any door of the Premises. No keys for any door other than
those provided by Landlord shall be made. If more than two keys for one
lock are desired by Tenant, Landlord may provide same upon payment of the
cost thereof by Tenant. Upon termination of this Lease or of Tenant's
right to possession, Tenant shall surrender all keys of all locks on
safes, cabinets and vaults remaining in the Premises.
<PAGE>
(j) Tenant shall be responsible for the locking of doors in and to the
Premises, and Tenant assumes full responsibility for any damage, theft,
robbery, pilferage and vandalism resulting from neglect of this duty.
(k) If Tenant desires telegraphic, telephonic, burglar alarm or signal
service, Landlord will, upon request, direct where and how connections
and all wiring for such service shall be introduced and run, and no
boring, cutting or installation of wires or cables are or shall be
permitted in the absence of or contrary to such directions.
(l) The shape, color and material of all shades, draperies or other form
of inside window covering must be approved in advance by Landlord in writing.
(m) Tenant shall not overload any floor of the Office Building. Safes,
furniture and all large articles shall be brought through the Office
Building and into the Premises at such times and in such manner as Landlord
shall direct and at Tenant's sole risk and responsibility. Tenant shall
list all furniture, equipment and similar articles to be removed from the
Office Building, and the list must be approved at the Office of the Building
before removal.
(n) Unless Landlord gives advance written consent in each and every
instance, Tenant shall not install or operate any steam or internal
combustion engine, boiler or other pressurized vessel, machinery,
refrigerating or heating device or air conditioning apparatus in or about
the Premises, or carry on any manufacturing or assembly operations therein,
or use the Premises for housing accommodations or lodging or sleeping
purposes, or do any cooking therein or install or permit the installation
of any vending or video game machines, or use any illumination other than
electric light, or use or permit to be brought into the Office Building
any inflammable oils or fluids such as gasoline, kerosene, naphtha and
benzine, or any explosive or other articles hazardous to persons or property.
(o) Tenant shall not place or allow anything to be against or near the
windows or the glass of partitions or doors of the Premises which may
diminish the light in, or be unsightly from public halls or corridors or
the exterior of the Office Building.
(p) Landlord reserves and shall have the right to make such other
reasonable rules and regulations in respect to the use, occupancy and
operation of the Office Building as Landlord or its agent may from time
to time adopt on reasonable notice, and Tenant agrees to comply therewith.
(q) In addition to all other liabilities for breach of any covenant of this
Section, Tenant shall pay to Landlord all direct damages caused by such
breach and shall also pay to Landlord on demand, as additional rent, an
amount equal to any increase in insurance premium or premiums under the
fire and other insurance policies covering the Office Building caused by such
breach. Any violation of this Section may be restrained by injunction.
9. Care and Maintenance.
(a) Subject to the provisions of Section 12, Tenant shall, at Tenant's
sole expense, keep the interior of the Premises and all electrical, plumbing
and mechanical equipment and conduits which solely service the Premises and
Tenant's appliances, equipment and installations therein in good order,
appearance, condition and repair throughout the Term. If Tenant does not
make repairs within 10 days and, to Landlord's satisfaction, Landlord may,
but shall not be required to, make repairs, and Tenant shall pay or
reimburse on demand all costs incurred by Landlord in connection therewith,
including overtime incurred in the event such repairs are not made during
ordinary business hours. Any such costs shall be considered additional
rent payable from the Tenant within 10 days from Landlord's billing.
Landlord may enter the Premises at all reasonable times to make such repairs.
(b) Landlord shall maintain and make all necessary repairs to electrical,
plumbing, mechanical equipment and conduits of the Office Building, except
such equipment and conduits which solely serve the Premises or Tenant's
equipment or installations herein. Landlord shall also maintain the common
areas of the Office Building and parking areas (including snow removal),
landscaping and the exterior and structure of the Office Building.
<PAGE>
10. Alterations.
(a) Tenant shall not do any painting or decorating, or erect any partitions,
make any alterations in the Premises or do any nailing, boring or screwing
into the ceilings, walls or floors thereof, without Landlord's prior written
consent in each and every instance. Unless otherwise agreed by Landlord and
Tenant in writing, all such work shall be performed either by or under the
direction of Landlord, but at the cost of Tenant. If Landlord consents to
such alterations, before commencement of the work or delivery of any
materials onto the Premises or into the Office Building, Tenant shall
furnish to Landlord for approval: (i) plans and specifications;
(ii) names and addresses of contractors; (iii) copies of contracts;
(iv) necessary governmental permits; (v) indemnification in form and
amount reasonably satisfactory to Landlord; and (vi) certificates of
insurance from all contractors performing labor or furnishing materials,
insuring against any and all claims, costs, damages, liabilities and
expenses which may arise in connection with the alterations or additions.
(b) Whether the Tenant furnished Landlord the foregoing or not, Tenant
hereby agrees to hold Landlord, its beneficiaries, and their respective
agents and employees harmless from any and all liabilities of every kind
and description which may arise out of or be connected in any way with
said alterations or additions. Any mechanic's lien filed against the
Premises, the Office Building or the Land, for work claimed to have been
furnished by Tenant shall be discharged of record by Tenant within
ten (10) days thereafter, at Tenant's expense. Upon completing any
alterations, Tenant shall furnish Landlord with contractors' affidavits
and full and final waivers of lien and receipted bills covering all labor
and materials expended and used in connection herewith.
(c) All alterations shall comply with the requirements of all insurance
policies covering the Office Building and of the issuing insurance companies
and with all ordinances and regulations of the Village of Lake Bluff or any
department or agency thereof having jurisdiction of the Premises and with
the requirements of all laws, statutes and regulations of Lake County,
the State of Illinois and the United States Government and any department
or agency thereof having jurisdiction of the Premises. All alterations
and additions shall be constructed in a good and workmanlike manner with
good grades of new materials.
(d) Except as otherwise provided in Section 20, all additions (including
drapes and blinds), decorations, hardware, non-trade fixtures and all
improvements, temporary or permanent, in or upon the Premises, whether
placed there by Tenant or by Landlord, shall, unless Landlord requests
their removal, become Landlord's property and shall remain upon the
Premises at the termination of this Lease by lapse of time or otherwise
without compensation or allowance or credit to Tenant. If, upon
Landlord's request, Tenant does not remove said additions, decorations,
hardware, non-trade fixtures and improvements, Landlord may remove the
same and Tenant shall pay to Landlord, upon demand, the cost of such
removal and the cost of repairing any damage to the Premises occasioned
by such removal.
11. Insurance.
(a) Tenant shall maintain insurance of the following character throughout
the Term and any extensions thereof; (i) comprehensive general public
liability insurance against claims for bodily injury, death or property
damage occurring on, in or about the Premises and the adjoining and
related common areas, including parking areas, docks, streets, sidewalks
and passageways, such insurance to provide for limits of liability
reasonably approved by Landlord but in no event less than $1,000,000
with respect to bodily injury or death to persons and $500,000 with
respect to property damage; (ii) casualty insurance (on a replacement
cost basis) with respect to all personal property of Tenant in or upon
the Premises against loss or damage by fire, lighting, theft and other
risks from time to time included under "extended coverage" or "all risk"
policies in an amount not less than the full replacement cost thereof;
(iii) worker's compensation insurance, covering all persons employed by
Tenant or its agents, employees and contractors in connection with any
work done on or about the Premises with respect to which claims for death
or bodily injury could be asserted against Landlord or the Office Building;
and (iv) such other insurance on or in respect to the Premises in such
amounts and against such other insurable hazards which at the time are
commonly obtained by tenants of property similar to the Office Building.
<PAGE>
(b) The insurance referred to in subsection (a) shall be issued by insurance
companies acceptable to Landlord authorized to issue such insurance in the
State of Illinois, shall be in the form and contain the provisions generally
used for like properties in the State of Illinois, and the public liability
insurance to be maintained by Tenant, Landlord's agents and beneficiaries,
and Tenant. Every insurance policy referred to in subsection (a) shall
contain an agreement by the insurer that it will not cancel or amend such
policy except after 30 days prior written notice to Landlord and Tenant,
and shall provide that any loss otherwise payable thereunder shall be payable
notwithstanding any act or negligence of Tenant which might, absent such
agreement, result in a forfeiture of all or a part of such insurance and
notwithstanding the occupation or use of the Office Building or the Premises
for purposes more hazardous than permitted by the terms of such policy.
(c) Tenant shall deliver to Landlord, on or before the commencement of the
Term, the original or duplicate original policies and/or certificates of
the insurers, evidencing all of the insurance which is then required to be
maintained by Tenant hereunder together with evidence of the payment of all
current premiums due therefor, and Tenant shall, within 30 days prior to
the expirations of any such insurance, deliver other original or duplicate
original policies and/or certificates of the insurers evidencing the renewal
or replacement of such insurance together with evidence of the payment of
all premiums therefor. Should Tenant fail to maintain or renew any insurance
provided for in this Section, or to pay the premium therefor, or to deliver
to the other any of such policies or certificates, then, and in any of said
events, Landlord, at its option, but without obligation so to do, may
procure such insurance and any sums expended therefor shall be reimbursed
by Tenant to Landlord on demand.
(d) Whenever (i) any loss, cost, damage or expense resulting from fire,
explosion or any other casualty occurrence is incurred by either of the
parties to this Lease in connection with the Premises, and (ii) such party
is or should be covered in whole or in part by insurance with respect to
such loss, cost, damage or expense, then the party so insured hereby
releases the other party from any liability it may have on account of such
loss, cost, damage or expense to the extent of any amount recovered by
reason of such insurance and waives any right of subrogation which might
otherwise exist in or accrue to any person on account thereof, provided
that such release of liability and waiver of the right of subrogation
shall not be operative in any case where the effect thereof is to
invalidate such insurance coverage or increase the cost thereof (provided
that in the case of increased cost, the other party shall have the right,
within thirty (30) days following written notice, to pay such increased
cost, thereupon keeping such release and waiver in full force and effect).
12. Untenantability.
(a) Except as hereinafter otherwise provided, if the Premises are damaged
by fire or other insured casualty, the damage shall be repaired by and at
the expense of Landlord, and Base Rent, until such damaged Premises shall
be rendered tenantable, shall abate on a per day basis in the same
proportion that the quantum of damaged Rentable Area of the Premises bears
to the entire Rentable Area of the Premises from time to time.
(b) If the entire Premises or 50% or more of the Office Building are damaged
or rendered untenantable by fire or other casualty, Landlord may, by notice
to Tenant within sixty (60) days after the date of the fire or other
casualty, elect to (i) terminate this Lease as of the date of the fire or
other casualty, in which event Base Rent and additional rent payable
hereunder shall be apportioned on a per diem basis and paid to the date
of the fire or other casualty, or (ii) repair, restore and rehabilitate
the Office Building and/or the Premises at Landlord's expense in which
event this Lease shall not terminate. In the event Landlord elects to
repair, restore, rehabilitate, Landlord shall undertake and prosecute such
repair, restoration and rehabilitation with due diligence and Base Rent
shall abate on a per diem basis during the period of untenantability in the
same proportion that the quantum of untenantable Rentable Area of the
Premises bears to the entire Rentable Area of the Premises from time to
time. In the event Landlord elects to repair, restore and rehabilitate,
as aforesaid, and fails or is unable to substantially complete such
repair, restoration or rehabilitation within nine (9) months following
the date of the fire or other casualty, either Landlord or Tenant may elect
to terminate this Lease without further liability to either party at any
time thereafter but prior to such substantial completion by notice to other,
provided that said period allowed for repair, restoration and rehabilitation
shall be extended by the duration of delays directly or indirectly resulting
from causes beyond the control of Landlord of the nature referred to in
Section~2~(a).
<PAGE>
(c) Under no circumstances shall Landlord be responsible for the repair,
restoration or rehabilitation of any personal property of Tenant or any
improvements or alterations made to the Premises by Tenant, or of any loss
or damage caused by neglect or willful act of Tenant, anything herein to
the contrary notwithstanding.
13. Eminent Domain.
If all or a material portion of the Office Building shall be lawfully taken
or condemned for any public or quasi-public use or purpose, the Term shall
end upon, and not before, the date of the taking of possession by the
condemning authority except with respect to obligations and liabilities of
Tenant under this Lease, actual or contingent, which have arisen on or
prior to such date, upon payment by Tenant of all installments of Base
Rent, additional rent and all other sums then due and payable under this
Lease to and including such termination date. Tenant hereby waives and
assigns to Landlord any and all interest Tenant may have in and to any
award and compensation payable on account of any such taking, and the
entire award payable on account of any such taking shall be payable to
and be the sole and exclusive property of Landlord.
14. Assignment and Subletting.
(a) Tenant shall not, without the prior written consent of Landlord,
(i) assign this Lease or any interest hereunder; (ii) permit any assignment
of this Lease by operation of law; (iii) sublet the Premises or any part
thereof; or (iv) permit the use of the Premises by any parties other than
Tenant, its agents and employees.
(b)No assignment of this Lease shall be effective unless Landlord shall
consent thereto and unless the assignee shall execute an appropriate
instrument assuming all of the obligations of Tenant hereunder and unless
Tenant (and its guarantor) acknowledge therein its (or their) continued
liability under this Lease. If Landlord consents to such assignment, Tenant
(and its guarantor) shall remain primarily liable for the payment of Base
Rent, additional rent and all other sums payable by Tenant hereunder and
for the performance of all covenants of Tenant herein contained,
notwithstanding any such assignment or subletting, to the same extent as
if such assignment and subletting had not occurred.
(c) A material change in the ownership or control of Tenant shall
constitute an assignment of this Lease for purposes of this Section.
15. Waiver of Claims/Indemnification.
(a) Tenant agrees that, to the extent not prohibited by law, Landlord
and its beneficiaries, and their officers, agents and employees shall not
be liable for any damage either to person or property or resulting from the
loss of use thereof sustained by Tenant or by other persons due to the
Office Building or any part thereof or any appurtenance thereof becoming
out of repair, or due to the happening of any accident or event in or about
the Office Building, or due to any act or neglect of any tenant or occupant
of the Office Building or of any other person. This provision shall apply
particularly (but not exclusively) to damage caused by gas, electricity,
snow, frost, steam, sewage, sewer gas or odors, fire, water or by the
bursting or leaking of pipes, faucets, sprinklers and plumbing fixtures,
and shall apply without distinction as to the person whose act or neglect
was responsible for the damage and whether the damage was due to any of the
causes specifically enumerated above or to some other cause of an entirely
different nature. Tenant further agrees that all personal property upon
the Premises or upon loading docks, receiving and holding areas, elevators
or other common areas of the Office Building shall be at the risk of Tenant
only, and the Landlord shall not be liable for any loss or damage thereto
or theft thereof.
<PAGE>
(b) Tenant agrees to defend, protect, indemnify and save harmless Landlord
and its beneficiaries, and their respective agents and employees, of and
from (i) all liability to third parties arising out of the acts of Tenant
and its servants, agents, employees, contractors, suppliers, workmen or
invitees, and (ii) any and all loss, damage, liability cost and expense,
including reasonable attorneys' fees, arising from Tenant's use or
occupation of the Premises or from any breach or default on the part of
Tenant in the performance of any covenant or agreement on the part of
Tenant to be performed pursuant to the terms of this Lease, or from any
act or negligence of Tenant, its agents, contractors, suppliers, workmen,
servants, employees or invitees, in or about the Premises. In case of
any action or proceeding brought against Landlord or its beneficiaries,
or their respective agents or employees by reason of any such claim, upon
notice from Landlord, Tenant covenants, at its expense, to defend such
action or proceeding by counsel reasonably satisfactory to Landlord.
16. Subordination of Superiority.
The rights and interests of Tenant under this Lease shall be subject and
subordinate to any ground lease, mortgage, trust deed or other paramount
encumbrance that may now or hereafter be placed upon the Land and/or the
Office Building or any part thereof and to any and all advances to be made
thereunder and to interest thereon and all renewals, replacements and
extensions thereof, provided that the ground lessor, mortgagee, trustee or
secured party named in such ground lease, mortgage, trust deed or other
encumbrance shall elect to subject and subordinate the rights and interest
of Tenant under this Lease to such ground lease or the lien of such
mortgage, trust deed or other encumbrance. Any such ground lessor,
mortgagee, trustee under a trust deed or secured party under any other
encumbrance may elect to give the rights and interests of Tenant under
this Lease priority over such ground lease or the lien of such mortgage,
trust deed or other encumbrance. In the event of either such election
and upon notification by such ground lessor, mortgagee, trustee or secured
party to Tenant to that effect, the rights and interest of Tenant under
this Lease shall be deemed to be subordinate to or to have priority over,
as the case may be, such ground lease or the lien of said mortgage, trust
deed or other encumbrance, whether this Lease is dated prior or subsequent
to the date of said ground lease, mortgage, trust deed or other
encumbrance. Tenant shall execute and deliver whatever instruments may be
required for such purpose, including an agreement to attorn to any such
ground lessor, mortgagee, trustee or other encumbrancer, and in the event
Tenant fails so to do within 20 days after demand in writing, the same
shall constitute an event of default hereunder.
17. Access and Other Rights Reserved to Landlord.
Landlord, for itself and its agents, reserves and may exercise the following
rights without affecting Tenant's obligations hereunder:
(a) to change the name or street address of the Office Building;
(b) to install and maintain any and all signs on the exterior and/or
interior of the Office Building;
(c) to reserve access for Landlord and the other tenants of the Office
Building of any mail chutes located within the Premises according to the
rules of the United States Post Office;
(d) to designate all sources furnishing sign painting and lettering, ice,
drinking water, towels, coffee cart service and toilet supplies used in
the Office Building;
(e) during the last 6 months of the Term, if Tenant has vacated the
Premises, to decorate, remodel, repair or otherwise prepare the Premises
for reletting;
(f) to retain at all times pass keys to the Premises;
(g)to grant anyone the exclusive right and privilege to conduct any
particular business or undertaking in the Office Building;
<PAGE>
(h) to exhibit the Premises to others and, during the last three (3)
months of the Term, to display "for rent" signs on the Premises;
(i) to close the Office Building after regular working hours and on legal
holidays subject, however, to Tenant's right to admittance, under such
reasonable regulations as Landlord may prescribe from time to time, which
may include by way of example but not of limitation, that persons entering
or leaving the Office Building identify themselves to a watchman by
registration or otherwise and that said persons establish their right to
enter or leave the Office Building;
(j) to approve the weight, size and location of safes, computers, copying
and printing equipment or other heavy equipment or articles, which articles
may be moved in, about, or out the Office Building or Premises only at such
times and in such manner as Landlord shall direct and in all events,
however, at Tenant's sole risk and responsibility;
(k) to take any and all measures, including inspections, repairs,
alterations, decorations, additions and improvements to the Premises or
to the Office Building, as may be necessary or desirable for the safety,
protection or preservation of the Premises or the Office Building or
Landlord's interests, or as may be necessary or desirable in the operation
of the Office Building;
(l) to erect, use and maintain pipes, ducts, wiring and conduits in and
through the Premises;
(m) upon reasonable advance notice to Tenant (provided that no notice shall
be required in an emergency), to enter the Premises, to inspect the same,
to perform janitorial and cleaning services and to make such decorations,
repairs, alterations, improvements or additions to the Premises or the
Office Building as Landlord may deem reasonably necessary or desirable,
and to take all material into and upon the Premises that may be required
therefor and during the continuance of any said work, to temporarily close
doors, entryways, public space and corridors in the Office Building and to
interrupt or temporarily suspend services and facilities, provided that
Landlord shall at all times use its best efforts to maintain reasonable
accessibility to the Premises, to minimize any disruption of Tenant's
business; if Tenant shall not be personally present to open and permit
entry into the Premises, at any time, when for any reason an entry therein
shall be necessary or permissible, Landlord or Landlord's agents may enter
the same by a master key, or, in the cases of an emergency only, may
forcibly enter the same, without rendering Landlord or such agents liable
therefor (if during such entry Landlord or Landlord's agents shall accord
reasonable care to Tenant's property), and without in any manner affecting
the obligations, responsibility or liability whatsoever, for the care,
supervision or repair of the Premises or the Office Building or any part
thereof, other than as herein provided; and
(n)to change the arrangement and/or location of entrances or passageways,
doors and doorways, and corridors, elevators, stairs, toilets or other
public parts of the Office Building, and to close entrances, doors,
corridors, elevators or other facilities.
Landlord may enter upon the Premises and may exercise any or all of the
foregoing rights hereby reserved without being deemed guilty of an actual
or constructive eviction or disturbance to Tenant's use or possession and
without being liable in any manner to Tenant and without abatement of Base
Rent and additional rent (except as provided in Section 12) or affecting
any of Tenant's obligations hereunder; provided that in the exercise of
any or all of the foregoing rights, Landlord shall use reasonable care to
minimize damage to Tenant's property or interruption of Tenant's business.
<PAGE>
18. Holding Over.
If Tenant retains possession of the Premises or any part thereof after the
termination of the Term, by lapse of time or otherwise, Tenant shall pay
Landlord monthly rent, at double the rate payable for the month immediately
preceding said holding over (including such additional rent for Expenses
and Taxes which Landlord may reasonably estimate), computed on a per-month
basis, for, and payable in advance on the first day of, each month or part
thereof (without reduction for any such partial month) that Tenant thus
remains in possession, and in addition thereto, Tenant shall pay Landlord
all damages, consequential as well as direct, sustained by reason of
Tenant's retention of possession. Alternatively, at the option and
election of Landlord, expressed in written notice to Tenant and not
otherwise, such retention of possession shall constitute an extension
of the Term for one (1) year. The provisions of this paragraph are not
exclusive and shall not preclude or impair Landlord's rights of re-entry
or any other right of Landlord hereunder, at law or in equity.
19. Default by Tenant.
(a) In addition to the other events of default mentioned elsewhere in this
Lease, any of the following occurrences or acts shall constitute an event
of default under this Lease: (i) if Tenant, at any time during the
continuance of this Lease (and regardless of the pendency of any bankruptcy,
reorganization, receivership, insolvency or other proceedings, in law,
in equity, or before any administrative tribunal, which have or might have
the effect of preventing Tenant from complying with the terms of this Lease),
shall (x) fail to make any payment of Base Rent, additional rent or other sum
required to be paid by Tenant hereunder and Tenant shall fail to make any
such payment for a period of five (5) days after service by Landlord of
written notice to Tenant that any such payment has become due, or
(y) fail to observe or perform any other provision hereof for ten (10) days
after Landlord shall have served on Tenant written notice of such failure,
provided, that in the case of any default referred to in this clause which
is curable but cannot be cured by the payment of money and cannot with
diligence be cured within such 10-day period, if Tenant shall proceed
promptly to cure the same and thereafter shall prosecute the curing of
within which such failure may be cured shall be extended for such period
as may be necessary to complete the curing of the same with diligence and
continuity; or (ii) if Tenant shall file a petition in bankruptcy or for
reorganization or for an arrangement pursuant to any present or future
federal or state bankruptcy law or under any similar federal or state law,
or shall be adjudicated a bankrupt or insolvent or shall make an assignment
for the benefit of its creditors or shall admit in writing its inability to
pay its debts generally as they become due, or if a petition or answer
proposing the adjudication of Tenant as a bankrupt or its reorganization
under any present or future federal or state bankruptcy law or any similar
federal or state law shall be filed in any court and such petition or
answer shall not be discharged or denied within thirty (30) days after
the filing thereof, or (iii) of a receiver, trustee, custodian or
liquidator of Tenant or of all or substantially all of the assets of Tenant
or of the Premises or any portion thereof shall be appointed any proceeding
brought by or against Tenant and shall not be discharged within thirty (30)
days after such appointment, or if Tenant shall consent to or acquiesce in
such appointment, or (iv) if the Premises shall have been abandoned, or
(v) if Tenant shall be in default under any other lease of Premises in the
Office Building or the complex.
<PAGE>
(b) If an event of default should have occurred and be continuing, Landlord
shall have the right at its election, then or any time thereafter while such
event of default shall continue, to give Tenant written notice of Landlord's
intention to terminate the Term on a date specified in such notice. Upon
the giving of such notice, the Term and the estate hereby granted shall
expire and terminate on such date as fully and completely and with the
same effect as if such date were the date hereinbefore fixed for the
expiration of the Term, and all rights of Tenant hereunder shall expire
and terminate, but Tenant shall remain liable as hereinafter provided.
(c) If an event of default shall have occurred and be continuing, Landlord
shall have the immediate right, whether or not the Term shall have been
terminated pursuant to subsection (b), to re-enter and repossess the
Premises or any part thereof by force, summary proceedings, ejection or
otherwise and the right to remove all persons and property therefrom.
Landlord shall be under no liability for, or by reason of, any such entry,
repossession or removal. No such re-entry or taking of possession of the
Premises by Landlord shall be construed as an election on Landlord's part to
terminate the Term unless a written notice of such intention be given to
Tenant pursuant to subsection (b), or unless the termination of this Lease
be decreed by a court or competent jurisdiction.
(d) At any time or from time to time after the repossession of the Premises
or any part thereof pursuant to subsection (c), whether or not the Term
shall have been terminated pursuant to subsection (b), Landlord may (but
shall be under no obligation to) relet the Premises or any part thereof
for the account of Tenant, in the name of Tenant or Landlord or otherwise,
without notice to Tenant, for such term or terms (which may be greater or
less than the period which would otherwise have constituted the balance
of the Term) and on such conditions (which may include concessions or free
rent) and for such uses as Landlord, in its absolute discretion, may
determine, and Landlord may collect and receive any rents payable by
reason of such reletting. Landlord shall not be responsible or liable
for any failure to collect any rent upon any such reletting.
(e) No expiration or termination of the Term pursuant to subsection (b),
by operation of law or otherwise, and no repossession of the Premises or
any part thereof pursuant to subsection (c) or otherwise, and no reletting
of the Premises or any part thereof pursuant to subsection (d), shall
relieve Tenant of its liabilities and obligations hereunder, all of which
shall survive such expiration, termination, repossession or reletting.
(f) In the event of any expiration or termination of this Lease or
repossession of the Premises or any part thereof by reason of the
occurrence of an event of default, Tenant will pay to Landlord the Base
Rent, additional rent and other sums required to be paid by Tenant to and
including the date of such expiration, termination or repossession; and,
thereafter, until the end of what would have been the Term in the absence
of such expiration, termination or repossession, and whether or not the
Premises or any part thereof shall have been relet, Tenant shall be liable
to Landlord for, and shall pay to Landlord the Base Rent, additional rent
and other sums which would be payable under this Lease by Tenant in the
absence of such expiration, termination or repossession, less the net
proceeds, if any, of any reletting effected for the account of Tenant
pursuant to subsection (d), after deducting from such proceeds all of
Landlord's expenses in connection with such reletting (including, without
limitation, all repossession costs, brokerage commissions, legal expenses,
reasonable attorneys' fees, employees' expenses, alteration costs and
expenses for preparation for such reletting). Tenant will pay said Base
Rent, additional rent and other sums on the days on which the Base Rent,
additional rent and such other sums would have been payable under this
Lease in the absence of such expiration, termination, or repossession,
and Landlord shall be entitled to recover the same from Tenant on each
such day.
20. Surrender of Possession.
Upon the expiration or other termination of the Term, Tenant shall quit and
surrender to Landlord the Premises, broom clean, in good order and condition,
ordinary wear expected, and Tenant shall remove all of its property
therefrom. Prior to the end of the Term, Tenant may remove from the
Premises such readily removable improvements to the Premises made and
paid for by Tenant, provided that (i) Tenant shall not remove any
improvements which shall result in the Premises being improved below
building standard (defined as those improvements installed by Landlord
in accordance with Exhibit "C" hereto), (ii) Tenant shall not remove
any mechanical, electrical or plumbing fixtures or conduits providing
heat, light, power, water, plumbing, air conditioning, ventilation or
other essential services to the Premises (as distinguished from removable
equipment therein) except for special or upgraded fixtures installed by
Tenant which are replaced by Tenant with fixtures customarily and normally
used in offices in other portions of the Office Building, and (iii) prior
to the end of the Term, Tenant shall at its sole expense restore any
damage to the Premises resulting from such removal. If Tenant does not
remove its property of every kind and description from the Premises prior
to the end of the Term, however ended, Tenant shall be conclusively
presumed to have conveyed the same to Landlord under this Lease as a
bill of sale without further payment or credit by Landlord to Tenant and
Landlord may remove the same and Tenant shall pay the cost of such removal
and the cost of repairing any damage caused thereby to Landlord upon
demand and, (iv) Tenant when vacating the Premises shall do so after
6:00 p.m. so as not to disturb the use of the elevators for other tenants.
21. Notices.
All notices required or permitted hereunder shall be in writing, and the
same shall be considered delivered when personally serviced and receipted
for by the intended recipient or when deposited in the United States
certified or registered mail, postage prepaid, return receipt requested,
and if directed to Landlord, addressed to Landlord at Landlord's Address,
and if directed to Tenant, addressed to Tenant at Tenant's Address.
Landlord and Tenant each reserve the right to change their respective
addresses effective three (3) business days following notice thereof
served upon the other in accordance herewith.
22. Relocation of Tenant.
Landlord shall have the right, upon thirty (30) days written notice, to
relocate Tenant in whole or in part, to another location in the Office
Building at no cost or expense to Tenant and upon the condition that the
new premises designated by Landlord shall be substantially as desirable
as the Premises with respect to layout and location in the Office Building
and shall not be smaller in area than the Premises.
23. Security Deposit.
Tenant has deposited with Landlord a security deposit in the amount of
$1942.26, the receipt whereof is hereby acknowledged. Said deposit shall
be held by Landlord as security for the full and faithful performance by
Tenant of each and every term, covenant and condition of this Lease on
the part of Tenant to be observed and performed. Such security deposit
shall not be mortgaged, assigned, transferred or encumbered by Tenant and
any such act on the part of Tenant shall be without force and effect and
shall not be binding upon Landlord. If any Base Rent or additional rent
herein reserved or any other sums payable by Tenant shall be overdue and
unpaid or should Landlord make payments on behalf of Tenant, or should
Tenant fail to perform any of the terms of this Lease for the cure thereof,
then Landlord may, at its option, and without prejudice to any other
remedy which Landlord may have on account thereof, appropriate and apply
said entire deposit or so much thereof as may be necessary to compensate
Landlord toward the payment of the rents or other sums due from Tenant,
or towards any loss, damage or reasonable expenses sustained by Landlord
resulting from such default on the part of Tenant; and in such event
Tenant shall forthwith upon demand restore said security to the original
sum deposited. In the event Tenant shall fully and faithfully comply with
all of the terms, covenants and conditions of this Lease and promptly pay
all Base Rent and additional rent as they fall due and all other sums
payable by Tenant to Landlord, said deposit shall be returned in full to
Tenant within thirty (30) days from the date of the expiration of the
Term and the surrender of the Premises by tenant in compliance with the
provisions of this Lease without any allowance for interest thereon.
In the event any bankruptcy, insolvency, reorganization or other
creditor/debtor proceedings shall be instituted by or against Tenant or
its successors or assigns, such security deposit shall be deemed to be
applied first to the payment of any Base Rent, additional rent and/or
other charges due Landlord for all periods prior to the institution of
such proceedings and the balance, if any, of such security deposit may
be retained by Landlord in partial liquidation of Landlord's damages.
<PAGE>
24. Brokerage.
Tenant hereby represents and warrants that it has not dealt with any broker
or finder entitled to any compensation by reason of the execution of this
Lease or the lease of the Premises pursuant hereto, except for The Beth
Corporation and _________ whose commission shall be paid by Landlord pursuant
to separate agreement). Tenant hereby agrees to indemnify and hold Landlord
harmless from all damage, liability and expense (including reasonable
attorneys' fees) Landlord may incur, suffer or sustain in respect to a
claim by a broker or finder for such compensation, excluding brokers
engaged by Landlord or named herein.
25. Waiver, Remedies, Expenses, Etc.
(a) No right or remedy herein conferred upon or reserved to Landlord is
intended to be exclusive of any other right or remedy, and each and every
right and remedy shall be cumulative and in addition to any other right or
remedy given hereunder or now or hereafter existing at law or in equity or
by statute. The failure of Landlord to insist at any time upon the strict
performance of any covenant or agreement or to exercise any option, right,
power or remedy contained in this Lease shall not be construed as a waiver
or a relinquishment thereof for the future. No receipt of money by Landlord
from Tenant after termination of the Term or after service of any notice
of default or after the commencement of any suit, or after final judgment
for possession of the Premises shall reinstate, continue or extend the
Term or affect such notice or suit. A receipt by Landlord of any Base Rent,
any additional rent or any other sum payable hereunder with knowledge of
the breach of any covenant or agreement contained in this Lease shall not
be deemed a waiver of such breach, and no waiver by Landlord of any provision
of this Lease shall be deemed to have been made unless expressed in writing
and signed by Landlord. In addition to other remedies provided in this
Lease, Landlord shall be entitled to the extent permitted by applicable law,
to injunctive relief in case of the violation, or attempted or threatened
violation, of any of the covenants, agreements, conditions or provisions of
this Lease, or to a decree compelling performance of this Lease.
(b) In the event Tenant shall be in default in the performance of
any of its obligations under this Lease, and an action shall be brought for
the enforcement thereof in which it shall be determined that Tenant was in
default, Tenant shall pay Landlord all expenses incurred or paid by Landlord
in connection therewith including reasonable attorneys' fees. In the event
Landlord shall, without fault on its part, be made a party to any litigation
commenced against Tenant, if Tenant, at its expense, shall fail to provide
Landlord with counsel approved by Landlord, Tenant shall pay as additional
rent all costs and reasonable attorneys' fees incurred or paid by Landlord
in connection with such litigation.
(c) Landlord may, but shall not be obligated to, cure any default by Tenant
after complying with the notice provisions as herein provided, and whenever
Landlord so elects, all costs and expenses paid or incurred by Landlord in
curing such default, including, without limitation, reasonable attorneys'
fees, shall be so much additional rent payable on demand.
<PAGE>
26. Estoppel Certificate.
Tenant, at any time and from time to time, upon not less than ten (10) days
prior request by Landlord, shall execute, acknowledge and deliver to
Landlord a statement in writing, executed by an executive officer of Tenant,
certifying, among other reasonable assurances as may be requested by
Landlord, Landlord's mortgagee or any prospective purchaser of the Office
Building, that this Lease is unmodified and in full effect (or, if there
have been modifications, that this lease is in full effect as modified,
and setting forth such modifications) and the dates to which the Base
Rent, additional rent and other sums payable hereunder have been paid,
the amount of the existing security deposit, and either stating that to
the knowledge of the parties executing such certificate no default exists
hereunder or specifying each such default of which the executing party may
have knowledge; it being intended that any such statement by Tenant may be
relied upon by any prospective purchaser or mortgagee of the Office Building.
27. Landlord Defined.
The term Landlord as used in this Lease, so far as the covenants or
obligations on the part of the Landlord are concerned, shall be limited to
mean and include only the owner or owners at the time in question of the
Office Building, and in the event of any transfer or transfers of title
thereto, Landlord named herein (and in case of any subsequent transfer or
conveyances, the then grantor) shall be automatically freed and relieved
from and after the date of such transfer or conveyance of all liability as
respects the performance of any covenants or obligations on the part of
Landlord contained in this Lease thereafter to be performed, provided that
such transferee shall expressly assume the obligations of Landlord under
this Lease and provided further that any funds in the hands of such Landlord
or the then grantor at this time of such transfer in which Tenant has an
interest shall be turned over or credited to the grantee and any amount
then due and payable to Tenant by Landlord or then grantor under any
provisions of this Lease, shall be paid to Tenant.
28. Separability.
Except as otherwise herein expressly provided, each and every covenant
and agreement contained in this Lease is, and shall be construed to be,
a separate and independent covenant or agreement by Landlord shall not
discharge or relieve Tenant from any of its obligations under this Lease.
If any term or provision of this Lease or the application thereof to any
person or circumstances shall to any extent be invalid and unenforceable,
the remainder of this Lease, or the application of such term or provision
to persons or circumstances other than those as to which it is invalid or
unenforceable, shall not be affected thereby, and each term and provision
of this Lease shall be valid and shall be enforced to the extent permitted
by law.
29. Binding Effect and Survival.
All of the covenants, conditions and obligations contained in this Lease
shall be binding upon and inure to the benefit of the respective successors
and assigns of Landlord and Tenant to the same extent as if each successor
and assign were in each case named as a party to this Lease. The covenants
and agreements of this Lease shall survive termination of the Term.
30. Interpretation and Amendments.
The headings to the various sections of this Lease have been inserted for
convenient reference only and shall not to any extent have terms and
provisions of this Lease. This Lease shall be governed by and interpreted
under the laws of the State of Illinois. Time is of the essence of this
Lease and all provisions herein relating thereto shall be strictly
construed. This Lease may not be changed, modified or discharged except
by a writing signed by Landlord and Tenant. The Preliminary Statement
and the following exhibits hereto are incorporated in and made a part of
this Lease:
* Exhibit A Legal Description
* Exhibit B Floor Plans
* Exhibit C Work Letter
<PAGE>
31. Time of Payment; Interest.
All amounts (unless otherwise provided herein, and other than the Base
Rent and current and final damages which shall be due as hereinbefore
provided) owed by Tenant to Landlord hereunder shall be deemed additional
rent and be paid within 30 days from the date Landlord renders statements
of account therefor. All such amounts (including Base Rent and additional
rent but excluding interest) which are not paid within 30 days shall bear
interest from the date due until the date paid at the rate of two percent
(2%) above the Prime Rate charges. For purposes hereof, Prime Rate shall
be the rate of interest announced from time to time by First Chicago Bank
as the rate of interest then being charged on short-term unsecured loans
made in Chicago, Illinois to said Bank's most credit-worthy customers.
Provision for and collection of interest as aforesaid shall not be in
derogation of any other right or remedy of Landlord provided in this
Lease, at law or in equity.
32. Early Occupancy.
If Tenant shall occupy the Premises prior to the beginning of the Term
with Landlord's consent, all the provisions of this Lease shall be in
full force and effect from and after commencement of occupancy by Tenant.
33. Quiet Enjoyment.
If, and so long as, Tenant shall observe and perform all covenants,
agreements and obligations required by it to be observed and performed
hereunder, Tenant shall have peaceful and quiet occupancy and enjoyment
of the Premises by Tenant as contemplated by this Lease, provided that
Landlord shall have access to the Premises as provided in this Lease.
34. Mortgagee Modifications.
Should any prospective mortgagee or ground lessor require a modification
or modifications of this Lease, which modification or modifications will
not cause an increased cost or expense to Tenant or in any other way
substantially change the rights and obligations of Tenant hereunder,
then and in such event, Tenant agrees that this Lease may be so modified
and agrees to execute whatever documents are required therefor within
10 days after receipt from Landlord. In the event Tenant does not execute
any such document within said 10 days, Landlord may then execute the
document on Tenant's behalf as Tenant's Attorney-in-Fact.
IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Lease
as of the day and year first above written.
Landlord: Tenant:
BY: /s/ Brooks Kellogg BY: /s/ Michael S. Rosen
Endorex Corp.
<PAGE>
December 9, 1996
Michael S. Rosen
Lake Bluff Office Center
900 North Shore Drive
Suite #224
Lake Bluff, IL 60044
Re: Lease Amendment, Suite #245
Effective January 1, 1997, the lease dated September 18, 1996, commencing
on October 1, 1992 by and between Endorex Corporation, as Lessee, and Lake
Bluff Office Center, L.L.C., Agent of the Lake Forest Bank and Trust Company,
as Trustee under Trust #1138, dated 09/18/96, as successor to American Bank
and Trust Company, as Lessor, for the premises at 900 North Shore Drive,
Lake Bluff, Illinois is amended as follows:
Premises: New Suite #245
Termination Date: December 31, 1998
Square Footage: 1501 Square Feet
Target Occupancy: Friday, December 13, 1996
Rent Schedule:
Date: per Sq. Ft. Monthly: Annual:
01/1/97 to 03/31/97 $08.16 $1,021.13 $16,753.56
04/1/97 to 06/30/97 $10.16 $1,271.13 $16,753.56
07/1/97 to 09/30/97 $12.16 $1,521.13 $16,753.56
10/1/97 to 12/31/97 $14.16 $1,771.13 $16,753.56
01/1/98 to 03/31/98 $16.16 $2,021.13 $24,638.31
04/1/98 to 12/31/98 $16.50 $2,063.88 $24,638.31
Carpet will be cleaned.
Lake Bluff Office Center will move the furniture only.
Lake Bluff Office Center will move all phone, fax and modem lines at
our expense.
Lake Bluff Office Center will build one wall and door for a small
conference room.
If Endorex Corp. wants a knee wall, we will build one - six foot long,
four foot high with a finished oak top for $430.00. This knee wall,
if desired, will be at Endorex's expense.
All other terms and conditions of the Lease shall remain the same.
/s/ BROOKS KELLOGG /s/ MICHAEL S. ROSEN
MANAGING PARTNER
12/10/96 12/10/96
SUBSIDIARIES OF THE REGISTRANT
1. Orasomal Technologies, Inc.
Incorporated in the State of Delaware
Does business as Orasomal Technologies, Inc.
