AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 19, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
JENNER TECHNOLOGIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------
CALIFORNIA (PRIOR TO REINCORPORATION)
DELAWARE (AFTER REINCORPORATION)
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)
2834
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)
68-0292466
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
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2010 CROW CANYON PLACE, SUITE 100
SAN RAMON, CALIFORNIA 94583
(510) 824-3150
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINICIPAL EXECUTIVE OFFICES)
----------
ANTHONY E. MAIDA III, CHIEF EXECUTIVE OFFICER
JENNER TECHNOLOGIES, INC.
2010 CROW CANYON PLACE, SUITE 100
SAN RAMON, CALIFORNIA 94583
(510) 824-3150
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
----------
COPIES TO:
BLAIR W. STEWART, JR., ESQ. LAWRENCE B. FISHER, ESQ.
TIMOTHY STEVENS, ESQ. ORRICK, HERRINGTON & SUTCLIFFE LLP
WILSON SONSINI GOODRICH & ROSATI 666 Fifth Avenue
Professional Corporation New York, New York 10103-0001
650 Page Mill Road (212) 506-5000
Palo Alto, California 94304
(415) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=============================================================================================================================
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE TO BE OFFERING PRICE AGGREGATE REGISTRATION
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value .001 per
share(3) 2,875,000 $ 8.00 $23,000,000 $ 6,969.70
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Redeemable Common
Stock Purchase
Warrants(4) 2,875,000 $ .10 $ 287,500 $ 87.12
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Common Stock, par
value .001 per share,
issuable on exercise
of Redeemable Common
Stock Purchase
Warrants(5) 2,875,000 $11.20 $32,200,000 $ 9,757.58
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Representative's
Warrants(6) 250,000 $.0001 $ 25 --
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Redeemable Common
Stock Purchase
Warrants issuable upon
exercise of
Representative's
Warrants 250,000 $ .14 $ 35,000 $ 10.61
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value .001 per share,
issuable upon exercise
of Redeemable Common
Stock Purchase
Warrants issuable upon
exercise of
Representative's
Warrants 250,000 $11.20 $ 2,800,000 $ 848.48
- -----------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value .001 per share,
issuable upon exercise
of Representative's
Warrants(7) 250,000 $11.20 $ 2,800,000 $ 848.48
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TOTAL N/A N/A $61,122,525 $ 18,521.97
=============================================================================================================================
</TABLE>
(Footnotes appear on following page)
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
(continued from previous page)
(1) Pursuant to Rule 416, there are also being registered such additional
securities as may become issuable pursuant to the antidilution provisions of
the Warrants, the Representative's Warrants and the Warrants underlying the
Representative's Warrants.
(2) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457.
(3) 2,500,000 shares of Common Stock and 2,500,000 Warrants are being registered
under this Registration Statement. For purposes of calculation of the
registration fee, each share of Common Stock has been assumed to have a
proposed maximum offering price of $8.00, and each Warrant has been assumed
to have a proposed maximum offering price of $0.10. Also includes 375,000
shares of Common Stock which the Underwriters have the option to purchase to
cover over-allotments, if any.
(4) Includes 375,000 Warrants which the Underwriters have the option to purchase
to cover over-allotments, if any.
(5) Includes 375,000 shares of Common Stock issuable upon exercise of Warrants
which the Underwriters have the option to purchase to cover over-allotments,
if any.
(6) In connection with the Registrant's sale of the Securities offered hereby,
the Registrant is granting to the Representative of the several Underwriters
(the "Representative") warrants (the "Representative's Warrants") to
purchase 250,000 shares of Common Stock and/or 250,000 Warrants. The
purchase price per Representative's Warrant is $.0001.
(7) The maximum exercise price of the Representative's Warrants will be $11.20
per share of Common Stock and $.14 per Warrant based on the proposed maximum
offering price of $8.00 per share of Common Stock and $0.10 per Warrant.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED FEBRUARY 19, 1997
PROSPECTUS
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[Logo]
JENNER TECHNOLOGIES, INC.
2,500,000 SHARES OF COMMON STOCK AND
2,500,000 REDEEMABLE COMMON STOCK PURCHASE WARRANTS
Jenner Technologies, Inc. ("Jenner" or the "Company") hereby offers (the
"Offering") 2,500,000 shares (the "Shares") of common stock, $0.001 par value
(the "Common Stock") and 2,500,000 redeemable common stock purchase warrants
(the "Warrants"). The Shares and Warrants are sometimes hereinafter collectively
referred to as the "Securities." The Shares and Warrants may only be purchased
together on the basis of one Share and one Warrant, but will trade separately
immediately upon issuance. Each Warrant entitles the registered holder thereof
to purchase one share of Common Stock at an exercise price of $____ per share
[140% of the initial public offering price per share of Common Stock], subject
to adjustment, at any time during the period commencing on _______________, 1998
[twelve months from the date of the Prospectus] until __________________, 2002
[5 years after the date of this Prospectus]. Commencing ____________________,
1998 [18 months from the date of the Prospectus], the Warrants are subject to
redemption by the Company, in whole but not in part, at $.10 per Warrant on 30
days' prior written notice provided that the average closing sales price of the
Common Stock as reported on the American Stock Exchange ("AMEX") equals or
exceeds $_______ per share [160% of the initial public offering price per share
of Common Stock] for any 20 trading days within a period of 30 consecutive
trading days ending on the fifth trading day prior to the date of the notice of
redemption. See "Description of Securities -- Warrants."
Prior to the Offering, there has been no public market for the Common Stock
or the Warrants, and there can be no assurance that such a market will develop
after completion of the Offering, or if developed, that it will be sustained. It
is currently anticipated that the initial public offering prices will be between
$7.00 and $8.00 per Share and $.10 per Warrant. For information regarding the
factors considered in determining the initial public offering price of the
Shares and Warrants and the terms of the Warrants, see "Risk Factors" and
"Underwriting." It is anticipated that the Shares and Warrants will be included
for quotation on the American Stock Exchange under the symbols JNR and JNRW,
respectively.
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THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE
SUBSTANTIAL DILUTION. SEE "RISK FACTORS" COMMENCING ON PAGE 7 AND "DILUTION."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- --------------------------------------------------------------------------------
Per Share $ $ $
- --------------------------------------------------------------------------------
Per Warrant $ $ $
- --------------------------------------------------------------------------------
Total(3) $ $ $
================================================================================
(1) Does not include additional compensation to National Securities
Corporation, the representative of the several Underwriters, (the
"Representative") in the form of a non-accountable expense allowance. In
addition, see "Underwriting" for information concerning indemnification and
contribution arrangements with the Underwriters and other compensation
payable to the Representative.
(2) Before deducting estimated expenses of $600,000 payable by the Company,
excluding the non-accountable expense allowance payable to the
Representative.
(3) The Company has granted to the Representative an option, exercisable within
45 days after the date of this Prospectus, to purchase up to an aggregate
of 375,000 additional shares of Common Stock and/or 375,000 additional
Warrants upon the same terms and conditions as set forth above, solely to
cover over-allotments, if any (the "Over-Allotment Option"). If such
Over-Allotment Option is exercised in full, the total Price to Public,
Underwriting Discount and Proceeds to the Company will be $______, $______
and $_______, respectively. See "Underwriting."
The Securities are being offered by the Underwriters, subject to prior sale,
when, as and if delivered to and accepted by the Underwriters, and subject to
approval of certain legal matters by their counsel and subject to certain other
conditions. The Underwriters reserve the right to withdraw, cancel or modify
this Offering and to reject any order in whole or in part. It is expected that
delivery of the Securities offered hereby will be made against payment therefor
at the offices of National Securities Corporation, Seattle, Washington on or
about _______________, 1997.
NATIONAL SECURITIES CORPORATION
THE DATE OF THIS PROSPECTUS IS_____________, 1997.
[INSERT 4/COLOR GRAPHICS HERE]
[Description of Photo and Copy of Text Follows]
JENNER'S APPROACH TO
TREATMENT OF PATIENT WITH MINIMAL TUMOR BURDEN
[Photo of Patient with Cancer in stages with and without Immunotherapy]
Current treatments for cancers that have spread are not very effective. Despite
significant improvements in early diagnosis and in surgical treaments, many
surgically treated patients experience recurrence of cancer. Jenner's principal
product candidates are designed to delay or prevent the recurrence of cancer by
stimulating the body's own immune system to attack microscopic disease remaining
after a patient has undergone tradional therapy.
The Company's products are in a development stage and have not been approved
by the United States Food and Drug Administration ("FDA") or any foreign
regulatory authority for marketing in any country. Such approval is not expected
to be forthcoming for several years, and may not be received at all.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
AND THE WARRANTS OFFERED HEREBY AT LEVELS ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN
STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED
AT ANY TIME.
The Company intends to furnish to its stockholders annual reports containing
financial statements audited by its independent certified public accountants and
quarterly reports containing unaudited interim financial statements for the
first three quarters of each fiscal year.
- --------------------------------------------------------------------------------
PROSPECTUS SUMMARY
This Prospectus contains forward-looking statements. Such forward-looking
statements include, but are not limited to, the Company's expectations regarding
its future financial condition and operating results, product development,
business and growth strategy, market conditions and competitive environment. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus. The following
summary is qualified in its entirety by the more detailed information and the
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
Unless otherwise indicated, all information in this Prospectus (i) assumes the
Underwriter's over-allotment option is not exercised, (ii) reflects a
1-for-1.7328 reverse stock split of the Company's Common Stock to be effected
prior to the closing of the Offering, (iii) assumes the Warrants and the
warrants to purchase 250,000 shares of Common Stock and/or 250,000 Warrants
issued to the Representative in connection with this Offering (the
"Representative's Warrants") are not exercised, (iv) assumes the reincorporation
of the Company in Delaware prior to the closing of the Offering, and (v) assumes
the conversion of all outstanding shares of the Company's Series A Preferred
Stock and Series B Preferred Stock into 1,510,015 shares of the Company's Common
Stock upon the closing of the Offering.
THE COMPANY
Jenner Technologies, Inc. ("Jenner" or the "Company"), a development stage
company, is engaged in the development of immunotherapies to treat patients with
cancer and certain side effects related to chemotherapy. The Company has four
product candidates under development, two of which are in clinical trials. Three
of the Company's product candidates are designed to delay or prevent the
recurrence of cancer by stimulating the body's own immune system to attack
microscopic disease remaining after a patient has undergone traditional therapy.
The Company's product candidates consist of macrophage activators (ACT and
JT3002) and therapeutic vaccines (OncoVax-P and OncoVax-CL). The Company
acquired the technology related to ACT and JT3002 through an exclusive worldwide
license with Novartis AG (the company resulting from the merger of Ciba-Geigy
Limited and Sandoz, Ltd.) ("Novartis"). In addition, the Company acquired the
rights to produce the antigen related to OncoVax-P through a non-exclusive
license with Research Corporation Technologies, Inc. and the antigen related to
OncoVax-CL through an exclusive worldwide license with Eli Lilly & Company.
ACT is in a nationwide Phase III clinical trial as a therapy for patients
with osteogenic sarcoma (bone cancer). The study calls for a total of 645
patients to be treated under the protocol and, as of December 31, 1996,
approximately 540 patients had entered the study. ACT utilizes a small molecule
that has the capacity to activate macrophages, which are scavenger cells that
are part of the immune system. Once activated, macrophages acquire the ability
to seek out and destroy tumor cells. ACT utilizes a proprietary liposomal
formulation to deliver its active ingredients (liposomes are spheres of
subcellular size composed primarily of fat molecules). JT3002 is in preclinical
evaluation as a therapy for mucositis (damage to the gastrointestinal mucosa or
lining of the gut), a side effect commonly associated with chemotherapy. The
Company intends to file an Investigational New Drug application ("IND") with the
United States Food and Drug Administration ("FDA") in late 1997 or early 1998 to
commence Phase I clinical trials of JT3002, subject to the results of the
preclinical evaluation.
OncoVax-P is in limited Phase I/II clinical trials in patients with prostate
cancer. The Company intends to commence a limited Phase I/II clinical trial for
OncoVax-CL in patients with colorectal cancer in the first quarter of 1997. The
Company's Phase I/II clinical trials are conducted in a small number of patients
(5-6) to gain preliminary information regarding safety of the vaccine and
ability to generate an immune response. OncoVax-P and OncoVax-CL each include a
genetically engineered version of a tumor associated antigen which represents
the "identity tag" of the cancer cell combined with an adjuvant which enhances
the body's immune response. The antigen and adjuvant are packaged in liposomes
which are taken up by antigen
- --------------------------------------------------------------------------------
3
- --------------------------------------------------------------------------------
presenting cells. The Company believes this approach will induce a more robust
relevant immune response than if the liposomal delivery system is not used.
Based on preclinical data, the Company believes that OncoVax-CL may have the
potential for application in cancer indications other than colorectal cancer,
such as lung, pancreatic and ovarian cancer.
In an effort to leverage the Company's resources and better manage the risks
and costs inherent in scientific research and new product development, Jenner
has followed a business strategy of (i) in-licensing promising proprietary
technologies for which substantial preclinical and/or clinical studies have been
undertaken, (ii) focusing on human clinical trials to gain relevant information
rather than developing animal models, and (iii) engaging qualified
subcontractors to perform research and development functions. Through this
business strategy, the Company has expended only approximately $4.0 million in
cash through December 31, 1996 to develop its current product candidates and
believes it has extended its research efforts to a larger number of applications
than would otherwise be the case given its limited resources.
The Company believes that its business strategy and management capabilities
may enable it to shorten the time frame for commercializing its products. As the
Company's product candidates advance through the regulatory process, the Company
generally intends to establish strategic alliances with pharmaceutical companies
and other corporate partners with large distribution systems to market and sell
the Company's products worldwide. In some cases, however, where the customers
for a product are easily identified and concentrated, the Company intends to
market and distribute the product through a direct sales force.
Jenner was incorporated as a California corporation in December 1992 and
expects to reincorporate in Delaware prior to consummation of this Offering. The
Company's principal offices are located at 2010 Crow Canyon Place, Suite 100,
San Ramon, California 94583, and its telephone number is (510) 824-3150.
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4
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THE OFFERING
Securities Offered....... 2,500,000 Shares of Common Stock and 2,500,000
Warrants. The Shares and the Warrants will be
separately transferable immediately following the
completion of this Offering.
Exercise Price of
Warrants............... Each Warrant entitles the registered holder thereof
to purchase, at any time over a four (4) year period
commencing one (1) year after the date of this
Prospectus, one share of Common Stock at a price of
$ per share [140% of the initial public offering
price per Share]. The Warrant exercise price is
subject to adjustment under certain circumstances.
See "Description of Securities."
Redemption of Warrants... Commencing eighteen (18) months after the date of
this Prospectus, the Warrants are subject to
redemption by the Company at $0.10 per Warrant on
thirty (30) days' prior written notice to the
warrant holders if the average closing sales price
of the Common Stock equals or exceeds $ per share
[160% of the initial public offering price per Share
of Common Stock] for any twenty (20) trading days
within a period of thirty (30) consecutive trading
days ending on the fifth trading day prior to the
date of the notice of redemption. See "Description
of Securities."
Common Stock Outstanding
Prior to the Offering(1). 4,621,886 Shares
Common Stock Outstanding
After the Offering(1)... 7,121,886 Shares
Use of Proceeds........... For research and development, clinical trials,
purchase of equipment, working capital and general
corporate purposes. See "Use of Proceeds."
Risk Factors and Dilution. An investment in the securities offered hereby
involves a high degree of risk and immediate and
substantial dilution to the purchasers in this
Offering. See "Risk Factors" and "Dilution."
Proposed AMEX Symbols(2):
Common Stock ........... JNR
Warrants ............... JNRW
- ----------
(1) Excludes 378,114 shares of Common Stock issuable upon exercise of
outstanding non-plan stock options and outstanding stock options granted
under the Company's 1993 Incentive Stock Plan as of January 31, 1997 at a
weighted average exercise price of $0.90 per share, and 350,000 shares of
Common Stock reserved for issuance under the Company's 1997 Stock Plan. See
"Management -- Employee Benefit Plans."
(2) Application has been made for listing of the Common Stock and the
Warrants on AMEX.
Jenner(tm) and ACT (tm) are trademarks of the Company. The Company has filed
an application to register JennerTech(tm) as a trademark of the Company.
- --------------------------------------------------------------------------------
5
- --------------------------------------------------------------------------------
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
INCEPTION INCEPTION
(DECEMBER 8, (DECEMBER 8,
1992) TO YEAR ENDED DECEMBER 31, 1992) TO
DECEMBER 31, ---------------------------------- DECEMBER 31,
1993 1994 1995 1996 1996
---- ---- ---- ---- ----
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ -- $ --
Research and development expenses 338,626 499,366 698,303 2,206,900 3,743,195
General and administrative expenses 137,325 228,114 195,663 339,948 901,050
--------- --------- --------- ----------- -----------
Loss from operations (475,951) (727,480) (893,966) (2,546,848) (4,644,245)
Interest income (expense) 9,037 22,369 17,100 (140,987) (92,481)
--------- --------- --------- ----------- -----------
Net loss $(466,914) $(705,111) $(876,866) $(2,687,835) $(4,736,726)
========= ========= ========= =========== ===========
Pro forma net loss per share(1) $ (0.56)
===========
Shares used to compute pro forma net loss
per share(1) 4,785,863
===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------
AS
ACTUAL ADJUSTED(2)
------ -----------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital $ 1,317,447 $ 17,697,447
Total assets 1,563,392 17,943,392
Note payable to principal stockholder 3,000,000 3,000,000
Deficit accumulated during the development stage (4,736,726) (4,736,726)
Total stockholders' equity (deficit) (1,852,170) 14,527,830
</TABLE>
- ----------
(1) See Note 1 of Notes to Financial Statements for an explanation of the
determination of the number of shares used to compute pro forma net loss
per share.
(2) Adjusted to give effect to the receipt of the estimated net proceeds
of the Offering based upon an assumed initial public offering price
of $7.50 per Share and $.10 per Warrant. See "Use of Proceeds" and
"Capitalization."
- --------------------------------------------------------------------------------
6
RISK FACTORS
An investment in the Securities offered hereby involves a high degree of
risk. In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing the Securities offered hereby. Prospective
investors should be in a position to risk the loss of their entire investment.
This Prospectus contains forward-looking statements. Such forward-looking
statements include, but are not limited to, the Company's expectations regarding
its future financial condition and operating results, product development,
business and growth strategy, market conditions and competitive environment. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
in the following risk factors and elsewhere in this Prospectus.
DEVELOPMENT STAGE COMPANY; LIMITED OPERATING HISTORY; NO REVENUES AND NO
ASSURANCE OF PROFITABILITY
The Company is in the development stage and is subject to all business risks
associated with a new enterprise, including uncertainties regarding product
development, constraints on the Company's financial and personnel resources, and
dependence on and need for third party relationships. At December 31, 1996, the
Company had an accumulated deficit of approximately $4.7 million. The Company
anticipates that it will continue to incur substantial additional operating
losses for at least the next several years and expects cumulative losses to
increase as the Company's research and development efforts expand. The Company
has a limited history of operations consisting primarily of development of its
products and sponsorship of research and clinical trials. The Company has not
generated any revenue to date, whether from product sales, license fees or
research funding, and there can be no assurance as to when or whether it will be
able to develop sources of revenue or that its operations will become
profitable, even if it is able to commercialize any products. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
NO ASSURANCE OF SUCCESSFUL PRODUCT DEVELOPMENT OR COMMERCIALIZATION;
UNCERTAINTIES RELATED TO CLINICAL TRIALS
The Company's research and development programs are at various stages of
development, ranging from the preclinical stage to Phase III clinical trials.
Substantial additional research and development will be necessary in order for
the Company to develop and obtain regulatory approval for its product
candidates, and there can be no assurance that the Company's research and
development will lead to development of products that are shown to be safe and
effective in clinical trials and that are commercially viable. In addition to
further research and development, the Company's product candidates will require
clinical testing, regulatory approval and development of marketing and
distribution channels, all of which are expected to require substantial
additional investment prior to commercialization. There can be no assurance that
the Company's products will be successfully developed, prove to be safe and
efficacious in clinical trials, meet applicable regulatory standards, be capable
of being produced in commercial quantities at acceptable costs, be eligible for
third party reimbursement from governmental or private insurers, be successfully
marketed or achieve market acceptance. Further, the Company's products may prove
to have undesirable or unintended side effects that may prevent or limit their
commercial use.
The Company may find, at any stage of its research and development, that
products which appeared promising in preclinical studies or Phase I and Phase II
clinical trials do not demonstrate efficacy in larger-scale Phase III clinical
trials and do not receive regulatory approvals. The results from preclinical
testing and early clinical trials may not be predictive of results obtained in
later clinical trials and large-scale testing. Companies in the pharmaceutical
and biotechnology industries have suffered significant setbacks in various
stages of clinical trials, even in advanced clinical trials after promising
results had been obtained in earlier trials. Accordingly, any product
development program undertaken by the Company may be curtailed, redirected or
eliminated at any time. The rate of completion of the Company's clinical trials
may be delayed by many factors, including slower than anticipated patient
enrollment, difficulty in securing sufficient supplies of clinical trial
materials or adverse events occurring during the clinical trials. Completion
7
of testing, studies and trials may take several years, and the length of time
varies substantially with the type, complexity, novelty and intended use of the
product. In addition, data obtained from preclinical and clinical activities are
susceptible to varying interpretations, which could delay, limit or prevent
regulatory approval. Delays or rejections may be encountered based upon many
factors, including changes in regulatory policy during the period of product
development. No assurance can be given that any of the Company's development
programs will be successfully completed, that any Investigational New Drug
application ("IND") will become effective or that additional clinical trials
will be allowed by the United States Food and Drug Administration ("FDA") or
other regulatory authorities or that clinical trials will commence as planned.
In addition, there have been delays in the Company's testing and development
schedules to date and there can be no assurance that the Company's expected
testing and development schedules will be met which could have a material
adverse effect on the Company. See "Business -- Jenner's Product Candidates and
Clinical Trials."
DEPENDENCE ON THIRD PARTY MANUFACTURING; RISKS OF CHANGING MANUFACTURING
SOURCES
The Company relies on third parties for the manufacture of products used in
clinical trials. The Company anticipates that current manufacturers of its
product candidates will not necessarily manufacture these products for
subsequent clinical trials, and will not manufacture the products for commercial
use should the clinical trials be successful and regulatory approval be
obtained. As a result, the Company will need to obtain alternate manufacturing
sources for its products. Applicable regulations require that, if the
manufacturing source of products such as the Company's vaccines or macrophage
activators is changed, equivalency must be demonstrated before patients can be
treated with product from the new manufacturer. The demonstration of such
equivalency may require that additional clinical trials be conducted. There is
no assurance that the Company will be able to demonstrate equivalency and the
effort to do so may require significant expenditures of money and time which
could have a material adverse effect on the Company. See "Business --
Manufacturing and Supply."
DEPENDENCE ON AND NEED FOR THIRD PARTY RELATIONSHIPS
The Company follows a business strategy of utilizing the expertise and
resources of third parties in a number of areas, including the manufacture of
vaccines and macrophage activators and their components, and the conduct of
preclinical and clinical trials. This strategy creates risks to the Company by
placing critical aspects of the Company's business in the hands of third parties
whom the Company may not be able to control as effectively as its own
operations. Moreover, in reliance on these relationships, the Company has not
developed its own resources to the extent these activities have been contracted
to third parties. Currently, the Company relies on these third parties as the
sources of supply for their respective products or services. If these third
parties do not perform in a timely and satisfactory manner, the Company may
incur additional costs and lose time in the conduct of its development and
clinical programs as it seeks alternate sources of such products and services,
if available. The effect of such costs and delays may have a material adverse
effect on the Company. See "Business -- Business Strategy."
The Company may seek additional third party relationships in certain areas,
particularly in situations in which the Company believes that the clinical
testing, marketing, manufacturing and other resources of a pharmaceutical
company collaborator will enable the Company to develop particular products or
geographic markets which are otherwise beyond the Company's resources and/or
capabilities. There is no assurance that the Company will be able to obtain any
such collaboration, or any other research and development, manufacturing, or
clinical trial agreement. The inability of the Company to obtain and maintain
satisfactory relationships with third parties may have a material adverse effect
on the Company.
NEED FOR SUBSTANTIAL ADDITIONAL FUNDS
The Company's operations to date have consumed substantial and increasing
amounts of cash. The negative cash flow from operations is expected to continue
and to accelerate in the foreseeable future. The Company will require
substantial funds of its own, or from third parties, to conduct research and
development, preclinical and clinical testing and to manufacture (or have
manufactured) and market (or have marketed) its product candidates. The Company
estimates that its current cash resources and the
8
net proceeds of the Offering will be sufficient to meet its operating and
capital requirements for at least 12 months following the closing of the
Offering. However, the Company's cash requirements may vary materially from
those now planned because of results of research and development, results of
preclinical and clinical testing, relationships with possible strategic
partners, changes in the focus and direction of the Company's research and
development programs, competitive and technological advances, the FDA regulatory
process and other factors. The net proceeds of this Offering are not expected to
be sufficient to fund the Company's operations through the commercialization of
one or more products yielding sufficient revenues to support the Company's
operations; therefore, the Company is likely to need to raise additional funds.
The Company may seek to satisfy its future funding requirements through public
or private offerings of securities, with collaborative or other arrangements
with major pharmaceutical companies or from other sources. Additional financing
may not be available when needed or on terms acceptable to the Company. If
adequate financing is not available, the Company may not be able to continue as
a going concern, or may be required to delay, scale back or eliminate certain of
its research and development programs, to relinquish rights to certain of its
technologies or product candidates, to forego desired opportunities, or to
license third parties to commercialize products or technologies that the Company
would otherwise seek to develop itself. To the extent the Company raises
additional capital by issuing equity securities, ownership dilution to the
investors in this Offering will result. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and Note 1 of Notes
to Financial Statements.
NO MANUFACTURING, MARKETING OR SALES
The Company currently has no marketing and sales resources or personnel. In
the event the Company successfully completes the regulatory process for the
introduction of a vaccine or macrophage activator product, the Company will need
to establish distribution, marketing and sales resources in order to
commercialize such product. Depending upon the product, the Company may seek to
develop its own distribution, marketing and sales resources, or may seek to
enter a collaborative agreement with a major pharmaceutical company for such
purposes. There is no assurance that the Company will be successful in either
situation. The inability of the Company to successfully distribute, market and
sell products will adversely affect the commercial value of such products and
may adversely affect the financial position of the Company. In view of the early
stage of development of the Company's potential products and the Company's
limited resources, the Company does not anticipate spending a material portion
of the net proceeds of this Offering to acquire resources and develop
capabilities in distribution, marketing or sales. See "Business -- Marketing and
Distribution."
The Company does not have a manufacturing facility, and thus currently lacks
the resources or capability to manufacture itself any of its product candidates
on a clinical or commercial scale. At the present time, the Company believes
that there are a number of facilities with FDA approval that have the capability
of synthesizing and manufacturing the Company's products and liposomal
formulations. However, the process for manufacturing and formulating the
Company's products is complex and subject to uncertainties. The Company is
currently, and will continue to be, dependent on third parties for manufacturing
clinical and commercial scale quantities of its products. There can be no
assurance that the Company will be able to maintain existing agreements for the
manufacturing of clinical quantities of products, that it will be able to enter
into additional agreements with other third parties for commercial scale
manufacturing, or that contract manufacturers will be able to adequately produce
the Company's products in commercial quantities in a cost-effective manner.
Interruptions or difficulties in clinical or commercial production of the
Company's products may require the Company to incur substantial costs to address
the situation, which could have a material adverse effect on the Company. See "
- -- Dependence on Third Party Manufacturing; Risks of Changing Manufacturing
Sources" and "Business -- Manufacturing and Supply."
Contract manufacturers must adhere to current Good Manufacturing Practice
("cGMP") regulations strictly enforced by the FDA on an ongoing basis through
its facilities inspection program. Contract manufacturing facilities must pass a
pre-approval plant inspection before the FDA will approve a Biologic License
Application ("BLA") or a Product License Application ("PLA") and Establishment
License
9
Application ("ELA"). Certain material manufacturing changes that occur after
approval are also subject to FDA review and clearance or approval. There can be
no assurance that the FDA or other regulatory agencies will approve the process
or the facilities by which any of the Company's products may be manufactured.
The Company's dependence on third parties for the manufacture of products may
adversely affect the Company's ability to develop and deliver products on a
timely and competitive basis. See " -- No Assurance of FDA Approval; Government
Regulation" and "Business -- Government Regulation."
UNCERTAIN ABILITY TO PROTECT PATENTS AND PROPRIETARY INFORMATION
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings, and a substantial number of patents have already been
issued to other pharmaceutical and biotechnology companies. Third parties may
have filed applications for or have been issued patents and may obtain
additional patents and proprietary rights related to products or processes
competitive with or similar to those of the Company. The Company may not be
aware of all of the patents potentially adverse to the Company's interests that
may have been issued to others. No assurance can be given that such patents do
not exist, have not been filed, or could not be filed or issued, which contain
claims relating to the Company's technology, products or processes. If patents
have been or are issued to others containing preclusive or conflicting claims
and such claims are ultimately determined to be valid, the Company may be
required to obtain licenses to one or more of such patents or to develop or
obtain alternate technology. There can be no assurance that the licenses that
might be required for the Company's processes or products would be available on
commercially acceptable terms, or at all.
Because of the substantial length of time and expense associated with
bringing new products to the marketplace through the development and regulatory
approval process, the biotechnology industry places considerable importance on
patent and trade secret protection for new technologies, products and processes.
Since patent applications in the United States are maintained in secrecy until
patents issue and since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, the Company cannot be certain
that it (or any licensor) was the first to make the inventions covered by
pending patent applications or that it (or any licensor) was the first to file
patent applications for such inventions. The patent positions of vaccine and
biotechnology companies can be highly uncertain and involve complex legal and
factual questions, and therefore the breadth of claims allowed in vaccine and
biotechnology patents or their enforceability, cannot be predicted. There can be
no assurance that any patents under pending patent applications or any further
patent applications will be issued. Furthermore, there can be no assurance that
the scope of any patent protection will exclude competitors or provide
competitive advantages to the Company, that any of the Company's patents that
have issued or may be issued will be held valid if subsequently challenged or
that others, including competitors or current or former employers of the
Company's employees, advisors and consultants, will not claim rights in or
ownership to the patents and other proprietary rights held by the Company. There
can be no assurance that others will not independently develop substantially
equivalent proprietary information or otherwise obtain access to the Company's
proprietary information or that others may not be issued patents that may
require licensing and the payment of significant fees or royalties by the
Company.
The Company currently licenses several patents and patent applications and
other technology that are integral to the Company's products and business. The
Company's breach of any existing license agreement or the failure to obtain a
license to technology required to commercialize its products candidates may have
a material adverse effect on the Company. See "Business -- Licenses."
The biotechnology industry has experienced extensive litigation regarding
patent and other intellectual property rights. Accordingly, the Company could
incur substantial costs in defending itself in suits that may be brought against
the Company claiming infringement of the patent rights of others or in asserting
the Company's patent rights in a suit against another party. The Company may
also be required to participate in interference proceedings declared by the
United States Patent and Trademark Office for the purpose of determining the
priority of inventions in connection with the patent applications of the Company
or other parties. Adverse determinations in litigation or interference
proceedings could require the Company to seek licenses (which may not be
available on commercially reasonable terms) or subject the Company to
significant liabilities to third parties, and could therefore
10
have a material adverse effect on the Company. Even if the Company prevails in
an interference proceeding or a lawsuit, substantial resources of the Company,
including the time and attention of its officers, will be required.
The Company also relies on trade secrets, know-how and technological
advancement to maintain its competitive position. Although the Company uses
confidentiality agreements and employee proprietary information and invention
assignment agreements to protect its trade secrets and other unpatented
know-how, these agreements may be breached by the other party thereto or may
otherwise be of limited effectiveness or enforceability.
The Company is aware of a company that has filed an intent to use
application in the United States Patent and Trademark Office for the mark "Onco
Vax" relating to therapeutic vaccines for oncological purposes. The Company
believes that it has superior rights to use "OncoVax" based upon its public use
of the mark in technical journals prior to the effective filing date of the
intent to use application. However, there can be no assurance in this regard,
and the Company may be required to discontinue using "OncoVax" as a name for its
products.
DEPENDENCE ON QUALIFIED PERSONNEL
Because of the specialized scientific nature of the Company's business, the
Company is highly dependent upon its ability to attract and retain qualified
scientific, technical and managerial personnel. The loss of the Company's Chief
Executive Officer, Anthony E. Maida III, or its President and Chief Scientific
Officer, Dr. Lynn E. Spitler, would be highly detrimental to the Company. The
Company has an employment agreement with each of these individuals. See
"Management -- Employment Agreements." Following the Offering, the Company
expects to maintain key person insurance for $1,000,000 on the life of each of
Mr. Maida and Dr. Spitler. The proceeds of such insurance may not be sufficient
to compensate the Company for the loss of the services of such individuals and
is not applicable in the case of resignation. There is intense competition for
qualified personnel in the biotechnology field, including personnel with
expertise in product candidate identification, licensing, clinical trials,
government regulation, manufacturing marketing and sales, and there can be no
assurance that the Company will be able to continue to attract and retain
qualified personnel necessary for the development of its business. The loss of
the services of existing personnel as well as the failure to recruit additional
key scientific and technical personnel in a timely manner could have a material
adverse effect on the Company.
RELATIONSHIPS OF SCIENTIFIC ADVISORS WITH OTHER ENTITIES
The members of the Company's Scientific Advisory Board are employed on a
full-time basis by academic or research institutions. Scientific Advisory Board
Members serve as consultants to the Company, and in some cases as consultants to
other companies. Accordingly, Scientific Advisory Board members are able to
devote only a portion of their time to the Company's business and research
activities. In addition, except for work performed specifically for and at the
direction of the Company, the inventions or processes discovered by the
Company's Scientific Advisory Board members and other consultants will not
become the intellectual property of the Company, but will be the intellectual
property of their institutions. If the Company desires access to inventions
which are not its property, it will be necessary for the Company to obtain
licenses to such inventions from the owners. In addition, invention assignment
agreements executed by Scientific Advisory Board members and consultants in
connection with their relationships with the Company may be subject to the
rights of their primary employers or other third parties with whom such
individuals have consulting relationships. See "Business -- Scientific Advisory
Board."
COMPETITION
There are many companies, both publicly and privately held, including
well-known pharmaceutical companies, as well as academic and other research
institutions, that are engaged in the discovery, development, marketing and sale
of products for the treatment of cancer. These include new pharmaceutical
products and new biologically derived products, including vaccines and
macrophage activators. The Company expects to encounter significant competition
for its product candidates from traditional and new treatment methods. The
Company is aware of a number of companies that have products based on
immunoactivation principles or intended to treat the indications targeted by the
Company, including Avigen, Inc., Akzo Pharma Group, Aphton Corp., Biomira, Inc.,
Cell Genesys, Inc., Cel-Sci Corporation, Centocor, Inc., Corixa Corporation,
Cytel Corp., EndoRex Corp., Epigen, Inc., IDEC Pharmaceutical Corp., ImClone
Systems, Inc., Janssen Pharmaceuticals (a division of Johnson & Johnson),
Medarex, Inc., Oncogene Sciences, Inc., RIBI ImmunoChem Research, Inc.,
Schering-Plough Corp., Therion Biologics Corporation, Chiron Viagene, Inc. and
Vical, Inc. Janssen Pharmaceuticals and Schering-Plough Corp. recently
11
received FDA clearance to market products in the United States for surgical
adjuvant treatment of colorectal carcinoma and melanoma, respectively, and
Centocor, Inc. recently received approval to market a product in Germany for the
adjuvant therapy of colorectal cancer.
Most of the Company's competitors and potential competitors have
substantially greater capital, research and development capabilities and human
resources than the Company. Furthermore, many of these competitors have
significantly greater experience than the Company in undertaking preclinical
testing and clinical trials of new biotechnology products and obtaining FDA and
other regulatory approvals. If the Company is permitted to commence commercial
sales of any product, it will also be competing with companies that have greater
resources and experience in manufacturing, marketing and sales. The Company's
competitors may succeed in developing products that are more effective, less
costly, or have a better side effect profile than any that may be developed by
the Company, and such competitors may also prove to be more successful than the
Company in manufacturing, marketing and sales. If the Company is able to
successfully commercialize a product, subsequent competitive developments could
render such product noncompetitive or obsolete. See "Business -- Competition."
TECHNOLOGICAL CHANGES AND UNCERTAINTY
The Company's research and development strategy is based upon advances in
recent years in the scientific understanding of monoclonal antibodies, genetic
engineering and the human immune system. The Company's strategy focuses on
techniques to stimulate the body's immune system to act against cancer cells.
This area is the subject of extensive research efforts and rapid scientific
progress. New developments are expected to continue at a rapid pace in industry
and academia in both the specific areas of interest to the Company and in other
areas directed at the prevention or treatment of cancer. There can be no
assurance that research and discoveries by others will not render some or all of
the Company's proposed products noncompetitive or obsolete. In addition, the
Company's business strategy is subject to the risks inherent in the development
of new therapeutic products. There can be no assurance that unforeseen problems
will not develop, that the Company will be able to address successfully
technological challenges it encounters in its research and development programs
or that commercially feasible products will ultimately be developed by the
Company. See "Business -- Competition."
NO ASSURANCE OF FDA APPROVAL; GOVERNMENT REGULATION
All new drugs and biologics, including the Company's product candidates, are
subject to extensive and rigorous regulation by the federal government,
principally the FDA under the Federal Food, Drug and Cosmetic Act and other laws
including, in the case of biologics, the Public Health Services Act, and by
state and local governments. Such regulations govern, among other things, the
development, testing, manufacture, labeling, storage, premarket clearance or
approval, advertising, promotion, sale and distribution of such products. If
drug products are marketed abroad, they also are subject to extensive regulation
by foreign governments. Failure to comply with the FDA or other applicable
regulatory requirements may subject a Company to administrative or judicially
imposed sanctions such as civil penalties, criminal prosecution, injunctions,
product seizure or detention, product recalls, total or partial suspension of
production, and FDA refusal to approve pending BLAs, PLAs and ELAs, or
supplements to approved BLAs or PLAs/ELAs.
The Company has not received regulatory approval in the United States or any
foreign jurisdiction for the commercial sale of any of its products. The process
of obtaining FDA and other required regulatory approvals, including foreign
approvals, often takes many years and can vary substantially based upon the
type, complexity and novelty of the products involved and the indications being
studied. Furthermore, such approval process is extremely expensive and
uncertain. There can be no assurance that the Company's product candidates will
be cleared for marketing by the FDA. There can be no assurance that the Company
will have sufficient resources to complete the required regulatory review
process, or that the Company could overcome the inability to obtain, or delays
in obtaining, such approvals. The failure of the Company to receive FDA approval
for its product candidates would preclude the Company from marketing and selling
its products in the United States. Therefore, the failure to receive such FDA
approval would have a material adverse effect on the Company. Even if
12
regulatory approval of a product is granted, there can be no assurance that the
Company will be able to obtain the labeling claims necessary or desirable for
the promotion of those products. FDA regulations prohibit the marketing or
promotion of a drug for unapproved indications. Furthermore, regulatory
marketing approval may entail ongoing requirements for postmarketing studies. If
regulatory approval is obtained, the Company will be subject to ongoing FDA
obligations and continued regulatory review. In particular, the Company or its
third party manufacturers will be required to adhere to regulations setting
forth cGMPs, which require that the Company or third party manufacturers
manufacture products and maintain records in a prescribed manner with respect to
manufacturing, testing and quality control activities. Further, the Company or
its third party manufacturer must pass a preapproval inspection of its
manufacturing facilities by the FDA before obtaining marketing approval. Failure
to comply with applicable regulatory requirements may result in penalties such
as restrictions on a product's marketing or withdrawal of the product from the
market. In addition, identification of certain side effects after a drug is on
the market or the occurrence of manufacturing problems could cause subsequent
withdrawal of approval, reformulation of the drug, additional preclinical
testing or clinical trials and changes in labeling of the product.
Prior to the submission of a BLA or PLA/ELA, drugs developed by the Company
must undergo rigorous preclinical and clinical testing which may take several
years and the expenditure of substantial resources. Before commencing clinical
trials in humans, the Company must submit to the FDA and receive clearance of an
IND. There can be no assurance that submission of an IND for future clinical
testing of any product under development or other future products of the Company
would result in FDA permission to commence clinical trials or that the Company
will be able to obtain the necessary approvals for future clinical testing in
any foreign jurisdiction. Success in preclinical studies or early stage clinical
trials does not assure success in later stage clinical trials. Data obtained
from preclinical and clinical activities are susceptible to varying
interpretations which could delay, limit or prevent regulatory approval.
Further, there can be no assurance that if such testing of products under
development is completed, any such drug compounds will be accepted for formal
review by the FDA or any foreign regulatory body, or approved by the FDA for
marketing in the United States or by any such foreign regulatory bodies for
marketing in foreign jurisdictions. Future federal, state, local or foreign
legislation or administrative acts could also prevent or delay regulatory
approval of the Company's products. See "Business -- Government Regulation."
UNCERTAIN AVAILABILITY OF HEALTH CARE REIMBURSEMENT; HEALTH CARE REFORM
The Company's ability to commercialize its product candidates may depend in
part on the extent to which reimbursement for the costs of such product will be
available from government health administration authorities, private health
insurers and others. Significant uncertainty exists as to the reimbursement
status of newly approved health care products. There can be no assurance of the
availability of adequate third-party insurance reimbursement coverage that
enables the Company to establish and maintain price levels sufficient for
realization of an appropriate return on its investment in developing vaccines
and biological products. Government and other third-party payors are
increasingly attempting to contain health care costs by limiting both coverage
and the level of reimbursement for new therapeutic products approved for
marketing by the FDA and by refusing, in some cases, to provide any coverage for
uses of approved products for disease indications for which the FDA has not
granted marketing approval. If adequate coverage and reimbursement levels are
not provided by government and third-party payors for uses of the Company's
product candidates, the market acceptance of these products would be adversely
affected.
Health care reform proposals have been introduced in Congress and in various
state legislatures. It is currently uncertain whether any health care reform
legislation will be enacted at the federal level, or what actions governmental
and private payors may take in response to the suggested reforms. The Company
cannot predict when any proposed reforms will be implemented, if ever, or the
effect of any implemented reforms on the Company's business. There can be no
assurance that any implemented reforms will not have a material adverse effect
on the Company. Such reforms, if enacted, may affect the availability of
third-party reimbursement for products developed by the Company as well as the
price levels at which the Company is able to sell such products. In addition, if
the Company is able to commercialize products in overseas markets, the Company's
ability to achieve success in such markets may depend, in part, on the health
care financing and reimbursement policies of such countries.
13
RISK OF PRODUCT LIABILITY; UNCERTAINTY OF AVAILABILITY OF PRODUCT
LIABILITY INSURANCE
The Company's business exposes it to potential product liability risks which
are inherent in the manufacturing, clinical testing, marketing and use of human
therapeutic products. The Company currently carries clinical trial liability
insurance in the amount of $1 million per occurrence and $1 million in the
aggregate, although this insurance does not currently cover the on-going Phase
III clinical trial for ACT. There can be no assurance that the coverage limits
of the Company's insurance policy will be adequate, and a successful claim in
excess of the coverage limits could have a material adverse effect on the
Company. The Company plans to obtain product liability insurance covering the
commercial sale of its products prior to their commercial introduction, however,
there can be no assurance that the Company will be able to obtain or maintain
such insurance on acceptable terms or that any insurance obtained will provide
adequate coverage against potential liabilities. Claims or losses in excess of
any liability insurance coverage now carried or subsequently obtained by the
Company could have a material adverse effect on the Company.
POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE
Sales of Common Stock (including shares issued upon the exercise of
outstanding options) in the public market after this Offering could materially
and adversely affect the market price of the Securities. Such sales also might
make it more difficult for the Company to sell equity securities or
equity-related securities in the future at a time and price that the Company
deems appropriate. Upon the completion of this Offering, the Company will have
7,121,886 shares of Common Stock outstanding (not including 378,114 shares of
Common Stock subject to outstanding options) assuming no exercise of options
after January 31, 1997 and outstanding warrants to purchase an additional
2,500,000 shares of Common Stock, assuming no exercise of the Representative's
Warrant. Of these securities, 2,500,000 shares of Common Stock and Warrants to
purchase 2,500,000 shares of Common Stock sold in this Offering will be freely
tradeable (unless held by affiliates of the Company) without restriction. The
remaining 4,621,886 shares will be restricted securities within the meaning of
the Securities Act of 1933, as amended (the "Securities Act"). The Company's
directors, executive officers and stockholders, who in the aggregate hold 100%
of the shares of Common Stock of the Company outstanding immediately prior to
the completion of this Offering, have entered into lock-up agreements under
which they have agreed not to sell, directly or indirectly, any shares owned by
them for a period of 12 months after the date of this Prospectus without the
prior written consent of the Representative. The Representative may, in its sole
discretion and at any time without notice, release all or any portion of the
shares subject to such lock-up agreements. Upon expiration of the 12-month
lock-up agreements, 2,927,449 shares of Common Stock (not including
approximately 228,403 shares subject to outstanding vested options) held by
existing stockholders will be eligible for immediate public resale, subject in
some cases to volume limitations pursuant to Rule 144, and the remaining
1,694,437 shares held by existing stockholders will become eligible for public
resale at various times over a period of less than two years, subject in some
cases to vesting provisions and volume limitations. In addition, 12 months after
the completion of this Offering, 250,000 shares of Common Stock issuable upon
exercise of the Representative's Warrants and the Warrants to purchase 250,000
shares of Common Stock issuable upon exercise of the Representative's Warrants
will be available for sale. Also, 1,860,680 of the shares outstanding
immediately following the completion of this Offering will be entitled to
registration rights with respect to such shares upon termination of lock-up
agreements. The number of shares sold in the public market could increase if
registration rights are exercised and such sales may have an adverse effect on
the market price of the Common Stock. See "Description of Capital Stock" and
"Shares Eligible for Future Sale."
CONCENTRATION OF OWNERSHIP
Upon consummation of this Offering, the directors and officers of the
Company (and certain members of their families) will beneficially own 4,529,387
shares of the Company's Common Stock or approximately 63.6% of the outstanding
shares of Common Stock following the completion of this Offering. Accordingly,
the Company's officers and directors will have the ability to elect a majority
of the Company's directors and otherwise control the Company. See "Principal
Stockholders."
14
IMMEDIATE SUBSTANTIAL DILUTION; DISPARITY OF CONSIDERATION
Purchasers of Securities in this Offering will experience immediate and
substantial dilution in the net tangible book value of the shares of Common
Stock and Warrants purchased by them in this Offering. The immediate dilution to
purchasers of the Securities offered hereby is $5.46 per share of Common Stock,
assuming an initial public offering price of $7.50 per share. Additional
dilution to future net tangible book value per share may occur upon the exercise
of the Warrants, the Representative's Warrants and the options that are
outstanding or to be issued under the Company's option plans. The current
stockholders of the Company, including the Company's officers and directors,
acquired their shares of Common Stock for nominal consideration or for
consideration substantially less than the public offering price of the shares of
Common Stock offered hereby. As a result, new investors will bear substantially
all of the risks inherent in an investment in the Company. See "Capitalization,"
"Dilution" and "Certain Transactions."
ANTI-TAKEOVER EFFECT OF DELAWARE LAW AND CERTAIN CHARTER AND BYLAWS
PROVISIONS
Certain provisions of Delaware law applicable to the Company could delay or
make more difficult a merger, tender offer or proxy contest involving the
Company, including Section 203 of the Delaware General Corporation Law, which
prohibits a Delaware corporation from engaging in any business combination with
any interested stockholder for a period of three years from the date the person
became an interested stockholder unless certain conditions are met. In addition,
the Board of Directors of the Company may issue shares of Preferred Stock
without stockholder approval on such terms as the Board may determine. The
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any Preferred Stock that may be issued
in the future. In addition, the Company's Certificate of Incorporation and
Bylaws eliminate the right of stockholders to act by written consent without a
meeting, eliminate cumulative voting in the election of directors and specify
procedures for director nominations by stockholders and submission of other
proposals for consideration at stockholder meetings. All of the foregoing could
have the effect of delaying, deferring or preventing a change in control of the
Company and could limit the price that certain investors might be willing to pay
in the future for shares of the Company's Common Stock. See "Description of
Capital Stock."
ABSENCE OF DIVIDENDS
The Company has never declared or paid dividends on its Common Stock and
does not intend to pay any dividends in the foreseeable future. See "Dividend
Policy."
ARBITRARY DETERMINATION OF OFFERING PRICE; NO PUBLIC MARKET FOR THE SECURITIES
The initial public offering price of the Securities and the exercise prices
and terms of the Warrants have been determined arbitrarily by negotiations
between the Company and the Representative. Factors considered in such
negotiations, in addition to prevailing market conditions, included the history
and prospects for the industry in which the Company competes, an assessment of
the Company's management, the prospects of the Company, its capital structure
and certain other factors as were deemed relevant. Therefore, the public
offering price of the Securities and the exercise prices and terms of the
Warrants do not necessarily bear any relationship to established valuation
criteria and therefore may not be indicative of prices that may prevail at any
time or from time to time in the public market for the Securities. Prior to this
Offering, there has been no public market for the Securities, and there can be
no assurance that an active trading market will develop in any of the Securities
after the Offering, or, if developed, be sustained. See "Underwriting."
PRICE VOLATILITY
The securities markets have from time to time experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. In addition, the market prices of the common stock of many
publicly traded pharmaceutical or biotechnology companies have in the past been,
and can in the future be expected to be, especially volatile. Announcements of
15
technological innovations or new products by the Company or its competitors,
developments or disputes concerning patents or proprietary rights, publicity
regarding actual or potential clinical trial results relating to products under
development by the Company or its competitors, regulatory developments in both
the United States and foreign countries, delays in the Company's testing and
development schedules, public concern as to the safety of vaccines or biological
products and economic and other external factors, as well as period-to-period
fluctuations in the Company's financial results, may have a significant impact
on the market prices of the Securities. The realization of any of the risks
described in these "Risk Factors" could have a significant and adverse impact on
such market prices.
POTENTIAL ADVERSE EFFECT OF REPRESENTATIVE'S WARRANTS
At the consummation of the Offering, the Company will sell to the
Representative for nominal consideration the Representative's Warrants to
purchase up to 250,000 shares of Common Stock and/or 250,000 Warrants. The
Representative's Warrants will be exercisable for a period of four years
commencing one year after the effective date of this Offering, at an exercise
price of $ per Share and $ per Warrant [140% of the respective public offering
prices of the Shares and the Warrants]. The Warrants obtained upon exercise of
the Representative's Warrants will be exercisable for a period of four years
commencing one year after the effective date of this Offering, at an exercise
price of $ per share [140% of the initial public offering price per Share]. For
the term of the Representative's Warrants, the holders thereof will have, at
nominal cost, the opportunity to profit from a rise in the market price of the
Securities without assuming the risk of ownership, with a resulting dilution in
the interest of other security holders. As long as the Representative's Warrants
remain unexercised, the Company's ability to obtain additional capital might be
adversely affected. Moreover, the Representative may be expected to exercise the
Representative's Warrants at a time when the Company would, in all likelihood,
be able to obtain any needed capital through a new offering of its securities on
terms more favorable than those provided by the Representative's Warrants. See
"Underwriting."
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
Commencing 18 months after the date of this Prospectus, the Warrants are
subject to redemption at $0.10 per Warrant on 30 days' prior written notice to
the Warrant holders if the average closing sales price of the Common Stock as
reported on the AMEX equals or exceeds $ per share [160% of the initial public
offering price per Share of Common Stock] for any 20 trading days within a
period of 30 consecutive trading days ending on the fifth trading day prior to
the date of the notice of redemption. If the Warrants are redeemed, holders of
the Warrants will lose their rights to exercise the Warrants upon expiration of
the 30 day notice of redemption period. Upon receipt of a notice of redemption,
holders would be required to (i) exercise the Warrants and pay the exercise
price at a time when it may be disadvantageous for them to do so, (ii) sell the
Warrants at the current market price, if any, when they might otherwise wish to
hold the Warrants or (iii) accept the redemption price which is likely to be
substantially less than the market value of the Warrants at the time of
redemption. See "Description of Securities -- Warrants."
POTENTIAL ADVERSE EFFECT OF SUBSTANTIAL SHARES OF COMMON STOCK RESERVED
The Company has reserved a total of 3,728,114 shares of Common Stock for
issuance as follows: (i) 2,500,000 shares for issuance upon exercise of the
2,500,000 Warrants; (ii) 250,000 shares for issuance upon exercise of the
Representative's Warrants; (iii) 250,000 shares for issuance upon exercise of
the Warrants issuable upon exercise of the Representative's Warrants; (iv)
378,114 shares for issuance upon exercise of non-plan stock options and stock
options granted under the Company's 1993 Stock Option Plan; and (v) 350,000
shares that may be granted under the Company's 1997 Stock Plan following the
Offering. The existence of the Warrants, the Representative's Warrants and any
other options or warrants may adversely affect the Company's ability to
consummate future equity financings. Further, the holders of such warrants and
options may exercise them at a time when the Company would otherwise be able to
obtain additional equity capital on terms more favorable to the Company.
16
REPRESENTATIVE'S INFLUENCE ON THE MARKET
A significant amount of the Securities offered hereby may be sold to
customers of the Representative. Such customers subsequently may engage in
transactions for the sale or purchase of such Securities through or with the
Representative. If it participates in the market, the Representative may exert a
dominating influence on the market, if one develops, for the Securities
described in this Prospectus. Such market making activity may be discontinued at
any time. The price and liquidity of the Common Stock and the Warrants may be
significantly affected by the degree, if any, of the Representative's
participation in the market.
LEGAL RESTRICTIONS ON SALES OF SHARES UNDERLYING THE WARRANTS
The Warrants are not exercisable unless, at the time of the exercise, the
Company has in effect a current prospectus covering the shares of Common Stock
issuable upon exercise of the Warrants, and such shares have been registered,
qualified or deemed to be exempt under the securities laws of the state of
residence of the exercising holder of the Warrants. Although the Company has
agreed to keep a registration statement covering the shares of Common Stock
issuable upon exercise of the Warrants effective for the term of the Warrants,
if it fails to do so for any reason, the Warrants may be deprived of value.
The Shares and Warrants are separately transferable immediately upon
issuance. Purchasers may buy Warrants in the aftermarket in, or may move to,
jurisdictions in which the shares underlying the Warrants are not so registered
or qualified during the period that the Warrants are exercisable. In this event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants, and holders of Warrants would have no choice but to
attempt to sell the Warrants in a jurisdiction where such sale is permissible or
allow them to expire unexercised. See "Description of Securities."
MANAGEMENT'S BROAD DISCRETION IN USE OF PROCEEDS
Although the Company intends to apply the net proceeds of this Offering in
the manner described under "Use of Proceeds," it has broad discretion within
such proposed uses as to the precise allocation of the net proceeds, the timing
of expenditures and all other aspects of the use thereof. The Company reserves
the right to reallocate the net proceeds of this Offering among the various
categories set forth under "Use of Proceeds" as it, in its sole discretion,
deems necessary or advisable. See "Use of Proceeds."
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by the Delaware General Corporations Law ("Delaware Law"), the
personal liability of directors for monetary damages for breach of their
fiduciary duties as a director. The Company's Bylaws provide that the Company
shall indemnify its officers and directors and may indemnify its employees and
other agents to the fullest extent permitted by law. The Company has entered
into indemnification agreements with its officers and directors containing
provisions which are in some respects broader than the specific indemnification
provisions contained in Delaware Law. The indemnification agreements may require
the Company, among other things, to indemnify such officers and directors
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
directors' and officers' insurance if available on reasonable terms. Section 145
of the Delaware Law provides that a corporation may indemnify a director,
officer, employee or agent made or threatened to be made a party to an action by
reason of the fact that he was a director, officer, employee or agent of the
corporation or was serving at the request of the corporation against expenses
actually and reasonably incurred in connection with such action if he or she
acted in good faith and in a manner he or she reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful. Delaware Law does not permit a corporation to eliminate a
director's duty of care, and the provisions of the Company's Certificate of
Incorporation have no effect on the availability of equitable remedies, such as
injunction or rescission, for a director's breach of the duty of care. See
"Management -- Limitation of Liability and Indemnification."
17
USE OF PROCEEDS
The net proceeds to be received by the Company from the sale of the
2,500,000 Shares of Common Stock and 2,500,000 Warrants offered hereby (after
deducting estimated offering expenses and underwriting discounts payable by the
Company in connection with the Offering) are estimated to be approximately
$16,380,000 ($19,002,000 if the Underwriters' over-allotment option is exercised
in full) based on an assumed initial public offering price of $7.50 per Share of
Common Stock and $0.10 per Warrant.
The Company intends to use most of the net proceeds of this Offering to fund
its research and development efforts, including clinical and preclinical
studies. In addition, the Company intends to use approximately $1.1 million of
the net proceeds to establish and equip a small laboratory facility to support
its research and development activities. The remainder of the net proceeds will
be used for working capital and general corporate purposes. The amount and
timing of expenditures of the net proceeds of this Offering cannot be precisely
determined, and will depend on numerous factors, including the status of the
Company's product development efforts, the results of clinical trials and the
regulatory approval process. The Company may also use a portion of the net
proceeds to acquire complementary businesses, products or technologies, although
the Company has no agreements and is not involved in any negotiations with
respect to any such transaction. See "Risk Factors -- Management's Broad
Discretion in Use of Proceeds." Pending such uses, the Company plans to invest
the net proceeds from this Offering in short-term, investment-grade,
interest-bearing securities.
The Company estimates that its current cash resources and the net proceeds
of this Offering will be sufficient to meet its operating and capital
requirements for at least 12 months following the closing of this Offering.
However, there can be no assurance that the net proceeds of the Offering will
satisfy the Company's requirements for any particular period of time. The
Company anticipates that additional funding will be required after the use of
the net proceeds of the Offering. No assurance can be given that such additional
financing will be available when needed on terms acceptable to the Company, if
at all. See "Risk Factors -- Need for Substantial Additional Funds."
DIVIDEND POLICY
The Company has never declared nor paid dividends on its Common Stock and
does not intend to pay any dividends in the foreseeable future.
18
CAPITALIZATION
The following table sets forth, as of December 31, 1996, (i) the actual
capitalization of the Company and (ii) the pro forma capitalization of the
Company as adjusted to give effect to the conversion of all outstanding shares
of Preferred Stock of the Company into Common Stock, to reflect the
reincorporation of the Company into the State of Delaware and to reflect the
receipt of the estimated net proceeds from the sale of the 2,500,000 Shares of
Common Stock and 2,500,000 Warrants offered hereby at an assumed initial public
offering price of $7.50 per Share and $0.10 per Warrant. This table should be
read in conjunction with the financial statements of the Company and the notes
thereto included elsewhere in this Prospectus. See "Description of Securities,"
"Use of Proceeds" and "Certain Transactions."
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------
PRO FORMA,
ACTUAL AS ADJUSTED
------ -----------
<S> <C> <C>
Note payable to principal stockholder $ 3,000,000 $ 3,000,000
----------- -------------
Stockholders' equity (net capital deficiency):
Preferred Stock, par value $0.001 per share;
5,000,000 shares authorized; 2,616,550 shares issued and
outstanding on an actual basis, none issued and outstanding
pro forma, as adjusted 2,310,400 --
Common Stock, par value $0.001 per share;
30,000,000 shares authorized; 3,111,871 shares issued and
outstanding on an actual basis, 7,121,886 shares issued
and outstanding pro forma, as adjusted(1) 619,156 7,122
Additional paid-in capital -- 19,302,434
Deferred compensation (45,000) (45,000)
Deficit accumulated during the development stage (4,736,726) (4,736,726)
---------- ----------
Total stockholders' equity (net capital deficiency) (1,852,170) 14,527,830
---------- ----------
Total capitalization $ 1,147,830 $ 17,527,830
=========== ============
</TABLE>
- -----------
(1) Excludes 378,114 shares of Common Stock issuable upon exercise of
outstanding non-plan stock options and outstanding stock options granted
under the Company's 1993 Incentive Stock Plan as of January 31, 1997 at a
weighted average exercise price of $0.90 per share, and 350,000 shares of
Common Stock reserved for issuance under the Company's 1997 Stock Plan. See
"Management -- Employee Benefit Plans."
19
DILUTION
The pro forma net tangible book value deficit of the Company as of December
31, 1996 was $(1,852,170), or $(0.40) per share of Common Stock, determined by
dividing the pro forma net tangible book value of the Company (pro forma
liabilities in excess of tangible assets) by the number of shares of Common
Stock outstanding as of December 31, 1996 (assuming the conversion of all
outstanding shares of Preferred Stock into Common Stock). After giving effect to
the receipt of the net proceeds of the sale of 2,500,000 shares of Common Stock
and 2,500,000 Warrants offered hereby at an assumed initial public offering
price of $7.50 per Share and $0.10 per Warrant, the adjusted pro forma net
tangible book value of the Company at December 31, 1996 would have been
$14,527,830, or $2.04 per share. This represents an immediate increase in pro
forma net tangible book value of $2.44 per share to existing stockholders and an
immediate dilution of $5.46 per share to new investors. The following table
illustrates the per share dilution:
Assumed initial public offering price per share $ 7.50
Pro forma net tangible book value deficit per share $ (.40)
Increase per share attributable to new stockholders 2.44
----
Pro forma net tangible book value per share after the Offering 2.04
----
Dilution per share to new stockholders $ 5.46
======
In the event the Over-allotment Option is exercised in full, the pro forma
net tangible book value as of December 31, 1996 would be $17,149,830 or $2.29
per share of Common Stock, which would result in immediate dilution in net
tangible book value to new investors of approximately $5.21 per share.
The following table summarizes, on a pro forma basis as of December 31,
1996, the difference between the number of shares of Common Stock purchased from
the Company, the total consideration paid and the average price per share paid
by existing stockholders of Common Stock and by the new investors purchasing
shares in this Offering, assuming the sale of the 2,500,000 Shares of Common
Stock and 2,500,000 Warrants offered hereby at an assumed initial public
offering price of $7.50 per Share and $0.10 per Warrant and before any deduction
of underwriting discounts and estimated offering expenses.
NUMBER OF
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE
------------------- ------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------ ------- ------ ------- ---------
Existing stockholders 4,621,886 64.9% $ 2,877,556 13.3% $ .62
New investors 2,500,000 35.1% 18,750,000 86.7% $7.50(2)
--------- ---- ---------- ----
Total 7,121,886 100.0% $21,627,556 100.0%
========= ===== =========== =====
- ---------
(1) Excludes 378,114 shares of Common Stock issuable upon exercise of
outstanding non-plan stock options and outstanding stock options granted
under the Company's 1993 Incentive Stock Plan as of January 31, 1997 at a
weighted average exercise price of $0.90 per share, and 350,000 shares of
Common Stock reserved for issuance under the Company's 1997 Stock Plan. See
"Management -- Employee Benefit Plans."
(2) Attributes no value to the Warrants.
20
SELECTED FINANCIAL DATA
The selected financial data set forth below is qualified in its entirety by,
and should be read in conjunction with, the Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus. The statement of
operations data for the years ended December 31, 1994, 1995 and 1996 and the
period from December 8, 1992 (inception) to December 31, 1996, and the balance
sheet data at December 31, 1995 and 1996, are derived from the financial
statements of Jenner Technologies, Inc. appearing elsewhere herein, which
financial statements have been audited by Ernst & Young LLP, independent
auditors, whose report is included elsewhere in this Prospectus. The statement
of operations data set forth for the period from inception (December 8, 1992) to
December 31, 1993 and the balance sheet data as of December 31, 1993 and 1994
were derived from audited financial statements of the Company, which are not
included in this Prospectus. The results for the year ended December 31, 1996
are not necessarily indicative of the results for any future period.
<TABLE>
<CAPTION>
PERIOD FROM PERIOD FROM
INCEPTION INCEPTION
(DECEMBER 8, (DECEMBER 8,
1992) TO YEAR ENDED DECEMBER 31, 1992) TO
DECEMBER 31, --------------------------------- DECEMBER 31,
1993 1994 1995 1996 1996
----------- --------- --------- ----------- ------------
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ -- $ --
Operating expenses:
Research and development 338,626 499,366 698,303 2,206,900 3,743,195
General and administrative 137,325 228,114 195,663 339,948 901,050
--------- --------- --------- ----------- -----------
Total operating expenses 475,951 727,480 893,966 2,546,848 4,644,245
--------- --------- --------- ----------- -----------
Loss from operations (475,951) (727,480) (893,966) (2,546,848) (4,644,245)
Interest income (expense) 9,037 22,369 17,100 (140,987) (92,481)
--------- ---------- --------- ----------- -----------
Net loss $(466,914) $ (705,111) $(876,866) $(2,687,835) $(4,736,726)
========= ========== ========= =========== ===========
Pro forma net loss per share(1) $ (0.56)
===========
Shares used to compute pro forma net loss
per share(1) 4,785,863
===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------
1993 1994 1995 1996
-------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $ 440,793 $ 537,814 $ 254,539 $ 1,317,447
Total assets 505,294 602,362 336,371 1,563,392
Note payable to principal stockholder -- -- -- 3,000,000
Deficit accumulated during the development stage (466,914) (1,172,025) (2,048,891) (4,736,726)
Total stockholders' equity (deficit) 452,700 550,108 273,275 (1,852,170)
</TABLE>
- ----------
(1) See Note 1 of Notes to Financial Statements for an explanation of the
determination of the number of shares used to compute pro forma net loss per
share.
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Prospectus contains forward-looking statements. Such forward-looking
statements include, but are not limited to, the Company's expectations regarding
its future financial condition and operating results, product development,
business and growth strategy, market conditions and competitive environment. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus.
OVERVIEW
The Company was incorporated in December 1992 and expects to reincorporate
in Delaware prior to consummation of this Offering. The Company is in the
development stage and is subject to all business risks associated with a new
enterprise, including uncertainties regarding product development, constraints
on the Company's financial and personnel resources, and dependence on and need
for third party relationships. At December 31, 1996, the Company had an
accumulated deficit of approximately $4.7 million. The Company anticipates that
it will continue to incur substantial additional operating losses for at least
the next several years and expects cumulative losses to increase as the
Company's research and development efforts expand. The Company has a limited
history of operations consisting primarily of development of its products and
sponsorship of research and clinical trials. The Company has not generated any
revenue to date, whether from product sales, license fees or research funding,
and there can be no assurance as to when or whether it will be able to develop
sources of revenue or that its operations will become profitable, even if it is
able to commercialize any products.
RESULTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
Research and Development Expenses. Research and development expenses
increased from $499,000 in 1994 to $698,000 in 1995 to $2,207,000 in 1996. The
increase in 1995 over 1994 was primarily associated with production and
formulation activities supporting the Company's first limited Phase I/II
clinical trial of OncoVax-P. The increase in 1995 was also the result of initial
production and formulation of OncoVax-CL. The increase in 1996 expenses over
1995 is attributed to further production of OncoVax-P in support of additional
limited Phase I/II clinical trials and support for a limited Phase I/II clinical
trial of OncoVax-CL which is scheduled to begin in the first quarter of 1997.
Research and development expenses in 1996 also include $830,000 associated with
acquiring rights to certain in-process research and development (ACT and JT3002)
from Novartis. This technology is currently being utilized in a Phase III
clinical trial for patients with osteogenic sarcoma. Management anticipates that
research and development expenses will increase significantly over the next
several years in support of ongoing and planned clinical trials in each of the
Company's principal product development programs.
General and Administrative Expenses. The Company incurred general and
administrative expenses of $228,000, $196,000 and $340,000 in the years ended
1994, 1995 and 1996, respectively. General and administrative expenses were
substantially the same in 1994 and 1995, except for a non-recurring settlement
of a finder's fee agreement in the amount of $30,000 in 1994. The increase of
$144,000 in 1996 compared with 1995 is due primarily to salary increases and
increases in legal expenses related to the acquisition of technology and general
corporate matters. The Company expects to incur increasing general and
administrative expenses in 1997 as a result of adding personnel, increasing
office rental costs and other costs related to supporting increases in staffing
and operating as a public company.
Interest Income (Expense). Interest income in 1996 was offset by an increase
in interest expense from $3,000 in 1995 to $203,000 in 1996 as a result of the
$3 million debt financing with the Company's principal shareholder.
22
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date primarily through the sale of
equity securities and borrowings from its principal stockholder. Through
December 31, 1996, the Company has raised approximately $2.4 million from the
sale of equity securities and $3.0 million through the stockholder loan. See
"Certain Transactions." At December 31, 1996, the Company had cash and cash
equivalents of $1.4 million and an outstanding principal balance of $3.0 million
under the stockholder loan. Borrowings under the stockholder loan bear simple
interest at a rate of 10% per annum. The principal and accrued interest is
payable on May 6, 1999. Cash used in operating activities totalled $698,000,
$871,000 and $1,900,000 in 1994, 1995 and 1996, respectively. Cash used to
acquire capital equipment has not been significant. The Company intends to use
approximately $1.1 million of the net proceeds of the Offering to establish and
equip a small laboratory facility to support its research and development
activities. See "Use of Proceeds."
The Company's operations to date have consumed substantial and increasing
amounts of cash. The negative cash flow from operations is expected to continue
and to accelerate in the foreseeable future. The Company will require
substantial funds of its own, or from third parties, to conduct research and
development, preclinical and clinical testing and to manufacture (or have
manufactured) and market (or have marketed) its product candidates. The Company
estimates that its current cash resources and the net proceeds of the Offering
will be sufficient to meet its operating and capital requirements for at least
12 months following the closing of the Offering. However, the Company's cash
requirements may vary materially from those now planned because of results of
research and development, results of preclinical and clinical testing,
relationships with possible strategic partners, changes in the focus and
direction of the Company's research and development programs, competitive and
technological advances, the FDA regulatory process and other factors. The net
proceeds of this Offering are not expected to be sufficient to fund the
Company's operations through the commercialization of one or more products
yielding sufficient revenues to support the Company's operations; therefore, the
Company is likely to need to raise additional funds. The Company may seek to
satisfy its future funding requirements through public or private offerings of
securities, with collaborative or other arrangements with major pharmaceutical
companies or from other sources. Additional financing may not be available when
needed or on terms acceptable to the Company. If adequate financing is not
available, the Company may not be able to continue as a going concern, or may be
required to delay, scale back or eliminate certain of its research and
development programs, to relinquish rights to certain of its technologies or
product candidates, to forego desired opportunities, or to license third parties
to commercialize products or technologies that the Company would otherwise seek
to develop itself. To the extent the Company raises additional capital by
issuing equity securities, ownership dilution to the investors in this Offering
will result.
INCOME TAXES
The Company has elected to be taxed as a C corporation since its inception.
At December 31, 1996, the Company had federal net operating loss carryforwards
of approximately $3.7 million and research and development credit carryforwards
of approximately $40,000. The net operating loss and credit carryforwards will
expire at various dates beginning in 2008, if not utilized. There is no
guarantee that the Company will have future profitable operations which would
allow the use of the tax benefits. In addition, utilization of the net operating
losses and credits may be subject to a substantial annual limitation due to the
"change of ownership" provisions of the Internal Revenue Code. The annual
limitation may result in the expiration of the carryforwards before utilization.
23
BUSINESS
This Prospectus contains forward-looking statements. Such forward-looking
statements include, but are not limited to, the Company's expectations regarding
its future financial condition and operating results, product development,
business and growth strategy, market conditions and competitive environment. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including those set
forth under "Risk Factors" and elsewhere in this Prospectus.
THE COMPANY
Jenner Technologies, Inc. ("Jenner" or the "Company"), a development stage
company, is engaged in the development of immunotherapies to treat patients with
cancer and certain side effects related to chemotherapy. The Company has four
product candidates under development, two of which are in clinical trials. Three
of the Company's product candidates are designed to delay or prevent the
recurrence of cancer by stimulating the body's own immune system to attack
microscopic disease remaining after a patient has undergone traditional therapy.
The Company's product candidates consist of macrophage activators (ACT and
JT3002) and therapeutic vaccines (OncoVax-P and OncoVax-CL). The Company
acquired the technology related to ACT and JT3002 through an exclusive worldwide
license with Novartis AG (the company resulting from the merger of Ciba-Geigy
Limited and Sandoz, Ltd.) ("Novartis"). In addition, the Company acquired the
rights to produce the antigen related to OncoVax-P through a non-exclusive
license with Research Corporation Technologies, Inc. and the antigen related to
OncoVax-CL through an exclusive worldwide license with Eli Lilly & Company.
ACT is in a nationwide Phase III clinical trial as a therapy for patients
with osteogenic sarcoma (bone cancer). The study calls for a total of 645
patients to be treated under the protocol and, as of December 31, 1996,
approximately 540 patients had entered the study. ACT utilizes a small molecule
that has the capacity to activate macrophages, which are scavenger cells that
are part of the immune system. Once activated, macrophages acquire the ability
to seek out and destroy tumor cells. ACT utilizes a proprietary liposomal
formulation to deliver its active ingredients (liposomes are spheres of
subcellular size composed primarily of fat molecules). JT3002 is in preclinical
evaluation as a therapy for mucositis (damage to the gastrointestinal mucosa or
lining of the gut), a side effect commonly associated with chemotherapy. The
Company intends to file an Investigational New Drug application ("IND") with the
United States Food and Drug Administration ("FDA") in late 1997 or early 1998 to
commence Phase I clinical trials of JT3002, subject to the results of the
preclinical evaluation.
OncoVax-P is in limited Phase I/II clinical trials in patients with prostate
cancer. The Company intends to commence a limited Phase I/II clinical trial for
OncoVax-CL in patients with colorectal cancer in the first quarter of 1997. The
Company's Phase I/II clinical trials are conducted in a small number of patients
(5-6) to gain preliminary information regarding safety of the vaccine and
ability to generate an immune response. OncoVax-P and OncoVax-CL each include a
genetically engineered version of a tumor associated antigen which represents
the "identity tag" of the cancer cell combined with an adjuvant which enhances
the body's immune response. The antigen and adjuvant are packaged in liposomes
which are taken up by antigen presenting cells. The Company believes this
approach will induce a more robust relevant immune response than if the
liposomal delivery system is not used. Based on preclinical data, the Company
believes that OncoVax-CL has the potential for application in cancer indications
other than colorectal cancer, such as lung, pancreatic and ovarian cancer.
In an effort to leverage the Company's resources and better manage the risks
and costs inherent in scientific research and new product development, Jenner
has followed a business strategy of (i) in-licensing promising proprietary
technologies for which substantial preclinical and/or clinical studies have been
undertaken, (ii) focusing on human clinical trials to gain relevant information
rather than developing animal models, and (iii) engaging qualified
subcontractors to perform research and development functions. Through this
business strategy, the Company has expended only approximately $4.0 million in
cash through December 31, 1996 to develop its current product candidates and
believes it has extended its research efforts to a larger number of applications
than would otherwise be the case given its limited resources.
24
The Company believes that its business strategy and management capabilities
may enable it to shorten the time frame for commercializing its products. The
Company intends to pursue its business strategy further by seeking to establish
strategic alliances with pharmaceutical companies and other corporate partners
in connection with development, marketing and distribution of the Company's
product candidates.
CANCER INCIDENCE AND TREATMENT
Cancer is the second leading cause of death in the United States. Based on
cancer incidence data collected by the National Cancer Institute's Surveillance,
Epidemiology and End Results (SEER) program and U.S. population data collected
by the Bureau of the Census, it is estimated that approximately 1.38 million new
cancer cases and 560,000 deaths will occur in the United States in 1997.
The current treatment regimens for cancer consist primarily of surgery to
remove malignant tumors, radiation therapy to treat tumors or post-surgical
residual tumor cells in a localized area in the body, and chemotherapy to treat
cancer that has spread systemically. Depending upon the type and severity of the
cancerous tumor, these therapies can be used individually or in combination with
each other.
Surgery is the most effective treatment for cancer and the one with the
greatest potential cure of solid tumors. However, despite significant
improvements in early diagnosis and in surgical techniques, many surgically
treated patients experience recurrence of cancer. The chances for recurrence
depend on the type of cancer, how early it is detected, and if metastases
(distant spread of the tumor) occurred prior to surgical removal of the primary
tumor. Most deaths from cancer are due to metastases that are resistant to
conventional therapies.
Radiation therapy involves subjecting tumor cells to radiation which causes
the cells to die or multiply more slowly. Because certain tumor cells are
rapidly dividing, they are often more sensitive to radiation than normal cells,
allowing radiation therapy to kill these cells with a resultant improvement in
the patient's condition. However, because of the overall damaging nature of
radiation, it is generally limited in use to small specific sites that are not
near sensitive organs or structures. In addition, the toxicity of the radiation
to normal cells limits the amount of radiation that can be administered, which
in turn limits the effectiveness of radiation therapy in killing cancer cells.
Chemotherapy involves the use of drugs that slow down or kill rapidly
dividing cells. Although many cancer cells fall into this category, there are
also normal cells in the body which divide rapidly. These include cells of the
gastrointestinal mucosa and bone marrow. Since chemotherapy affects all of these
cell populations, it produces significant side effects, including mucositis, a
serious condition that can cause gastrointestinal ulcerations and diarrhea.
Thus, administration of chemotherapy carries with it the hazard of significant
complications, and, for solid tumors, it generally does not achieve cure of the
disease. For prostate cancer, chemotherapy has minimal efficacy, but hormonal
therapy may delay tumor progression for a period of time.
Current treatments for metastatic cancers are not very effective. The
Company believes that recent technological advances and increased understanding
of the immune system make possible cancer therapies that will activate or
stimulate the immune system offering the potential for new, effective treatment.
JENNER'S PRODUCT CANDIDATES AND CLINICAL TRIALS
The Company has two primary areas of product focus: macrophage activators
and therapeutic vaccines. Three of the Company's product candidates are designed
to delay or prevent the recurrence of cancer by stimulating the body's own
immune system to attack microscopic disease remaining after a patient has
undergone traditional therapy. The Company's other product candidate is designed
to ameliorate certain side effects of chemotherapy. There have been many
scientific advances in recent years that have enabled the Company to pursue
development of its macrophage activators and therapeutic vaccines. Hybridoma
technology has permitted the development of monoclonal antibodies that can be
used to identify and characterize tumor associated antigens important for
vaccine development and to study their tissue distribution. In addition,
advances in genetic engineering have
25
enabled cost-effective production of specific antigens once they have been
identified. Finally, advances in biology have provided a better understanding of
the immune response and methods to manipulate it for the clinical benefit of the
patient.
The table below sets forth the Company's principal products under
development, the primary indications for these products and the clinical status
for each product.
PRODUCT CANDIDATE INDICATION CLINICAL STATUS
----------------- ---------- ---------------
ACT Osteogenic Sarcoma Phase III
OncoVax-P Prostate Cancer Limited Phase I/II*
OncoVax-CL Colorectal Cancer Limited Phase I/II*
Patient Enrollment
JT3002 Mucositis Preclinical Evaluation
- ----------
* Jenner's limited Phase I/II clinical trials are conducted in a small number of
patients (5-6) to gain preliminary information regarding safety of the vaccine
and ability to generate an immune response.
ACT
ACT is currently in a pivotal Phase III randomized trial as therapy for
patients with osteogenic sarcoma. The pivotal Phase III clinical trial is
sponsored by the National Cancer Institute of the U.S. National Institutes of
Health and is being conducted nationwide by the Children's Cancer Study Group
and the Pediatric Oncology Group. These groups include the majority of U.S.
centers treating patients with osteogenic sarcoma. The Overall Chair of the
study is Paul Meyers, M.D. of Memorial Sloan-Kettering Cancer Center. The Phase
III study has been designed to evaluate the efficacy of ACT when administered
for nine months with chemotherapy following surgical excision of primary
osteogenic sarcoma. End points of the study are disease-free survival and
survival. The study calls for a total of 645 patients to be treated under the
protocol and, as of December 31, 1996, approximately 540 patients had entered
the study. It is estimated that there will be approximately 2,500 new cases of
osteogenic sarcoma in the United States in 1997. The Company acquired the
technology related to ACT through an exclusive worldwide license with Novartis.
The Phase III pivotal trial design is based on the results obtained in a
Phase II trial conducted at University of Texas, M.D. Anderson Cancer Center, in
children and adults with pulmonary metastasis of osteogenic sarcoma. Patients
who entered the Phase II trial had histologically proven osteogenic sarcoma with
pulmonary metastases that had developed during adjuvant chemotherapy or that
were present at diagnosis, persisted despite chemotherapy and recurred following
surgical excision. Patients were rendered clinically disease-free by surgery.
ACT was administered postoperatively to two separate groups of patients for
three months or six months, respectively. For comparison, medical records of
patients previously treated at the same institution were reviewed and 21
patients identified whose disease status was similar but who were treated with
chemotherapy rather than ACT. The median time to relapse was 4.5 months in the
21 patients treated with chemotherapy, 6.8 months in the 12 patients who
received three months of ACT therapy, and 9.0 months in the 16 patients who
received six months of ACT therapy. The increase in median time to relapse from
4.5 months to 9 months represents a statistically significant increase. These
data suggested that ACT is an active agent in osteogenic sarcoma, that six
months of ACT is superior to three months, and that a more prolonged
administration of the drug (nine to 12 months) could benefit more patients and
could result in even longer disease-free intervals.
ACT is a liposomal formulation of MTP-PE, which is a conjugate of
muramyl-tripeptide (MTP) and dipalmitoylphosphotidylethanolamine (PE). MTP is a
synthetic derivative of muramyl dipeptide, a naturally occurring component of
bacterial cell walls that has the capacity to activate macrophages.
26
Once activated, macrophages acquire the ability to distinguish tumor cells from
normal cells and will kill only the tumor cells. Both the liposomal formulation
and the basic molecule of MTP-PE are proprietary to the Company.
Based on the results of the Phase II trial and earlier preclinical and
clinical trials, the Company believes that ACT may be effective as an
immunotherapeutic for other types of cancer as well. The data suggests that ACT
is most effective when administered at a time when the tumor burden is minimal
but the patient is at high risk of recurrence because of tiny metastases left
behind following standard treatment. The Company is in the process of designing
new Phase II clinical trials and defining patient populations to study the
efficacy of ACT in the adjuvant setting for cancers other than osteogenic
sarcoma. Substantial additional research and development will be necessary in
this regard, and there can be no assurance that ACT will be shown in clinical
trials to be effective for the treatment of osteogenic sarcoma or any other
cancer indication. See "Risk Factors -- No Assurance of Product Development or
Commercialization; Uncertainties Related to Clinical Trials."
CANCER VACCINES
The Company is developing OncoVax-P to treat prostate cancer. Prostate
cancer is the most common malignancy among men in the United States, accounting
for an estimated 43% of all cancer malignancies in men. It is estimated that
there will be 334,500 new cases of prostate cancer in the United States in 1997
and over 40,000 deaths. OncoVax-P includes a prostate specific antigen (PSA)
licensed from Research Technologies Corporation combined with an adjuvant
formulated into liposomes. In the third quarter of 1995, the Company initiated a
limited Phase I/II clinical trial for OncoVax-P in which six patients with
advanced metastatic prostate cancer who had all failed standard therapy
(including hormonal therapy) were treated with OncoVax-P. Moreover, although all
patients had advanced disease, two of the patients mounted an immune response to
the PSA antigen in the vaccine.
Based on the foregoing results, the Company has initiated three additional
limited Phase I/II clinical trials using OncoVax-P, each of which involves five
or six evaluable patients. These new trials are designed to determine an
effective regimen for inducing a strong immune response and will study the
effect of (i) administering OncoVax-P intravenously rather than intramuscularly,
(ii) administering OncoVax-P in combination with granulocyte macrophage-colony
stimulating factor (GM-CSF), a cytokine that has been shown to enhance white
blood cell count and immune response, and (iii) pretreating patients with
cyclophosphamide, a chemotherapy drug, and then treating them with a combination
of OncoVax-P and bacillus Calmette-Guerin (BCG), a bacterium-based adjuvant. In
a fourth limited Phase I/II trial planned to commence later in 1997, OncoVax-P
will be evaluated in a proprietary emulsion formulation. The clinical trials are
sponsored by the Company and are conducted by David Harris, M.D. at Lankenau
Hospital near Philadelphia, Pennsylvania.
The Company is developing OncoVax-CL to treat colorectal cancer. Colorectal
cancer is currently the third most commonly occurring cancer in the United
States. It is estimated that there will be 131,000 new cases of colorectal
cancer in the United States in 1997 and 55,000 deaths. Approximately 50% of all
persons diagnosed with colorectal cancer die within five years of diagnosis.
OncoVax-CL consists of a liposomal formulation of an antigen (KSA) licensed from
Eli Lilly & Company and an adjuvant. The Company has submitted an IND to the FDA
for OncoVax-CL and expects to commence a limited Phase I/II clinical trial
involving six evaluable patients in the first quarter of 1997. The Company
sponsored clinical trial will be conducted by Albert F. LoBuglio, M.D. at the
University of Alabama. Based on preclinical data, the Company believes that
OncoVax-CL may have the potential for application in cancer indications other
than colorectal cancer, such as lung, pancreatic and ovarian cancer.
Each of the Company's cancer vaccines includes a genetically engineered
version of a tumor associated antigen combined with an adjuvant. An antigen is a
substance which induces an immune response within the body. An adjuvant is a
substance that is administered with an antigen to enhance the immune response to
the antigen. The antigen and adjuvant are packaged in liposomes. The liposomal
formulation targets the antigen-presenting cells of the immune system. The
immune response includes direct killing of the tumor cells by the T-cells,
production of antibodies which activate the patient's
27
defense mechanisms to kill the tumor cells, and the generation of cytokines
which kill tumor cells directly and indirectly through activating the patient's
defenses. Research and development and clinical testing of the Company's
vaccines are at an early stage and there can be no assurance that such vaccines
will be shown in clinical trials to be safe or effective in treating any cancer
indication. See "Risk Factors -- No Assurance of Product Development or
Commercialization; Uncertainties Related to Clinical Trials."
JT3002
JT3002 is in preclinical evaluation for the therapy of mucositis, a common
side effect of chemotherapy. Mucositis may cause severe, disabling and
potentially life threatening side effects in patients and may lead to the need
for extended hospitalization. For some chemotherapy regimens, mucositis is the
major dose limiting side effect. There is currently no effective treatment for
mucositis. Preclinical studies are being conducted by Isaiah J. Fidler, D.V.M.,
Ph.D., a director of the Company and a member of its Scientific Advisory Board,
at the University of Texas, M.D. Anderson Cancer Center. See "Certain
Transactions." The Company intends to file an IND with the FDA in late 1997 or
early 1998 to commence Phase I clinical trials of JT3002, subject to the results
of the preclinical evaluation. The Company acquired the technology related to
JT3002 through an exclusive worldwide license with Novartis. Research and
development of JT3002 is at a very early stage and there can be no assurance
that JT3002 will be shown in preclinical studies or in clinical trials, if
undertaken, to be safe or effective in treating mucositis. See "Risk Factors --
No Assurance of Product Development or Commercialization; Uncertainties Related
to Clinical Trials."
BUSINESS STRATEGY
Scientific research and the development of therapeutic products is an
uncertain endeavor in which many projects fail, even though they may appear
promising at an earlier stage. Moreover, the infrastructure, including
facilities, equipment and qualified personnel, needed for research and
development in biotechnology is very costly. As a result, in an effort to
leverage the Company's resources and better manage the risks and costs inherent
in scientific research and new product development, Jenner has followed a
business strategy of (i) in-licensing promising proprietary technologies for
which substantial preclinical and/or clinical studies have been undertaken, (ii)
focusing on human clinical trials to gain relevant information as opposed to
developing animal models, and (iii) engaging qualified subcontractors to perform
research and development functions. Where possible, it has been the Company's
policy to second and sometimes third source those subcontracted services that
are vital to the Company's product development. Through its business strategy,
the Company has expended only approximately $4.0 million in cash through
December 31, 1996 to develop its current product candidates and believes it has
extended its research efforts to a larger number of applications than would
otherwise be the case given its limited resources.
The Company's management has considerable experience in identifying and
licensing promising technologies, retaining and managing the efforts of
subcontractors, and designing, supervising and monitoring clinical trials. The
Company's Chief Executive Officer has extensive experience in business
management and has scientific knowledge complementary to the Company's business.
The Company's President and Chief Scientific Officer has worked in the area of
cancer therapy for over 25 years, and combines comprehensive scientific
knowledge with business experience. The Company recently hired a Vice President
of Clinical Trials and Product Development, and believes that his experience in
the areas of clinical trials and product development will be key to
commercialization of the Company's product candidates. The Company believes that
the overlapping skills of its management has enabled them to communicate
effectively and manage the Company efficiently. The Company intends to continue
to recruit highly qualified personnel with a broad base of scientific and
business skills to complement existing management.
The Company believes that its business strategy and management capabilities
may enable it to shorten the time frame for commercializing its products. As the
Company's product candidates advance through the regulatory process, the Company
generally intends to establish strategic alliances with pharmaceutical companies
and other corporate partners with large distribution systems to market and sell
the Company's products worldwide. In some cases, however, where the customers
for a product are easily identified and concentrated, the Company intends to
market and distribute the product through a direct sales force.
28
Although the Company believes that it has benefitted from its business
strategy, the strategy creates risks to the Company by placing critical aspects
of the Company's business in the hands of third parties whom the Company may not
be able to control as effectively as its own operations. Additionally, in
reliance on these relationships, the Company has not developed its own resources
to the extent these activities have been contracted to third parties. If these
third parties do not perform in a timely and satisfactory manner, the Company
may incur additional costs and lose time in the conduct of its development and
clinical programs as it seeks alternate sources of such products and services,
if available. The effect of such costs and delays may have a material adverse
effect on the Company.
The Company may seek additional third party relationships in certain areas,
particularly in situations in which the Company believes that the clinical
testing, marketing, manufacturing and other resources of a pharmaceutical
company collaborator will enable the Company to develop particular products or
geographic markets which are otherwise beyond the Company's resources and/or
capabilities. There is no assurance that the Company will be able to obtain any
such collaboration, or any other research and development, manufacturing, or
clinical trial agreement. The inability of the Company to obtain and maintain
satisfactory relationships with third parties may have a material adverse effect
on the Company.
LICENSES
Novartis Corporation. The Company is a party to a license agreement with
Novartis which was entered into in April 1996. Under the license agreement,
Novartis granted to Jenner an exclusive worldwide license under its rights in
certain U.S. and foreign patent applications and patents and proprietary
know-how to manufacture and commercialize products incorporating liposomal
MTP-PE (ACT) and CGP 40774 (JT3002) and their analogues in all human and
veterinary therapeutic and prophylactic uses, excluding use as a vaccine
adjuvant and, with respect to JT3002, excluding use for the treatment of asthma
and other allergic diseases which materially affect lung function. Jenner may
grant and authorize sub-licenses under its license. In consideration for the
license, the Company has paid to Novartis an up-front license fee and is
obligated to pay running royalties based on a percentage of the net sales of
licensed products sold by the Company or its sublicensees, annual maintenance
fees and one-time milestone payments for the first products incorporating ACT
and JT3002, respectively, upon the completion of a Phase III clinical trial, the
filing of a PLA, and FDA approval of such PLA. The obligation to pay running
royalties begins upon the first commercial sale of a particular licensed product
and terminates 15 years later. Jenner has an obligation to use reasonable
efforts to diligently develop and commercialize the patent rights licensed under
the agreement and to obtain such approvals as may be necessary for the sale of
the licensed products in the United States and such other worldwide markets as
the Company elects to commercialize the licensed products. If the Company,
either itself or through a sublicensee or a distributor, elects not to
commercialize a licensed product in any particular country, then the Company is
obligated to negotiate a sublicense with Novartis in such country on reasonable
terms customary in the industry. If the Company elects to commercialize any
licensed product for veterinary uses through a sublicensee, Novartis shall have
a right of first refusal to acquire an exclusive, worldwide sublicense to market
such licensed product for veterinary purposes on agreed terms reasonable and
customary in the industry. The license agreement continues in effect on a
country-by-country and licensed product-by-licensed product basis until there
are no remaining royalty payment obligations in a country, at which time the
license shall expire in its entirety in such country. Upon such expiration, the
Company shall have a non-exclusive, irrevocable, fully paid-up right and license
to use and exploit the proprietary know-how. Either party may terminate the
license agreement in the event of a material breach by the other party.
Eli Lilly & Company. The Company entered into a license agreement with Eli
Lilly & Company ("Eli Lilly") in June 1994. Under the license agreement, Eli
Lilly has granted to Jenner an exclusive worldwide license under a U.S. patent
(and all additional patents issuing therefrom and corresponding foreign patents
issued in connection therewith) to manufacture and commercialize products that
contain the KSA antigen (the antigen associated with OncoVax-CL). Jenner may
grant and authorize sub-licenses under its license. Except as expressly provided
in the agreement, Eli Lilly is not obligated
29
under the license grant to provide the Company any know-how related to the
patent rights. In consideration for the license grant, Jenner has paid to Eli
Lilly an up-front license fee and is obligated to pay certain patent issuance
fees and to make certain milestone payments upon the first anniversary of the
initiation of Phase III clinical trials of the first product incorporating the
KSA antigen (regardless of the outcome of the trial) and upon FDA approval to
market the first such product. In addition, the Company is obligated to pay
running royalties to Eli Lilly based on the net sales of licensed products sold
by the Company or any sublicensee. Royalties are due and payable on a
country-by-country basis until the expiration of the patent covering the KSA
antigen in such country. Jenner has an obligation to use reasonable efforts to
develop, gain regulatory approval and market at least one product using the KSA
antigen. The license agreement continues in effect until the expiration of the
last licensed patent. Either party may terminate the license agreement in the
event of a material breach by the other party.
Research Corporation Technologies, Inc. In June 1994, the Company entered
into a license agreement with Research Corporation Technologies, Inc. ("RCT"),
an independent technology management company. Under the license agreement, RCT
granted to Jenner a non-exclusive license under its rights in certain U.S. and
Canadian patents to manufacture and commercialize products that contain the PSA
antigen (the antigen associated with OncoVax-P) as a prophylactic vaccine for
prostate cancer and/or a therapeutic vaccine for prostate cancer in the United
States and Canada. Jenner may grant to up to three third party sublicenses under
its license. The Company has the option to extend the license to include the
territory of Japan if certain pending patent applications filed by RCT are
issued in Japan. In consideration for the license grant, the Company has paid to
RCT an up-front license fee and is obligated to pay running royalties based on
the net sales of licensed products sold by the Company or any sublicensee. The
royalty obligation begins with the first commercial sale of a licensed product
and terminates upon termination of the license agreement. Jenner has an
obligation to exercise diligence consistent with its reasonable business
judgment in developing, testing, manufacturing and marketing products
incorporating the PSA antigen. The license agreement continues in effect until
the expiration of the last licensed patent. RCT may terminate the license
agreement in the event of a material breach by Jenner.
Walter Reed Army Institute of Research. The Company entered into a
Cooperative Research and Development Agreement ("CRADA") with the Walter Reed
Army Institute of Research ("WRAIR") in October 1993. Under the CRADA, the
Company is sponsoring research to develop and optimize liposomal and emulsion
formulations of the Company's cancer vaccines. Under a separate non-exclusive
worldwide license agreement with WRAIR entered into in March 1996, the Company
also licensed a certain patent application related to a special process for
making the liposomes necessary for the formulation of the Company's vaccines.
The CRADA provides that inventions developed solely by one party are owned by
that party and inventions developed jointly are owned by both parties; provided
however that Jenner is obligated to provide the U.S. government a non-exclusive,
fully paid-up, worldwide license under any patents covering any invention
developed under the CRADA; and provided further that Jenner has an option to
acquire an exclusive license under any patent covering any invention developed
under the CRADA in which WRAIR (on behalf of the U.S. government) has an
interest (subject to the reservation of a nonexclusive, irrevocable, paid-up
license to practice and have practiced the subject inventions on behalf of the
U.S. government). If Jenner elects to exercise such option, then it would be
obligated to make certain milestone payments and royalty payments based on net
sales of products covered by the licensed patents. The CRADA continues in effect
until December 15, 1997, although either party may terminate the agreement
earlier upon 30 days prior written notice. The license agreement requires that
the Company make certain milestone payments upon the conclusion of Phase I,
Phase II and Phase III clinical trials of products manufactured using the
licensed liposome formulation process and certain royalty payments to WRAIR
based on the net sales of such products. The term of the license agreement
extends to the expiration of the last to expire of the patents covering the
technology.
MARKETING AND DISTRIBUTION
The Company currently has no marketing and sales resources or personnel. As
the Company's product candidates advance through the regulatory process, the
Company generally intends to establish strategic alliances with pharmaceutical
companies and other corporate partners with large distribution systems to market
and sell the Company's products worldwide. In some cases, the Company may grant
30
marketing and distribution rights in exchange for payment by the strategic
partner of the costs and expenses related to the Phase III clinical trial
relating to the particular product. With respect to ACT, the Company intends to
establish a direct sales force to market such product for the treatment of
osteogenic sarcoma in the United States. The Company believes that a direct
sales force may be effective for this indication because most of the physicians
specializing in this area are located at a small number of well-known clinical
institutions, most of which are participating in the Phase III clinical trials
for ACT.
MANUFACTURING AND SUPPLY
The Company does not have and does not intend to acquire or establish its
own dedicated manufacturing facilities in the foreseeable future. The Company's
manufacturing strategy is to develop relationships with established
pharmaceutical manufacturers for production of all of its product candidates and
liposomal formulations. At the present time, the Company has arrangements in
place for manufacturing and supply of ACT, OncoVax-P and OncoVax-CL to support
its current clinical trials. However, the Company anticipates that current
manufacturers of these products will not necessarily manufacture these products
in subsequent clinical trials, and will not manufacture the products for
commercial use should the clinical trials be successful and regulatory approval
be obtained. As a result, the Company will need to obtain alternate
manufacturing sources for its products. Applicable regulations require that, if
the manufacturing source of products such as the Company's vaccines or
macrophage activators is changed, equivalency must be demonstrated before
patients are treated with product from the new manufacturer. The demonstration
of such equivalency may require that additional clinical trials be conducted.
There is no assurance that the Company will be able to demonstrate equivalency
and the effort to do so may require significant expenditures of money and time
which could have a material adverse effect on the Company.
The Company is currently, and will continue to be, dependent on third
parties for manufacturing clinical and commercial scale quantities of its
products. At the present time, the Company believes that there are a number of
facilities with FDA approval that have the capability of synthesizing and
manufacturing the Company's product candidates and liposomal formulations.
However, the process for manufacturing and formulating the Company's product
candidates is complex and subject to uncertainties. There can be no assurance
that the Company will be able to maintain existing agreements for the
manufacturing of clinical quantities of products, that it will be able to enter
into additional agreements with other third parties for commercial scale
manufacturing, or that contract manufacturers will be able to adequately produce
the Company's products in commercial quantities in a cost-effective manner.
Interruptions or difficulties in clinical or commercial production of the
Company's products may require the Company to incur substantial costs to address
the situation, which could have a material adverse effect on the Company.
PATENTS AND PROPRIETARY RIGHTS
The Company believes that patent and trade secret protection is important to
its business and that its future success will depend in part on its ability to
maintain its technology licenses, protect trade secrets, obtain patents and
operate without infringing the proprietary rights of others, both in the United
States and in other countries. With respect to ACT and JT3002, there are seven
United States patents and 101 foreign patents which have issued, and 28 foreign
patents pending, all of which are under an exclusive, worldwide, royalty-bearing
license from Novartis. With respect to OncoVax-P, there is United States patent
and one Canadian patent, both of which are under a non-exclusive,
royalty-bearing license from RCT, and one United States patent pending with
counterpart filings pending in Australia, Canada, Europe and Japan owned by the
Company. With respect to OncoVax-CL, there is one United States patent with
counterpart foreign filings, all of which are under an exclusive,
royalty-bearing license from Eli Lilly, and one United States patent pending
with counterpart filings pending in Australia, Canada, Europe and Japan owned by
the Company. In addition, there are two additional United States patent
applications with counterpart foreign filings applicable to both OncoVax-P and
OncoVax-CL, one of which is under a non-exclusive, royalty-bearing license from
WRAIR, and one of which is co-owned by the Company and WRAIR (on behalf of the
U.S. Government).
The pharmaceutical and biotechnology fields are characterized by a large
number of patent filings, and a substantial number of patents have already been
issued to other companies. Third parties may have filed applications for or have
been issued patents and may obtain additional patents and proprietary
31
rights related to products or processes competitive with or similar to those of
the Company. The Company may not be aware of all of the patents potentially
adverse to the Company's interests that may have been issued to others. No
assurance can be given that such patents do not exist, have not been filed, or
could not be filed or issued, which contain claims relating to the Company's
technology, products or processes. If patents have been or are issued to others
containing preclusive or conflicting claims and such claims are ultimately
determined to be valid, the Company may be required to obtain licenses to one or
more of such patents or to develop or obtain alternate technology. There can be
no assurance that the licenses that might be required for the Company's
processes or products would be available on commercially acceptable terms, or at
all.
Because of the substantial length of time and expense associated with
bringing new products to the marketplace through the development and regulatory
approval process, the biotechnology industry places considerable importance on
patent and trade secret protection for new technologies, products and processes.
Since patent applications in the United States are maintained in secrecy until
patents issue and since publication of discoveries in the scientific or patent
literature often lag behind actual discoveries, the Company cannot be certain
that it (or any licensor) was the first to make the inventions covered by
pending patent applications or that it (or any licensor) was the first to file
patent applications for such inventions. The patent positions of vaccine and
biotechnology companies can be highly uncertain and involve complex legal and
factual questions, and therefore the breadth of claims allowed in vaccine and
biotechnology patents or their enforceability, cannot be predicted. There can be
no assurance that any patents under pending patent applications or any further
patent applications will be issued. Furthermore, there can be no assurance that
the scope of any patent protection will exclude competitors or provide
competitive advantages to the Company, that any of the Company's patents that
have issued or may be issued will be held valid if subsequently challenged or
that others, including competitors or current or former employers of the
Company's employees, advisors and consultants, will not claim rights in or
ownership to the patents and other proprietary rights held by the Company. There
can be no assurance that others will not independently develop substantially
equivalent proprietary information or otherwise obtain access to the Company's
proprietary information or that others may not be issued patents that may
require licensing and the payment of significant fees or royalties by the
Company. The Company's breach of any existing license agreement or the failure
to obtain a license to technology required to commercialize its products
candidates may have a material adverse effect on the Company.
The biotechnology industry has experienced extensive litigation regarding
patent and other intellectual property rights. Accordingly, the Company could
incur substantial costs in defending itself in suits that may be brought against
the Company claiming infringement of the patent rights of others or in asserting
the Company's patent rights in a suit against another party. The Company may
also be required to participate in interference proceedings declared by the
United States Patent and Trademark Office for the purpose of determining the
priority of inventions in connection with the patent applications of the Company
or other parties. Adverse determinations in litigation or interference
proceedings could require the Company to seek licenses (which may not be
available on commercially reasonable terms) or subject the Company to
significant liabilities to third parties, and could therefore have a material
adverse effect on the Company. Even if the Company prevails in an interference
proceeding or a lawsuit, substantial resources of the Company, including the
time and attention of its officers, will be required.
The Company also relies on trade secrets, know-how and technological
advancement to maintain its competitive position. Although the Company uses
confidentiality agreements and employee proprietary information and invention
assignment agreements to protect its trade secrets and other unpatented
know-how, these agreements may be breached by the other party thereto or may
otherwise be of limited effectiveness or enforceability.
The Company is aware of a company that has filed an intent to use
application in the United States Patent and Trademark Office for the mark "Onco
Vax" relating to therapeutic vaccines for oncological purposes. The Company
believes that it has superior rights to use "OncoVax" based upon its public use
of the mark in technical journals prior to the effective filing date of the
intent to use application. However, there can be no assurance in this regard,
and the Company may be required to discontinue using "OncoVax" as a name for its
products.
32
GOVERNMENT REGULATION
General. Testing, manufacturing, labeling, advertising, promotion, export
and marketing, among other things, of the Company's products are subject to
extensive regulation by governmental authorities in the United States and other
countries. In the United States, pharmaceutical products are regulated by the
FDA under the Federal Food, Drug, and Cosmetic Act and other laws, including, in
the case of biologics, the Public Health Service Act. At the present time, the
Company believes that its immunotherapeutics that it may develop will be
regulated by the FDA as biologics.
The steps required before a drug or biologic may be approved for marketing
in the United States generally includes (i) preclinical laboratory and animal
testing, (ii) the submission to the FDA of an IND for human clinical testing,
which must become effective before human clinical trials may commence, (iii)
adequate and well-controlled human clinical trials to establish the safety and
efficacy of the product, (iv) in the case of a biologic, the submission to the
FDA of a biologic license application ("BLA"), or in the alternative a Product
License Application ("PLA") for the product and an Establishment License
Application ("ELA") for the facility at which the product is manufactured, or in
the case of a drug, a New Drug Application ("NDA"), (v) FDA review of the BLA
(or PLA/ELA) or NDA, and (vi) satisfactory completion of an FDA inspection of
the manufacturing facilities at which the product is made to assess compliance
with cGMPs. The testing and approval process requires substantial time, effort
and financial resources, and there can be no assurance that any approval will be
granted on a timely basis, if at all.
Preclinical studies include laboratory evaluation of the product, as well as
animal studies to assess the potential safety and efficacy of the product. The
results of the preclinical studies, together with manufacturing information and
analytical data, are submitted to the FDA as part of the IND, which must become
effective before clinical trials may be commenced. The IND automatically will
become effective 30 days after receipt by the FDA, unless the FDA, before that
time, raises concerns or questions about the trials as outlined in the IND and
places a clinical hold on the trials. In such case, an IND sponsor and the FDA
must resolve any outstanding concerns before clinical trials can proceed.
Clinical trials involve the administration of the investigational product to
healthy volunteers or patients under the supervision of a qualified principal
investigator. In the case of Jenner's products, it is anticipated that trials
will be conducted in patients with cancer, not healthy subjects. Each clinical
trial must be reviewed and approved by an independent Institutional Review Board
("IRB") at each institution at which the study will be conducted. The IRB will
consider, among other things, ethical factors, the safety of human subjects and
possible liability of the institution.
Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the drug into human
subjects, the drug is usually tested for safety (adverse effects), dosage
tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.
While safety testing in the Phase I trial applies to all of Jenner's products,
the Company believes that the other items may not be applicable in the case of
its vaccine candidates. Phase II clinical trials usually involve studies in a
limited patient population to (i) evaluate the efficacy of the drug for
specific, targeted indications, (ii) determine dosage tolerance and optimal
dosage and (iii) identify possible adverse effects and safety risks. Phase III
clinical trials further evaluate clinical efficacy and test further for safety
within an expanded patient population. There can be no assurance that Phase I,
Phase II or Phase III testing will be completed successfully within any specific
time period, if at all, with respect to any of the Company's product candidates.
Furthermore, the FDA may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.
Phase IV clinical trials are conducted after approval to gain additional
experience from the treatment of patients in the intended therapeutic indication
and to document safety and clinical benefit in the case of drugs approved under
accelerated approval regulations. If the FDA approves a product while a company
has ongoing clinical trials that were not necessary for approval, a company may
be able to use the data from these clinical trials to meet all or part of any
Phase IV clinical trial requirement. These clinical trials are often referred to
as "Phase III/IV post-approval clinical trials." Failure to promptly conduct
Phase IV clinical trials, if required, could result in withdrawal of products
approved under accelerated approval regulations.
33
The results of the preclinical studies and clinical trials, together with
detailed information on the manufacture and composition of the product, are
submitted to the FDA in the form of a BLA or PLA/ELA, or in the case of a drug,
NDA, requesting approval to market the product. Before approving a BLA or
PLA/ELA or NDA, the FDA will inspect the facilities at which the product is
manufactured and will not approve the product unless the manufacturing facility
is in compliance with cGMPs. The FDA may delay regulatory approval if applicable
regulatory criteria are not satisfied, require additional testing or
information, and/or require post marketing testing and surveillance to monitor
safety or efficacy of a product. There can be no assurance that any regulatory
submission submitted by the Company will be accepted on a timely basis, if at
all. Also, if regulatory approval of a product is granted, such approval may
entail limitations on the indicated uses for which such product may be marketed.
In 1988, the FDA issued "fast-track" regulations intended to accelerate the
approval process for the development, evaluation and marketing of new
therapeutic and diagnostic products used to treat life-threatening and severely
debilitating illnesses, especially for those for which no satisfactory
alternative therapy exist. "Fast-track" designation provides the opportunity to
interact early with the FDA in terms of protocol design, and permits, although
it does not require the FDA to grant approval after completion of Phase II
clinical trials (although the FDA may require subsequent Phase III clinical
trials or even post-approval Phase IV safety and/or efficacy studies). The
Company believes that a number of its product candidates may fall within these
regulations, but there can be no assurance that any of the Company's products
will receive this or other similar regulatory treatment, or will be approved
under accelerated approval regulations.
Orphan Drug Designation. Under the Orphan Drug Act, the FDA may grant orphan
drug designation to drugs intended to treat a "rare disease or condition," which
is generally a disease or condition that affects fewer than 200,000 individuals
in the United States. Orphan Drug Designation must be requested before
submitting a BLA or PLA/ELA, or in the case of a drug, NDA. After the FDA grants
Orphan Drug Designation, the generic identity of the therapeutic agent and its
potential orphan use are disclosed publicly by the FDA. Orphan Drug Designation
does not convey any advantage in, or shorten the duration of, the regulatory
review and approval process. If a product that has Orphan Drug Designation
subsequently receives FDA approval for the indication for which it has such
designation, the product is entitled to orphan exclusivity, i.e. the FDA may not
approve any other applications to market the same drug for the same indication
except in very limited circumstances, for seven years. There can be no assurance
that competitors will not receive approval of other, different drugs or
biologics for the same indications sought by the Company. Thus, although
obtaining FDA approval to market a product with Orphan Drug exclusivity can be
advantageous, there can be no assurance that it would provide the Company with a
material commercial benefit.
Foreign Regulations. Whether or not FDA approval has been obtained, approval
of a product by comparable regulatory authorities in foreign countries may be
necessary prior to commencement of marketing the product in such countries. In
certain instances, the Company may seek approval to market and sell certain of
its products outside of the United States before submitting applications for
U.S. approval to the FDA. The regulatory procedures for approval of new
pharmaceutical products vary significantly among foreign countries. The clinical
testing requirements and the time required to obtain foreign regulatory
approvals may differ from that required for FDA approval. Although there is now
a centralized European Community ("EU") approval mechanism in place, each EU
country may nonetheless impose its own procedures and requirements, many of
which are time consuming and expensive. Thus, there can be substantial delays in
obtaining required approvals from both the FDA and foreign regulatory
authorities after the relevant applications are filed, and approval in any
single country may not be a meaningful indication that the product will
thereafter be approved in another country.
COMPETITION
There are many companies, both publicly and privately held, including
well-known pharmaceutical companies, as well as academic and other research
institutions, that are engaged in the discovery, development, marketing and sale
of products for the treatment of cancer. These include new pharmaceutical
products and new biologically derived products, including vaccines and
macrophage activators. The Company expects to encounter significant competition
for its product candidates from
34
traditional and new treatment methods. The Company is aware of a number of
companies that have products based on immunoactivation principles or intended to
treat the indications targeted by the Company,including Avigen, Inc., Akzo
Pharma Group, Aphton Corp., Biomira, Inc., Cell Genesys, Inc., Cel-Sci
Corporation, Centocor, Inc., Corixa Corporation, Cytel Corp., EndoRex Corp.,
Epigen, Inc., IDEC Pharmaceutical Corp., ImClone Systems, Inc., Janssen
Pharmaceuticals (a division of Johnson & Johnson), Medarex, Inc., Oncogene
Science, Inc., RIBI ImmunoChem Research, Inc., Schering-Plough Corp., Therion
Biologics Corporation, Chiron Viagene, Inc. and Vical, Inc. Janssen
Pharmaceuticals and Schering-Plough Corp. recently received FDA clearance to
market products in the United States for surgical adjuvant treatment of
colorectal carcinoma and melanoma, respectively, and Centocor, Inc. recently
received approval to market a product in Germany for the adjuvant therapy of
colorectal cancer.
The Company believes that its competitive success will be based on its
ability to license and maintain scientifically advanced technology, establish
and maintain key research, manufacturing and distribution relationships, obtain
required regulatory approvals, attract and retain scientific personnel, obtain
patent or other protection for its products, and manufacture and successfully
market its products either independently or through collaborative partners. Most
of the Company's competitors and potential competitors have substantially
greater capital, research and development capabilities and human resources than
the Company. Furthermore, many of these competitors have significantly greater
experience than the Company in undertaking preclinical testing and clinical
trials of new biotechnology products and obtaining FDA and other regulatory
approvals. If the Company is permitted to commence commercial sales of any
product, it will also be competing with companies that have greater resources
and experience in manufacturing, marketing and sales. The Company's competitors
may succeed in developing products that are more effective, less costly, or have
a better side effect profile than any that may be developed by the Company, and
such competitors may also prove to be more successful than the Company in
manufacturing, marketing and sales. If the Company is able to successfully
commercialize a product, subsequent competitive developments could render such
product noncompetitive or obsolete.
PRODUCT LIABILITY AND INSURANCE
The Company's business exposes it to potential product liability risks which
are inherent in the manufacturing, clinical testing, marketing and use of human
therapeutic products. The Company currently carries clinical trial liability
insurance in the amount of $1 million per occurrence and $1 million in the
aggregate, although this insurance does not currently cover the on-going Phase
III clinical trial for ACT. There can be no assurance that the coverage limits
of the Company's insurance policy will be adequate, and a successful claim in
excess of the coverage limits could have a material adverse effect on the
Company. The Company plans to obtain product liability insurance covering the
commercial sale of its products prior to their commercial introduction, however,
there can be no assurance that the Company will be able to obtain or maintain
such insurance on acceptable terms or that any insurance obtained will provide
adequate coverage against potential liabilities. Claims or losses in excess of
any liability insurance coverage now carried or subsequently obtained by the
Company could have a material adverse effect on the Company.
SCIENTIFIC ADVISORY BOARD
The Company has assembled a Scientific Advisory Board which meets for a full
day once a quarter to discuss areas of scientific and medical interest to the
Company. The Company uses the ideas and information from these meetings to help
determine the direction of the Company's scientific endeavors. The Company has
entered into agreements with each member of the Scientific Advisory Board
providing that all inventions made by such member when working for the Company
belong to the Company. The Company has granted options to purchase Common Stock
to most members of the Scientific Advisory Board as compensation for their
efforts, and intends to continue to do so in the future. The Company provides a
cash stipend of $1,000 per month to certain members of the Scientific Advisory
Board. The members of the Scientific Advisory Board and their principal
positions and experience are set forth below:
Michael Mastrangelo, M.D. Dr. Mastrangelo is Chairman of Jenner's Scientific
Advisory Board and a Professor of Medicine and Associate Clinical Director of
the Cancer Center at Jefferson Medical College. Dr. Mastrangelo has been working
in cancer immunotherapy and vaccine development for over 25 years, is founding
Editor of Seminars in Oncology, and past President of the Society of Biological
Therapy.
35
Stuart A. Aaronson, M.D. Dr. Aaronson is the Director of the Ruttenberg
Cancer Center, Mount Sinai Medical Center, New York. He was formerly Chief of
the Laboratory of Cellular and Molecular Biology at the National Cancer
Institute and, before that, head of the Molecular Biology Section of the Viral
Carcinogenesis Branch of the National Cancer Institute. He serves on the
Editorial Boards of several journals, including the International Journal of
Oncology and Onocology Research.
Byron William Brown, Ph.D. Dr. Brown is the former Chairman of the
Department of Health, Research and Policy and a Professor and Head, Division of
Biostatistics, at Stanford University. Dr. Brown is a member of the
International Institute of Statistics and the Institute of Medicine, National
Academy of Sciences. He served on the Editorial Board of Statistics in Medicine
and was head of the Statistical Office for the Northern California Oncology
Group.
Isaiah J. Fidler D.V.M., Ph.D. Dr. Fidler holds the R.E. "Bob" Smith Chair
in Cell Biology and is a Professor and Chairman in the Department of Cell
Biology at the University of Texas, M.D. Anderson Cancer Center. Dr. Fidler is a
past President of the American Association for Cancer Research and is an
Associate Editor of several journals including Cancer Research, Journal of
Immunotherapy, Selective Cancer Therapies, and Melanoma Research. He has
published over 400 articles in the area of cancer metastases and immunology.
Philip O. Livingston, M.D. Dr. Livingston is a Member of the Memorial
Sloan-Kettering Cancer Center and Attending Physician on the clinical immunology
service at Memorial Hospital in New York City. Dr. Livingston has worked in the
area of evaluating immune responses in cancer patients and in cancer vaccine
development for over 20 years. He was the leader of a group which developed a
vaccine which is currently in a Phase III clinical trial for the treatment of
melanoma being conducted by two clinical cooperative groups.
Jeffrey Schlom, Ph.D. Dr. Schlom is Chief of the Laboratory of Tumor
Immunology and Biology, Division of Basic Sciences at the National Cancer
Institute. Dr. Schlom has worked in the area of tumor immunotherapy for over 20
years and has published over 400 manuscripts.
Lynn E. Spitler, M.D. Dr. Spitler is the founder of Jenner and has been its
President and Chief Scientific Officer since December 1992. Dr. Spitler has
worked in the area of cancer therapy for over 25 years. Dr. Spitler was formerly
Senior Vice President of Xoma Corporation. She serves on the Editorial Board of
Cancer Biotherapy and Radiopharmaceuticals and was on the Board of Directors of
the Society of Biological Therapy until her term was completed in 1996. Dr.
Spitler received the Dernham Senior Fellowship from the American Cancer Society
from 1969 to 1971 and the Research Career Development Award from the National
Institutes of Health from 1971 to 1976.
James E. Talmadge, Ph.D. Dr. Talmadge is a Professor in the Department of
Pathology and Microbiology at the University of Nebraska Medical Center. Dr.
Talmadge is or has been an Associate Editor and board member of several
journals, including Cancer Research, Cancer Immunology and Immunotherapy and The
Journal of Immunology. He was formerly head of the Preclinical Screening
Laboratory of the National Cancer Institute -- Frederick Cancer Research
Facility.
Carl R. Alving, M.D. (ex officio, CRADA representative). Dr. Alving is
Chief, Department of Membrane Biochemistry, Walter Reed Army Institute of
Research. He was elected to the rank of Fellow of the American Association for
the Advancement of Science for studies on the practical uses of liposomes. He
holds numerous patents and has developed liposomal inventions as vehicles for
vaccines. He also serves on the Editorial Boards of several journals, including
the Journal of Immunological Methods and Vaccine Research.
Anthony E. Maida, III, M.B.A. (ex officio, Management representative). Mr.
Maida has been the Company's Chief Executive Officer since December 1992, and is
responsible for operations, business development and strategic direction. Mr.
Maida actively participates in all Company Scientific Board meetings. He is a
member of the Genetic and Environmental Toxicology Association, the Society of
Toxicology and the American Chemical Society.
36
EMPLOYEES AND FACILITIES
As of December 31, 1996, the Company had five employees, of whom three were
involved in research and development and two were involved in finance and
administration. The Company believes that its relationship with its employees is
good.
The Company leases approximately 200 square feet of office space located in
San Ramon, California. The Company intends to lease an additional 600 square
feet in the same location in the second quarter of 1997. The lease expires in
December 1997. The Company intends to lease additional space as needed to
accommodate an increase in personnel and believes that adequate space will be
available to do so.
LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings.
37
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The executive officers, directors and key employees of the Company as of
January 31, 1997 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Lynn E. Spitler, M.D.. 58 President, Chief Scientific Officer,
Director
Anthony E. Maida, III 44 Chief Executive Officer, Chief Financial
Officer, Director
Thomas P.H. Twaddell, M.D. 59 Vice President of Clinical Research and
Product Development
Larry E. Moore 54 Treasurer
Jack L. Bowman(2) 64 Director
Lowell M. Dicke(1) 57 Director
Isaiah J. Fidler, D.V.M., Ph.D. 60 Director
Robert A. Fildes, Ph.D(1) 58 Director
Herbert Grossman(1) 66 Director
Hayden Leason(1) 66 Director
</TABLE>
- -----------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
All directors hold office until the next annual meeting of stockholders and
until their successors are duly elected. Officers are appointed to serve,
subject to the discretion of the Board of Directors, until their successors are
appointed.
Lynn E. Spitler, M.D., is the founder of Jenner and has been its President,
Chief Scientific Officer and a director since inception in December 1992. Dr.
Spitler has worked in the area of cancer therapy for over 25 years, and, prior
to founding the Company, Dr. Spitler was among the founders of Xoma Corporation,
a cancer therapy company, where she was Senior Vice President for seven years.
Since March 1991, she has been the Director of the Northern California Melanoma
Center, a melanoma clinical practice group. She also serves on the Editorial
Board of Cancer Biotherapy and Radiopharmaceuticals and was on the Board of
Directors of the Society of Biological Therapy until her term was completed in
1996. Dr. Spitler received the Dernham Senior Fellowship from the American
Cancer Society from 1969 to 1971 and the Research Career Development Award from
the National Institutes of Health from 1971 to 1976. Dr. Spitler received her
M.D. from the University of Michigan Medical School in 1963.
Anthony E. Maida, III, has been Chief Executive Officer, Chief Financial
Officer and a director of the Company since inception in December 1992, and is
responsible for the Company's operations, business development and strategic
direction. From 1990 to November 1992, Mr. Maida was President and Chief
Executive Officer of Cellpath, Inc, a biotechnology company. Prior to that, Mr.
Maida spent ten years with Lockheed Corporation, a designer and developer of
defense and space technology, where he most recently served as Vice President
and Chief Financial Officer of a subsidiary of Lockheed.
38
He is a member of the Genetic and Environmental Toxicology Association, the
Society of Toxicology and the American Chemical Society. Mr. Maida received an
M.S. in Toxicology from San Jose State University in 1986 and an M.B.A. from
Santa Clara University in 1978.
Thomas P.H. Twaddell, M.D., joined the Company in January 1997 as Vice
President of Clinical Research and Product Development. Dr. Twaddell has more
than 10 years of experience in managing clinical trials and FDA submissions.
From June 1991 until January 1997, Dr. Twaddell was a Clinical Scientist in the
Immunology-Oncology department of Genentech, Inc., a biotechnology company.
Prior to that, he was the Director of Gastroenterology for Glaxo, Inc., a
pharmaceutical company , where he was responsible for the NDA submissions and
FDA interactions for Zofran, a drug for prevention of nausea and vomiting
associated with chemotherapy. Prior to that, he was an Associate Medical
Director at Sandoz Pharmaceutical Corporation, a pharmaceutical company. Dr.
Twaddell received his M.D. from the University of Pennsylvania in 1963.
Larry E. Moore, has been a consultant to the Company since inception in
December 1992 and was appointed as Treasurer in January 1997. For the past eight
years, Mr. Moore has been a self-employed financial and accounting consultant to
companies in several industries, including medical research, electronic
manufacturing and real estate development. Mr. Moore received his B.S. in
Accounting from the San Diego State University and is a certified public
accountant.
Jack L. Bowman joined the Company as a member of the Board of Directors in
December 1993. Since January 1994, Mr. Bowman has been retired. From 1987 until
December 1993, Mr. Bowman was Company Group Chairman at Johnson & Johnson, a
health care company. Mr. Bowman is a member of the Board of Directors of NeoRx
Corp., Cell Therapeutics, Inc., PharmaGenics, Inc. and CytRx Corp., all of which
are publicly traded companies. Mr. Bowman received his B.A. in Education from
Western Washington University.
Lowell M. Dicke joined the Company as a member of the Board of Directors at
its inception in December 1992. Mr. Dicke has served as President, Chief
Financial Officer and Director of Diversified Investors Corporation, a publicly
held investment company, since December 1994. From January 1990 to December
1994, Mr. Dicke was self-employed as a financial consultant. Mr. Dicke received
a J.D. from Yale University.
Isaiah J. Fidler, D.V.M., Ph.D. joined the Company as a member of the Board
of Directors in July 1996. Dr. Fidler holds the R.E. "Bob" Smith Chair in Cell
Biology and is Chairman of the Department of Cell Biology at the University of
Texas, M.D. Anderson Cancer Center, where he has been a professor since 1983.
Dr. Fidler is a past President of the American Association for Cancer Research
and is an Associate Editor of several journals including Cancer Research,
Journal of Biological Response Modifiers, Selective Cancer Therapies and
Melanoma Research. Dr. Fidler received his D.V.M. from Oklahoma State University
in 1963 and his Ph.D. in Pathology from the University of Pennsylvania in 1970.
Robert A. Fildes, Ph.D. joined the Company as a member of the Board of
Directors at its inception in December 1992. Dr. Fildes has served as Chairman
and Chief Executive Officer of Scotgen Biopharmaceuticals, a biotechnology
company, since February 1993. From January 1991 to January 1993, Dr. Fildes was
self-employed as a biotechnology consultant. From 1982 to 1990, he was the
President and Chief Executive Officer of Cetus Corporation, which was acquired
by Chiron Corporation in 1991. In 1978, Dr. Fildes became the first U.S.
employee of Biogen, Inc., a biotechnology company, where he worked until 1981.
Dr. Fildes is a member of the Board of Directors of Carrington Laboratories Inc.
and La Jolla Pharmaceuticals, both of which are publicly traded companies. Dr.
Fildes received his B.Sc. in 1961 and a D.C.C. and Ph.D. in 1964 from the
University of London.
Herbert Grossman joined the Company as a member of the Board of Directors at
its inception in December 1992. Mr. Grossman has served as the President, Chief
Executive Officer and director of Beacon Laboratories LLC, a pharmaceutical
company, since July 1995. From October 1992 until June 1995, he served as a
consultant to Ortho Diagnostics Systems, a diagnostic company and a division of
39
Johnson & Johnson. From May 1988 until September 1992, he held various positions
with Zambon Corporation, a pharmaceutical company, most recently as Chairman of
the Board. Mr. Grossman serves on the Board of Directors of Dermasciences, Inc.,
a publicly traded company. Mr. Grossman received his B.S. from the Brooklyn
College of Pharmacy.
Hayden Leason joined the Company as a member of the Board of Directors in
June 1993. He has served as Chairman of the Board of Advanced Photonics, Inc., a
publicly held company that manufactures electrical equipment, since November
1996. From 1992 to October 1996, Mr. Leason was retired. In 1964, Mr. Leason
founded Filtertek, now a division of Schawk Inc. and manufacturer of insert
molded filters, and served as Chief Executive Officer and Chairman of the Board
until 1992.
DIRECTOR COMPENSATION
Directors are not currently paid any compensation for attendance at
directors' meetings or for attending or participating in any committee, although
the Board expects to review and may revise its policy in this regard following
the Offering. Directors are reimbursed for reasonable out-of-pocket expenses in
connection with attendance at such meetings.
On December 10, 1992, prior to the Company's adoption of its 1993 Incentive
Stock Plan, the Company granted a stock option to purchase 7,158 shares of the
Company's Common Stock at an exercise price of $0.00693 per share to Herbert
Grossman in connection with his services as a director of the Company. On
September 18, 1995, in connection with his services to the Company, including
services as a director, the Company granted to Mr. Maida a stock option to
purchase 143,129 shares of Common Stock at an exercise price of $0.21 per share.
On July 29, 1996, in connection with their services as directors, the Company
granted to each of Messrs. Bowman, Dicke, Fildes and Grossman stock options to
purchase 7,157 shares of the Company 's Common Stock at an exercise price of
$0.23 per share. On July 29, 1996, in connection with their services to the
Company, including services as directors, the Company granted to each of Mr.
Maida and Dr. Spitler stock options to purchase 28,625 shares of the Company's
Common Stock. Mr. Maida's options are exercisable at $0.23 per share and Dr.
Spitler's options are exercisable at $0.24 per share. See " -- Employee Benefit
Plans."
BOARD COMMITTEES
The Audit Committee of the Board of Directors reviews the internal
accounting procedures of the Company and consults with and reviews the services
provided by the Company's independent auditors. The Compensation Committee of
the Board of Directors reviews and recommends to the Board the compensation and
benefits of all officers of the Company and establishes and reviews general
policies relating to compensation and benefits of employees of the Company.
EMPLOYMENT AGREEMENTS
In November 1994, the Company executed employment agreements with each of
Lynn E. Spitler, M.D. and Anthony E. Maida, III (the "Executives"). On each
anniversary of the execution date of the employment agreements, the term of the
employment agreements is automatically extended to a date three years from the
respective anniversary date, unless the Company shall have provided the
Executive with at least 60 days prior notice to such anniversary date of its
intent not to renew the employment agreement. The employment agreements provide
the Executives with a monthly salary, and medical and vacation benefits together
with the following: (i) in the event the Executive's employment is terminated
without cause, the Executive is entitled to severance payments equal to the
Executive's monthly salary computed at the time of such termination payable from
the date employment is terminated to the termination date of the agreement and
all accrued benefits and bonuses, (ii) in the event the Executive's employment
is terminated as a result of the Company experiencing adverse financial
conditions (i.e., bankruptcy or cessation of operations), the Executive is
entitled to a payment of up to $50,000 (subject to applicable law) and (iii) in
the event the Executive's employment is terminated by death, the Executive's
estate is entitled to severance payments equal to the Executive's monthly salary
computed at the time of death payable from the time of death to the termination
date of the agreement and all accrued benefits and bonuses.
40
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
information for the year ended December 31, 1996 regarding the compensation of
the Company's Chief Executive Officer and the Company's other most highly
compensated executive officer whose total annual salary and bonus for the fiscal
year ended December 31, 1996 were in excess of $100,000 (the "Named Executive
Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
------------ ------------
NAME AND PRINCIPAL POSITION YEAR SALARY($) OPTIONS/SARS(#)
--------------------------- ---- --------- ---------------
<S> <C> <C> <C>
Anthony E. Maida, III 1996 $133,333 28,625
Chief Executive Officer, Chief Financial Officer, Director
Lynn E. Spitler, M.D. 1996 $133,331 28,625
President, Chief Scientific Officer, Director
</TABLE>
Option Grants in Last Fiscal Year. The following table sets forth each grant
of stock options made during the fiscal year ended December 31, 1996 to each of
the Named Executive Officers:
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------- POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF PERCENT OF ANNUAL RATES OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM(4)
OPTIONS DURING FISCAL PRICE EXPIRATION ---------------------
NAME GRANTED(#)(1) 1996(%)(2) ($/SH)(3) DATE 5%($) 10%($)
---- ------------- ---------- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Anthony E. Maida, III 28,625 25.8% $0.23 7/29/03 $2,680 $6,246
Lynn E. Spitler, M.D. 28,625 25.8% $0.24 7/29/03 $2,797 $6,518
</TABLE>
- ----------
(1) Options were granted under the Company's 1993 Incentive Stock Option Plan
and vest monthly over three years from May 1996, subject to continued
employment with or services to the Company.
(2) Based on an aggregate of 111,076 options granted by the Company in the year
ended December 31, 1996 to employees of and consultants to the Company,
including the Named Executive Officers.
(3) The exercise price per share of each option was equal to the fair market
value of the Common Stock on the date of grant as determined by the Board
of Directors except for the options granted to Lynn E. Spitler, M.D. which
were granted at an exercise price of 110% of the fair market value on the
date of grant.
(4) The potential realizable value is calculated based on the term of the
option at its time of grant (seven years). It is calculated assuming that
the fair market value of the Company's Common Stock on the date of grant
appreciates at the indicated annual rate compounded annually for the entire
term of the option and that the option is exercised and sold on the last
day of its term for the appreciated stock price. These numbers are
calculated based on the requirements promulgated by the Securities and
Exchange Commission and do not reflect the Company's estimate of future
stock price growth.
41
Option Exercises in Last Fiscal Year and Fiscal Year End Option Values.
There were no stock option exercises during the year ended December 31, 1996.
The following table sets forth for each of the Named Executive Officers the
number and value of securities underlying unexercised options held at December
31, 1996:
AGGREGATE OPTION EXERCISES IN YEAR ENDED DECEMBER 31, 1996 AND
OPTION VALUES AT DECEMBER 31, 1996
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1996(#) DECEMBER 31, 1996($)(1)
-------------------- ------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Anthony E. Maida, III 69,975 101,779 $509,990 $ 741,523
Lynn E. Spitler, M.D. 6,361 22,264 $ 49,361 $ 161,636
</TABLE>
- ----------
(1) Based on a value of $7.50 per share, the assumed initial public offering
price, minus the per share exercise price, multiplied by the number of
shares underlying the option.
EMPLOYEE BENEFIT PLANS
1993 Incentive Stock Plan. The Company's 1993 Incentive Stock Plan (the
"1993 Plan") provides for the grant of incentive stock options to employees and
nonstatutory stock options to employees, directors and consultants. Options
granted under the 1993 Plan typically vest over three years. As of January 31,
1997, options to purchase an aggregate of 363,800 shares of Common Stock were
outstanding and 1,950 shares had been issued upon exercise of outstanding
options. Options granted under the 1993 Plan will remain outstanding in
accordance with their terms, but the Board of Directors has determined that no
further options will be granted under the 1993 Plan.
Non-Plan Stock Options. Prior to adopting the 1993 Plan, the Company granted
options to purchase a total of 28,629 shares of its Common Stock. As of January
31, 1997, non-plan options to purchase 14,314 shares were outstanding and 14,315
shares had been issued upon exercise of outstanding options. The Company does
not plan to make any future option grants outside of its existing option plans.
1997 Stock Plan. The Company's 1997 Stock Plan (the "1997 Plan") provides
for the grant of incentive stock options to employees (including employee
directors) and nonstatutory stock options and stock purchase rights to
employees, directors and consultants. A total of 350,000 shares of Common Stock
have been reserved for issuance under the 1997 Plan, all of which are currently
available for grant. The 1997 Stock Plan is administered by the Board of
Directors. Options and stock purchase rights granted under the 1997 Plan will
vest as determined by the Board, and may accelerate and become fully vested in
the event of an acquisition of the Company if so determined. The exercise price
of options and stock purchase rights granted under the 1997 Plan will be as
determined by the Board, although the exercise price of incentive stock options
must be at least equal to the fair market value of the Company's Common Stock on
the date of grant. The Board of Directors may amend or modify the 1997 Plan at
any time. The 1997 Plan will terminate in January 2007, unless terminated
earlier by the Board of Directors.
The Company has agreed that it will not, without the Representative's prior
written consent, for a period of 12 months from the effective date of the
Registration Statement adopt, propose to adopt, or otherwise permit to exist any
additional equity compensation plans or similar arrangements providing for (i)
the grant, sale, or issuance of stock options, warrants, or other rights to
acquire the Company's securities to any of the Company's executive officers,
directors, employees, consultants or holders of
42
5% or more of the Company's Common Stock; (ii) the grant, sale or issuance of
any option, warrant or other right to acquire the Company's securities or enter
into any agreement to grant, sell or issue any option, warrant or other right to
acquire the Company's securities at an exercise price that is less than the
greater of the fair market value on the date of grant or sale or the initial
public offering price of the shares; (iii) allow for the maximum number of
shares of Common Stock or other securities of the Company purchasable pursuant
to options or warrants issued by the Company, together with the shares of Common
Stock acquired upon exercise of outstanding options, to exceed 728,114 shares;
(iv) allow for the payment for such securities with any form of consideration
other than cash; or (v) allow for the existence of stock appreciation rights,
phantom options or similar arrangements.
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Company's Certificate of Incorporation limits the liability of directors
to the maximum extent permitted by Delaware law. Delaware law provides that
directors of a corporation will not be personally liable for monetary damages
for breach of their fiduciary duties as directors, except liability for (i) any
breach of their duty of loyalty to the corporation or its stockholders, (ii)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) unlawful payments of dividends or unlawful stock
repurchases or redemptions or (iv) any transaction from which the director
derived an improper personal benefit. Such limitation of liability does not
apply to liabilities arising under the federal securities laws and does not
affect the availability of equitable remedies such as injunctive relief or
rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and executive officers and may indemnify its other officers and employees and
other agents to the fullest extent permitted by law. The Company believes that
indemnification under its Bylaws covers at least negligence and gross negligence
on the part of indemnified parties. The Company's Bylaws also permit it to
secure insurance on behalf of any officer, director, employee or other agent for
any liability arising out of his or her actions in such capacity, regardless of
whether the Bylaws permit such indemnification.
The Company has entered into agreements to indemnify its directors and
executive officers, in addition to indemnification provided for in the Company's
Bylaws. These agreements among other things, indemnify the Company's directors
and executive officers for certain expenses (including attorney's fees),
judgments, fines and settlement amounts incurred by any such person in any
action or proceeding, including any action by or the right of the Company
arising out of such person's services as a director or executive officer of the
Company, any subsidiary of the Company or any other company or enterprise to
which the person provides services at the request of the Company. The Company
believes that these provisions and agreements are necessary to attract and
retain qualified persons as directors and executive officers.
There is no currently pending litigation or proceeding involving a director,
officer, employee or other agent of the Company in which indemnification would
be required or permitted. The Company is not aware of any threatened litigation
or proceeding which would provide the basis for a claim for such
indemnification.
43
CERTAIN TRANSACTIONS
In May 1993, the Company entered into a Series A Preferred Stock and Warrant
Purchase Agreement with Hayden Leason, a director and principal stockholder of
the Company. Pursuant to the agreement, the Company issued 992,056 shares of
Series A Preferred Stock to Mr. Leason at a price of $800,000. In addition, the
Company issued a warrant to Mr. Leason to purchase additional shares of Series A
Preferred Stock. Mr. Leason exercised this warrant in January 1994 and acquired
an additional 992,056 shares of Series A Preferred Stock at a price of $800,000.
The shares of Series A Preferred Stock issued to Mr. Leason will convert into
1,145,034 shares of Common Stock upon consummation of this Offering.
In July 1995, the Company entered into a Series B Preferred Stock and
Warrant Purchase Agreement with Mr. Leason. Pursuant to the Agreement, the
Company issued 496,028 shares of Series B Preferred Stock (convertible into
286,258 shares of Common Stock upon consummation of this Offering) to Mr. Leason
at a price of $600,000. In addition, the Company issued a warrant to Mr. Leason
to purchase up to 2,146,931 shares of Common Stock. Mr. Leason exercised the
warrant as to 715,649 shares in March 1996 at a price of $50,000 and as to
286,258 shares in May 1996 at a price of $20,000. In connection with the May
exercise, the Company and Mr. Leason agreed to terminate the warrant as to the
remaining shares.
In February 1996, the Company caused TherAtid, Incorporated ("TherAtid") to
be formed as a California corporation. TherAtid was formed for the purpose of
entering into the license agreement (the "Novartis License") with Novartis
Corporation. See "Business -- Licenses." TherAtid issued 200,000 shares of
Common Stock to Mr. Leason at a price of $200 and 1,000,000 shares of Common
Stock to Isaiah J. Fidler, D.V.M., Ph.D. at a price of $1,000. Dr. Fidler is a
director and principal stockholder of Jenner. In addition, TherAtid issued
1,818,180 shares of Series A Preferred Stock to Jenner at a price of $999,999
and a warrant to purchase additional shares of Series A Preferred Stock. In
August 1996, TherAtid was merged with and into Jenner. As a result of the
merger, Jenner became the successor to the Novartis License, the shares of
TherAtid Common Stock issued to Mr. Leason were converted into 115,420 shares of
Jenner Common Stock, the shares of TherAtid Common Stock issued to Dr. Fidler
were converted into 577,100 shares of Jenner Common Stock, and the shares of
TherAtid Series A Preferred Stock and the warrant issued to Jenner were
canceled.
From March through May 1996, the Company borrowed an aggregate of $3 million
from Mr. Leason. The loan bears simple interest at 10% per annum and all
principal and interest is due and payable on May 6, 1999. The loan was
originally secured by the TherAtid securities issued to Jenner. However, with
the merger of TherAtid into Jenner, the loan is now unsecured.
In August 1996, the Company entered into a Consulting Agreement with Isaiah
J. Fidler, D.V.M., Ph.D., a director of the Company, pursuant to which Dr.
Fidler agreed to assist the Company in developing proprietary compounds, ACT and
JT3002 and their respective analogs, in exchange for an aggregate of $48,000
payable over the term of the agreement. The agreement expires in August 1997.
In September 1996, the Company entered into a Sponsored Research Agreement
with the University of Texas M.D. Anderson Cancer Center ("M.D. Anderson").
Under the agreement, M.D. Anderson will perform certain research related to the
preclinical development of JT3002 for the adjuvant therapy of cancer and the
abrogation of mucositis, GI toxicity and myelosuppression in exchange for
funding in the aggregate amount of $425,752. All inventions made solely by M.D.
Anderson's personnel or the Company's personnel will be the sole property of
M.D. Anderson or the Company, respectively, and all property developed jointly
by personnel of M.D. Anderson and the Company will be owned jointly. With
respect to the property owned solely by M.D. Anderson or jointly by the Company
and M.D. Anderson, the Company has the option to negotiate the terms and
conditions of a license agreement with M.D. Anderson. If the Company and M.D.
Anderson do not reach agreement on the terms and conditions of such a license
agreement within 180 days, the Company shall have a right of first refusal with
respect to any third party offers that are more favorable to M.D. Anderson than
those offered by the Company. The research performed by M.D. Anderson under the
agreement will be directed by Dr. Fidler.
44
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1996 and as adjusted
to reflect the sale by the Company of the Securities offered hereby, by (i) each
director of the Company, (ii) each Named Executive Officer, (iii) each person
known to the Company to be the beneficial owner of more than 5% of the Company's
Common Stock, and (iv) all directors and executive officers of the Company as a
group. Except as otherwise indicated, based on information furnished by the
beneficial owners of the Common Stock listed below, the Company believes that
such owners have sole investment and voting power with respect to such shares,
subject to community property laws where applicable. See "Certain Transactions"
and "Risk Factors -- Concentration of Ownership."
PERCENTAGE OF VOTING
NUMBER OF STOCK BENEFICIALLY OWNED
SHARES ------------------------
BENEFICIALLY BEFORE AFTER
NAME AND ADDRESS OWNED OFFERING OFFERING
---------------- ----- -------- --------
Lowell M. Dicke(1) 23,458 1.0% *
Diversified Investors Corporation
82 Wall Street
New York, NY 10005
Isaiah J. Fidler, D.V.M., Ph.D(2) 584,257 12.6% 8.2%
Department of Cell Biology -- 173
MD Anderson Cancer Center
1515 Holcombe Boulevard
Houston, TX 77030
Robert A. Fildes, Ph.D.(3) 23,458 1.0% *
905 Pepperwood Drive
Danville, CA 94506
Jack Bowman(4) 9,145 * *
3077 Scenic Avenue
Lummi Island, WA 98262
Anthony E. Maida, III(5) 258,484 5.5% 3.6%
2010 Crow Canyon Place, Suite 100
San Ramon, CA 94853
Herbert Grossman(6) 9,146 * *
35 Highland Drive
West Caldwell, NJ 07006
Hayden Leason(7) 2,548,610 55.1% 35.8%
W4269 Southland Road
Lake Geneva, WI 53147
Lynn E. Spitler, M.D.(8) 1,072,829 23.2% 15.1%
2010 Crow Canyon Place, Suite 100
San Ramon, CA 94853
All directors and executive officers
as a group (8 persons)(9) 4,529,387 95.9% 62.7%
- ------------
* Less than 1%.
(1) Includes 397 shares issuable upon exercise of stock options exercisable
within 60 days of December 31, 1996.
45
(2) Includes 289,017 shares of Common Stock initially subject to repurchase by
the Company. One twenty-fourth of the shares were released from the
repurchase option on April 30, 1996 and an additional one twenty-fourth of
the shares are released at the end of each full month thereafter, based
upon Dr. Fidler's continued relationship to the Company.
(3) Includes 1,988 shares issuable upon exercise of stock options exercisable
within 60 days of December 31, 1996.
(4) Consists of 9,145 shares issuable upon exercise of stock options
exercisable within 60 days of December 31, 1996.
(5) Includes an aggregate of 49,747 shares that have been gift transferred to
members of Mr. Maida's family. Mr. Maida disclaims beneficial ownership of
all shares held by such transferees except for 43,282 shares held in
custodianship under the California Uniform Transfer to Minors Act for the
benefit of Mr. Maida's minor children. Also includes 79,515 shares issuable
upon exercise of stock options exercisable within 60 days of December 31,
1996.
(6) Includes 1,988 shares issuable upon exercise of stock options exercisable
within 60 days of December 31, 1996.
(7) Includes an aggregate of 288,998 shares that have been gift transferred to
friends and to members of Mr. Leason's family. Mr. Leason disclaims
beneficial ownership of all shares held by such transferees.
(8) Includes an aggregate of 248,335 shares that have been gift transferred to
friends and to members of Dr. Spitler's family. Dr. Spitler disclaims
beneficial ownership of all shares held by such transferees. Also includes
7,951 shares issuable upon exercise of stock options exercisable within 60
days of December 31, 1996.
(9) Includes an aggregate of 587,080 shares previously gift transferred by Mr.
Maida, Mr. Leason and Dr. Spitler. See Notes 5, 7 and 8. Also includes
100,984 shares issuable upon exercise of stock options exercisable within
60 days of December 31, 1996.
46
DESCRIPTION OF SECURITIES
Upon the closing of this Offering, the authorized capital stock of the
Company will consist of 30,000,000 shares of Common Stock, par value $0.001 per
share, and 5,000,000 shares of Preferred Stock, $0.001 par value (the "Preferred
Stock"). At December 31, 1996, there were 4,621,886 shares of Common Stock
outstanding held of record by approximately 51 stockholders.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Subject to any
outstanding Preferred Stock preference, the holders of Common Stock are entitled
to receive ratably the dividends, if any, that may be declared from time to time
by the Board of Directors out of funds legally available for such dividends. The
Company has never declared a dividend and does not anticipate doing so. See
"Dividend Policy." Subject to any outstanding Preferred Stock preference, in the
event of a liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to share ratably in all assets remaining after payment
of liabilities. Holders of Common Stock have no preemptive rights and no right
to convert their Common Stock into any other securities. There are no redemption
or sinking fund provisions applicable to the Common Stock. All the outstanding
shares of Common Stock are, and the shares of Common Stock to be issued in the
Offering will be, validly issued, fully paid and nonassessable.
PREFERRED STOCK
Effective upon the closing of this Offering, the Company will be authorized
to issue 5,000,000 shares of undesignated Preferred Stock, none of which will be
outstanding upon the closing of this Offering. The Board of Directors will have
the authority, without further action by the stockholders, to issue the
undesignated Preferred Stock in one or more series, to fix the rights,
preferences, privileges and restrictions granted to or imposed upon any wholly
unissued shares of undesignated Preferred Stock and to fix the number of shares
constituting any series and the designation of such series. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the stockholders, may
discourage bids for the Company's Common Stock at a premium over the market
price of the Common Stock and may adversely affect the market price of and the
voting and other rights of the holders of Common Stock. At present, the Company
has no plans to issue any of the Preferred Stock.
WARRANTS
The following is a brief summary of certain provisions of the Warrants, but
such summary does not purport to be complete. A copy of the Warrant Agreement
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part. See "Additional Information."
Exercise Price and Terms. Each Warrant entitles the registered holder
thereof to purchase, at any time over a forty-eight month period commencing
twelve (12) months after the date of this Prospectus, one share of Common Stock
at a price of $ per share [140% of the initial public offering price per share],
subject to adjustment in accordance with the anti-dilution and other provisions
referred to below. The holder of any Warrant may exercise such Warrant by
surrendering the certificate representing the Warrant to the Warrant Agent, with
the subscription form thereon properly completed and executed, together with
payment of the exercise price. The Warrants may be exercised at any time in
whole or in part at the applicable exercise price until expiration of the
Warrants. No fractional shares will be issued upon the exercise of the Warrants.
The exercise price of the Warrants bears no relationship to any objective
criteria of value and should in no event be regarded as an indication of any
future market price of the Securities offered hereby.
Adjustments. The exercise price and the number of shares of Common Stock
purchasable upon the exercise of the Warrants are subject to adjustment upon the
occurrence of certain events, including stock dividends, stock splits,
combinations or reclassifications of the Common Stock, or sale by the
47
Company of shares of its Common Stock or other securities convertible into
Common Stock at a price below the then-applicable exercise price of the
Warrants. Additionally, an adjustment would be made in the case of a
reclassification or exchange of Common Stock, consolidation or merger of the
Company with or into another corporation (other than a consolidation or merger
in which the Company is the surviving corporation) or sale of all or
substantially all of the assets of the Company in order to enable warrantholders
to acquire the kind and number of shares of stock or other securities or
property receivable in such event by a holder of the number of shares of Common
Stock that might otherwise have been purchased upon the exercise of the Warrant.
Redemption Provisions. Commencing eighteen (18) months after the date of
this Prospectus, the Warrants are subject to redemption at $0.10 per Warrant on
thirty (30) days' prior written notice to the warrantholders if the average
closing bid price of the Common Stock as reported on the American Stock Exchange
equals or exceeds $ per share [160% of the initial public offering price per
share of Common Stock] for any twenty (20) trading days within a period of
thirty (30) consecutive trading days ending on the fifth trading day prior to
the date of the notice of redemption. In the event the Company exercises the
right to redeem the Warrants, such Warrants will be exercisable until the close
of business on the business day immediately preceding the date for redemption
fixed in such notice. If any Warrant called for redemption is not exercised by
such time, it will cease to be exercisable and the warrantholder will be
entitled only to the redemption price.
Transfer, Exchange and Exercise. The Warrants are in registered form and may
be presented to the Warrant Agent for transfer, exchange or exercise at any time
on or prior to their expiration date five (5) years from the date of this
Prospectus, at which time the Warrants become wholly void and of no value. If a
market for the Warrants develops, the holder may sell the Warrants instead of
exercising them. There can be no assurance, however, that a market for the
Warrants will develop or continue.
Warrantholder Not a Stockholder. The Warrants do not confer upon holders any
voting, dividend or other rights as stockholders of the Company.
Modification of Warrant. The Company and the Warrant Agent may make such
modifications to the Warrant as they deem necessary and desirable that do not
adversely affect the interests of the warrantholders. The Company may, in its
sole discretion, lower the exercise price of the Warrants for a period of not
less than thirty (30) days on not less than thirty (30) days' prior written
notice to the warrantholders and the Representative. Modification of the number
of securities purchasable upon the exercise of any Warrant, the exercise price
and the expiration date with respect to any Warrant requires the consent of
two-thirds of the warrantholders. No other modifications may be made to the
Warrants, without the consent of two-thirds of the warrantholders.
A significant amount of the securities offered hereby may be sold to
customers of the Representative. Such customers subsequently may engage in
transactions for the sale or purchase of such securities through or with the
Representative. Although it has no obligation to do so, the Representative
currently intends to make a market in the Company's securities and may otherwise
effect transactions in such securities. If it participates in the market, the
Representative may exert a dominating influence on the market, if one develops,
for the securities described in this Prospectus. Such market-making activity may
be discontinued at any time. The price and liquidity of the Common Stock and the
Warrants may be significantly affected by the degree, if any, of the
Representative's participation in such market. See "Underwriting."
The Warrants are not exercisable unless, at the time of the exercise, the
Company has a current prospectus covering the shares of Common Stock issuable
upon exercise of the Warrants, and such shares have been registered, qualified
or deemed to be exempt under the securities laws of the state of residence of
the exercising holder of the Warrants. Although the Company will use its best
efforts to have all the shares of Common Stock issuable upon exercise of the
Warrants registered or qualified on or before the exercise date and to maintain
a current prospectus relating thereto until the expiration of the Warrants,
there can be no assurance that it will be able to do so.
The Warrants are separately transferable immediately upon issuance. Although
the Securities will not knowingly be sold to purchasers in jurisdictions in
which the Securities are not registered or otherwise qualified for sale,
purchasers may buy Warrants in the aftermarket or may move to
48
jurisdictions in which the shares underlying the Warrants are not so registered
or qualified during the period that the Warrants are exercisable. In this event,
the Company would be unable to issue shares to those persons desiring to
exercise their Warrants, and holders of Warrants would have no choice but to
attempt to sell the Warrants in a jurisdiction where such sale is permissible or
allow them to expired unexercised.
REGISTRATION RIGHTS OF CERTAIN HOLDERS
The holders of 1,860,680 shares of Common Stock (the "Registrable
Securities") or their transferees are entitled to certain rights with respect to
the registration of such shares under the Securities Act. These rights are
provided under the terms of an agreement between the Company and the holders of
Registrable Securities. Subject to certain limitations in the agreement, the
holders of at least 80% of the Registrable Securities may require, on one
occasion beginning six months after the date of this Prospectus, that the
Company use its best efforts to register the Registrable Securities for public
resale (the "Requested Registration"). If the Company registers any of its
Common Stock either for its own account or for the account of other security
holders, the holders of Registrable Securities are entitled to include their
shares of Common Stock in the registration, subject to the ability of the
underwriters to limit the number of shares included in the offering. Any holders
of the Registrable Securities may also require the Company to register all or a
portion of their Registrable Securities on Form S-3 when use of such form
becomes available to the Company, provided, among other limitations, that the
proposed aggregate selling price of such shares (net of any underwriters'
discounts or commissions) is at least $1 million. All registration expenses for
the Requested Registration must be borne by the Company and all other
registration expenses and selling expenses relating to Registrable Securities
must be borne by the holders of the securities being registered.
DELAWARE ANTI-TAKEOVER LAW AND CERTAIN CHARTER AND BYLAW PROVISIONS
Jenner is a Delaware corporation and is subject to Section 203 of the
Delaware General Corporation Law, an anti-takeover law. In general, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date the person became an interested stockholder unless (with certain
exceptions) the "business combination" or the transaction in which the person
became an interested stockholder is approved in a prescribed manner. Generally,
a "business combination" includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the stockholder. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years prior, did own) 15% or more of the
corporation's voting stock. The existence of this provision would be expected to
have an anti-takeover effect with respect to transactions not approved in
advance by the Board of Directors, including discouraging attempts that might
result in premium over the market price for the shares of Common Stock held by
the stockholders.
The Company's Certificate of Incorporation provides that the Board of
Directors may issue shares of Preferred Stock without stockholder approval on
such terms as the Board may determine. The authorization of undesignated
Preferred Stock makes it possible for the Board of Directors to issue Preferred
Stock with voting or other rights or preferences that could impede the success
of any attempt to change control of the Company. In addition, the Company's
Certificate of Incorporation and Bylaws eliminate cumulative voting in the
election of directors, and provide that stockholder action can be taken only at
an annual or special meeting of stockholders and may not be taken by written
consent. The Bylaws provide that special meetings of stockholders can be called
only by the Board of Directors, the Chairman of the Board, if any, or the
President of the Company. These and other provisions may have the effect of
deferring hostile takeovers or delaying changes in control or management of the
Company. The affirmative vote of the holders of at least two-thirds of the
voting stock of the Company is required to amend the foregoing provisions of the
Certificate of Incorporation and Bylaws.
TRANSFER AGENT AND REGISTRAR AND WARRANT AGENT
The name and address of the Transfer Agent and Registrar for the Company's
Common Stock and the Warrant Agent for the Warrants is Continental Stock
Transfer and Trust Company, 2 Broadway, New York, New York 10004.
49
SHARES ELIGIBLE FOR FUTURE SALE
Upon the completion of this Offering, the Company will have 7,121,886 shares
of Common Stock outstanding (not including 378,114 shares of Common Stock
subject to outstanding options), assuming no exercise of options after January
31, 1997 and outstanding warrants to purchase an additional 2,500,000 shares of
Common Stock assuming no exercise of the Representative's Warrant. Of these
securities, 2,500,000 shares of Common Stock and the Warrants to purchase
2,500,000 shares of Common Stock sold in this Offering will be freely tradeable
without restriction under the Securities Act. The remaining 4,621,886 shares of
Common Stock held by existing stockholders were issued and sold by the Company
in reliance on exemptions from the registration requirements of the Securities
Act. These shares may be sold in the public market only if registered, or
pursuant to an exemption from registration such as Rule 144, 144(k) or 701 under
the Securities Act. Such restricted shares will be available for sale in the
public market 12 months after the date of this Prospectus upon expiration of
lock-up agreements with the Representative as follows: (i) 2,927,449 shares (not
including approximately 228,403 shares subject to outstanding vested options)
will be available for immediate sale, subject in some cases to volume
limitations pursuant to Rule 144 and (ii) the remaining 1,694,437 shares will be
eligible for sale at various times over a period of less than two years, subject
in some cases to vesting provisions and volume limitations. In addition, twelve
(12) months after the completion of this Offering, 250,000 shares of Common
Stock issuable upon exercise of the Representative's Warrants and the Warrants
to purchase 250,000 shares of Common Stock issuable upon exercise of the
Representative's Warrants will be available for sale. The Company's directors,
executive officers and stockholders, who in the aggregate hold 100% of the
shares of Common Stock of the Company outstanding immediately prior to the
completion of this Offering, have entered into lock-up agreements with the
Representative under which they have agreed not to offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of, or agree to dispose
of, directly or indirectly, any shares of Common Stock or options to acquire
shares of Common Stock owned by them for a period of 12 months after the date of
this Prospectus, without the prior written consent of the Representative. The
Representative may, in its sole discretion, and at any time without notice,
release all or any portion of the shares subject to such lock-up agreements. The
Company has entered into a similar agreement, except that the Company may grant
options and issue stock under its current stock option and stock purchase plans
and issue stock pursuant to outstanding vested options.
As of January 31, 1997, 378,114 shares were subject to outstanding options.
All of these shares are subject to the lock-up agreements with the
Representative described above. In addition, 1,860,680 of the shares outstanding
immediately following the completion of this Offering will be entitled to
registration rights with respect to such shares upon the release of lock-up
agreements. The number of shares sold in the public market could increase if
such rights are exercised.
In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), including an affiliate, who has beneficially owned
shares for at least two (2) years (including the contiguous holding period of
any prior owner except an affiliate) is entitled to sell in "broker's
transactions" or to market makers, within any three-month period commencing at
least ninety (90) days after the date of this Prospectus, a number of shares
that does not exceed the greater of (i) one percent of the then outstanding
shares of Common Stock (approximately 105,087 shares immediately after the
Offering) or (ii) the average weekly trading volume in the Common Stock during
the four calendar weeks preceding the filing of a Form 144 with respect to such
sale. Sales under Rule 144 are also subject to certain requirements as to manner
of sale, the filing of a notice and the availability of public information
concerning the Company. In addition, a person who is not deemed to have been an
affiliate of the Company at any time during the three (3) months preceding a
sale and who has beneficially owned the shares proposed to be sold for at least
three (3) years (including the contiguous holding period of any prior owner
except an affiliate) would be entitled to sell such shares under Rule 144(k)
without regard to the requirements described above.
Any employee, officer or director of or consultant to the Company who
purchased his or her shares pursuant to a written compensatory plan or contract
is entitled to rely on the resale provisions of Rule 701 under the Securities
Act, which permits nonaffiliates to sell their Rule 701 shares without having to
50
comply with the public information, holding period, volume limitation or notice
provisions of Rule 144 and permits affiliates to sell their Rule 701 shares
without having to comply with Rule 144's holding period restrictions, in each
case commencing ninety (90) days after the date of this Prospectus; however, all
persons who hold shares of the Company that would be eligible for resale
pursuant to Rule 701 have entered into agreements with the Company pursuant to
which they have agreed not to sell any such shares for a period of twelve (12)
months from the date of this Prospectus (the "Lock-up Period") without the
Representative's consent. See "Underwriting."
Prior to the Offering, there has been no market for the Common Stock or the
Warrants of the Company, and no predictions can be made of the effect, if any,
that market sales of shares or the availability of shares for sale will have on
the market price prevailing from time to time. Nevertheless, sales of
substantial amounts of the Common Stock and the Warrants of the Company in the
public market could adversely affect prevailing market prices for the Common
Stock and the Warrants and the ability of the Company to raise equity capital in
the future.
51
UNDERWRITING
The Underwriters named below (the "Underwriters") for whom National
Securities Corporation is acting as representative (in such capacity, the
"Representative"), have severally agreed, subject to the terms and conditions of
the Underwriting Agreement (the "Underwriting Agreement"), to purchase from the
Company, and the Company has agreed to sell to the Underwriters on a firm
commitment basis, the respective number of shares of Common Stock and Warrants
set forth opposite their names.
NUMBER OF
SHARES OF
COMMON NUMBER OF
UNDERWRITER STOCK WARRANTS
----------- ----- --------
National Securities Corporation
--------- ---------
Total 2,500,000 2,500,000
========= =========
The Underwriters are committed to purchase all the shares of Common Stock
and Warrants offered hereby, if any of such Securities are purchased. The
Underwriting Agreement provides that the obligations of the several Underwriters
are subject to conditions precedent specified therein.
The Company has been advised by the Representative that the Underwriters
propose initially to offer the Securities to the public at the initial public
offering prices set forth on the cover page of this Prospectus and to certain
dealers at such prices less concessions of not in excess of $_____ per Share and
$_______ per Warrant. Such dealers may reallow a concession not in excess of
$_______ per Share and $______ per Warrant to certain other dealers. After the
commencement of the Offering, the public offering price, concession and
reallowance may be changed by the Representative.
The Representative has informed the Company that it does not expect sales to
discretionary accounts by the Underwriters to exceed five percent of the
Securities offered hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make. The Company has also
agreed to pay to the Representative a nonaccountable expense allowance of
$500,000, of which $50,000 has been paid to date.
The Company has granted to the Underwriters an Over-Allotment Option
exercisable during the forty-five (45) day period from the date of this
Prospectus, to purchase up to an additional 375,000 Shares of Common Stock
and/or 375,000 additional Warrants at the public offering price per Share and
Warrant, respectively, offered hereby, less underwriting discounts. Such
Over-Allotment Option may be exercised only for the purpose of covering
over-allotments, if any, incurred in the sale of the Securities offered hereby.
To the extent such Over-Allotment Option is exercised in whole or in part, each
Underwriter will have a firm commitment, subject to certain conditions, to
purchase the number of the additional Securities proportionate to its initial
commitment.
In connection with the Offering the Company has agreed to sell to the
Representative, for nominal consideration, warrants to purchase from the Company
up to 250,000 Shares of Common Stock and/or 250,000 Warrants (the
"Representative's Warrants"). The Representative's Warrants are initially
exercisable at a price of $_______ per Share [140% of the initial public
offering price per Share] and $_______ per Warrant [140% of the initial public
offering price per Warrant] for a period of four years,
52
commencing at the beginning of the second year after their issuance and sale.
The Representative's Warrants provide for adjustment in the numbers of shares of
Common Stock and Warrants issuable upon the exercise thereof as a result of
certain subdivisions or combinations of the Common Stock.
The Company's directors and executive officers, and all holders of shares of
Common Stock, options, warrants or other securities exercisable, convertible or
exchangeable for shares of Common Stock, have agreed not to offer, sell or
otherwise dispose of any shares of Common Stock for a period of twelve (12)
months following the effective date of this Prospectus without the prior written
consent of the Representative. An appropriate legend shall be marked on the face
of certificates representing all such securities.
Upon the exercise of any Warrants more than one year after the date of this
Prospectus, which exercise was solicited by the Representative, and to the
extent not inconsistent with the guidelines of the National Association of
Securities Dealers, Inc., and the Rules and Regulations of the Commission, the
Company has agreed to pay the Representative a commission which shall not exceed
five percent (5%) of the aggregate exercise price of such Warrants in connection
with bona fide services provided by the Representative relating to any warrant
solicitation undertaken by the Representative. In addition, the individual must
designate the firm entitled to payment of such warrant solicitation fee. A
warrant solicitation fee will only be paid to the Representative or another NASD
member when such NASD member is specifically designated in writing as the
soliciting broker. However, no compensation will be paid to the Representative
in connection with the exercise of the Warrants if (a) the market price of the
Common Stock is lower than the exercise price, (b) the Warrants were held in a
discretionary account, or (c) the exercise of Warrants is not solicited by the
Representative. Unless granted an exemption by the Commission from its Rule
10b-6 under the Exchange Act, the Representative will be prohibited from
engaging in any market-making activities with regard to the Company's securities
for the period from nine (9) business days (or other such applicable periods as
Rule 10b-6 may provide) prior to any solicitation of the exercise of the
Warrants until the later of the termination of such solicitation activity or the
termination (by waiver or otherwise) of any right the representative may have to
receive a fee. As a result, the Representative may be unable to continue to
provide a market for the Common Stock or Warrants during certain periods while
the Warrants are exercisable. If the Representative has engaged in any of the
activities prohibited by Rule 10b-6 during the periods described above, the
Representative undertakes to waive unconditionally its rights to receive a
commission on the exercise of such Warrants.
The Company has agreed, at the request of the Representative, that for three
years after the date of this Prospectus, it will use its best efforts to cause
one individual designated by the Representative to be elected to the Company's
Board of Directors.
Prior to the Offering, there has been no public market for the Common Stock
or the Warrants. Consequently, the initial public offering price of the
Securities has been determined by negotiation between the Company and the
Representative and does not necessarily bear any relationship to the Company's
asset value, net worth, and other established criteria of value. Factors
considered in such negotiations, in addition to prevailing market conditions,
include the history of and prospects for the industry in which the Company
competes, an assessment of the Company's management, the prospects of the
Company, its capital structure and certain other factors as were deemed
relevant.
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Reference is made to a copy
of each such agreement, which is filed as an exhibit to the Registration
Statement. See "Additional Information."
53
LEGAL MATTERS
The validity of the issuance of the Securities offered hereby will be passed
upon for the Company by Wilson Sonsini Goodrich & Rosati, P.C., Palo Alto,
California. Orrick, Herrington & Sutcliffe, LLP, New York, New York, has acted
as counsel to the Underwriters in connection with this Offering. Mario M.
Rosati, a partner of Wilson, Sonsini, Goodrich & Rosati, P.C., is Secretary of
the Company. As of December 31, 1996 a certain investment partnership of Wilson
Sonsini Goodrich & Rosati, P.C. beneficially owned an aggregate of 6,442 shares
of the Company's Common Stock and Mario M. Rosati owned 717 shares of the
Company's Common Stock.
EXPERTS
The financial statements of Jenner Technologies, Inc. as of December 31,
1995 and 1996 and for each of the three years in the period ended December 31,
1996 and for the period from inception (December 8, 1992) to December 31, 1996
appearing in this Prospectus and Registration Statement have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein with respect thereto, and are included in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") Washington, D.C. 20549, a Registration Statement on Form S-1,
including amendments thereto, under the Securities Act, with respect to the
Securities offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules filed therewith. For further information with respect to the Company
and the Securities offered hereby, reference is made to such Registration
Statement and to the exhibits and schedules filed therewith. Statements
contained in this Prospectus regarding the contents of any contract or other
document referred to are not necessarily complete and, in each instance,
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference. The Registration Statement, including the
exhibits and schedules thereto, may be inspected without charge at the principal
office of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and
copies of all or any part thereof may be obtained from such office upon the
payment of prescribed fees. Such information is also available electronically by
means of the Commission's web site on the Internet at http:/www.sec.gov.
54
INDEX TO FINANCIAL STATEMENTS
JENNER TECHNOLOGIES, INC.
(A DEVELOPMENT STAGE COMPANY)
PAGE
----
Report of Ernst & Young LLP, Independent Auditors F-2
Balance Sheets as of December 31, 1994, 1995, and 1996 F-3
Statements of Operations for the years ended December 31, 1994,
1995 and 1996 and for the period from Inception (December 8,
1992) to December 31, 1996 F-4
Statement of Stockholders' Equity (Net Capital Deficiency)
for the period from Inception (December 8, 1992) to December 31, 1996 F-5
Statements of Cash Flows for the years ended December 31, 1994, 1995
and 1996, and for the period from Inception (December 8, 1992) to
December 31, 1996 F-7
Notes to Financial Statements December 31, 1996 F-8
F-1
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Jenner Technologies, Inc.
We have audited the accompanying balance sheets of Jenner Technologies, Inc.
(a development stage company) at December 31, 1995 and 1996, and the related
statements of operations, stockholders' equity (net capital deficiency), and
cash flows for each of the three years in the period ended December 31, 1996 and
for the period from inception (December 8, 1992) to December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Jenner Technologies, Inc. (a
development stage company) at December 31, 1995 and 1996, and the results of its
operations and its cash flows for each of the three years ended December 31,
1996 and for the period from inception (December 8, 1992) to December 31, 1996,
in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Palo Alto, California
January 14, 1997, except as for Note 7,
as to which the date is
March , 1997
- ------------
The foregoing report is in the form that will be signed upon the completion of
the restatement of the capital accounts as described in Note 7 to the financial
statements.
Palo Alto, California
February 18, 1997
F-2
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED
PRO FORMA
STOCKHOLDERS'
EQUITY (NET CAPITAL
DECEMBER 31, DEFICIENCY) AT
------------------------ DECEMBER 31,
1995 1996 1996
----------- ---------- --------------------
(NOTE 7)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 317,635 $ 1,428,510
Deferred offering costs -- 102,514
----------- -----------
Total current assets 317,635 1,531,024
Equipment 18,504 35,637
Less accumulated depreciation (9,393) (16,153)
----------- -----------
9,111 19,484
Other assets 9,625 12,884
----------- -----------
$ 336,371 $ 1,563,392
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Current liabilities:
Accounts payable $ 14,562 $ 72,351
Accrued offering costs -- 44,000
Accrued liabilities -- 97,226
Notes payable to related party 42,124 --
Accrued interest 6,410 --
----------- -----------
Total current liabilities 63,096 213,577
Long-term note payable to related party -- 3,000,000
Accrued interest due to related party -- 201,985
Commitments
Stockholders' equity (net capital deficiency):
Preferred stock, $0.001 par value, 5,000,000 shares authorized; issuable
in series (none issued and outstanding pro forma):
Series A convertible, 2,137,500 shares designated, 2,120,522 shares
issued and outstanding in 1995 and 1996 (liquidation preference of
$2,035,000 at December 31, 1996) 1,710,400 1,710,400 $ --
Series B convertible, 500,000 shares designated, 496,028 shares issued
and outstanding in 1995 and 1996 (liquidation preference of $645,000
at December 31, 1996) 600,000 600,000 --
Common stock, $0.001 par value, 30,000,000 shares authorized, 1,411,424
and 3,111,871 shares issued and outstanding in 1995 and 1996,
respectively (4,621,886 shares issued and outstanding pro forma) 11,766 619,156 4,622
Additional paid-in capital -- -- 2,924,934
Deferred compensation -- (45,000) (45,000)
Deficit accumulated during the development stage (2,048,891) (4,736,726) (4,736,726)
---------- ---------- ----------
Total stockholders' equity (net capital deficiency) 273,275 (1,852,170) $(1,852,170)
---------- ---------- ==========
$ 336,371 $ 1,563,392
=========== ===========
</TABLE>
See accompanying notes.
F-3
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(DECEMBER 8,
YEAR ENDED DECEMBER 31, 1992) TO
----------------------------------- DECEMBER 31,
1994 1995 1996 1996
--------- --------- ----------- -------------
<S> <C> <C> <C> <C>
Operating expenses:
Research and development $ 499,366 $ 698,303 $ 2,206,900 $ 3,743,195
General and administrative 228,114 195,663 339,948 901,050
--------- --------- ----------- -----------
727,480 893,966 2,546,848 4,644,245
--------- --------- ----------- -----------
Loss from operations (727,480) (893,966) (2,546,848) (4,644,245)
Interest (expense) income 22,369 17,100 (140,987) (92,481)
--------- --------- ----------- -----------
Net loss $(705,111) $(876,866) $(2,687,835) $(4,736,726)
========= ========= =========== ===========
Pro forma net loss per share $ (0.56)
===========
Shares used in calculation of pro forma
net loss per share 4,785,863
============
</TABLE>
See accompanying notes.
F-4
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY)
Period from Inception (December 8, 1992) to December 31, 1996
<TABLE>
<CAPTION>
PREFERRED STOCK
-------------------------------------- DEFICIT TOTAL
SERIES A SERIES B ACCUMULATED STOCKHOLDERS'
CONVERTIBLE CONVERTIBLE COMMON STOCK DURING THE EQUITY (NET
----------------- ---------------- ----------------- DEFFERRED DEVELOPEMENT CAPITAL
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT COMPENSATION STAGE DEFICIENCY)
------ ------ ------ ------ ------ ------ ------------ ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common
stock at $0.007 per
share to founders in
exchange for cash
and technology in
December 1992 and
June 1993 -- $ -- -- $ -- 1,334,718 $ 2,360 $ -- $ -- $ 2,360
Issuance of common
stock at $0.14 per
share in exchange
for technology and
services in April
through October 1993 -- -- -- -- 45,706 6,387 -- -- 6,387
Issuance of common
stock at $0.007 per
share upon exercise
of stock options in
May 1993 -- -- -- -- 3,877 27 -- -- 27
Issuance of Series A
convertible
preferred stock at
$0.8064 per share
and a warrant to
purchase 992,056
shares of Series A
convertible
preferred stock at
an exercise price of
$0.8064 for cash in
May through July
1993 1,128,466 910,400 -- -- -- -- -- -- 910,400
Net loss for period
from inception
(December 8, 1992)
to December 31, 1993 -- -- -- -- -- -- -- (466,914) (466,914)
--------- ------- ----- ------ --------- ----- -------- -------
Balances at December
31, 1993 1,128,466 910,400 -- -- 1,384,301 8,774 -- (466,914) 452,260
Issuance of Series A
convertible
preferred stock for
cash at $0.8064 per
share in January
1994 upon exercise
of warrant 992,056 800,000 -- -- -- -- -- -- 800,000
Issuance of common
stock to consultants
at $0.14 per share
in exchange for
services in January
1994 -- -- -- -- 20,756 2,900 -- -- 2,900
Issuance of common
stock at $0.007-
$0.14 per share upon
exercise of stock
options in May
through October 1994 -- -- -- -- 1,651 59 -- -- 59
Net loss -- -- -- -- -- -- -- (705,111) (705,111)
--------- ------- ----- ------ --------- ----- -------- -------
Balances at December
31, 1994 (carried
forward) 2,120,522 $1,710,400 -- $ -- 1,406,708 $11,733 $ -- $(1,172,025) $550,108
</TABLE>
See accompanying notes.
F-5
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (NET CAPITAL DEFICIENCY) -- (Continued)
Period from Inception (December 8, 1992) to December 31, 1996
<TABLE>
<CAPTION>
PREFERRED STOCK
-------------------------------------- DEFICIT TOTAL
SERIES A SERIES B ACCUMULATED STOCKHOLDERS'
CONVERTIBLE CONVERTIBLE COMMON STOCK DURING THE EQUITY (NET
----------------- ---------------- ----------------- DEFFERRED DEVELOPEMENT CAPITAL
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT COMPENSATION STAGE DEFICIENCY)
------ ------ ------ ------ ------ ------ ------------ ----- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December
31, 1994 (brought
forward) 2,120,522 $1,710,400 -- $ -- 1,406,708 $ 11,733 $ -- $(1,172,025) $ 550,108
Issuance of Series B
convertible
preferred stock at
$1.21 per share and
a warrant to
purchase 2,146,931
shares of common
stock at an exercise
price of $0.04 per
share for cash in
July 1995 -- -- 496,028 600,000 -- -- -- -- 600,000
Issuance of common
stock upon exercise
of stock options for
cash at $0.007 per
share in January
through April 1995 -- -- -- -- 4,716 33 -- -- 33
Net loss -- -- -- -- -- -- -- (876,866) (876,866)
--------- ---------- ------- ------- --------- ------- ----- ---------- --------
Balances at December
31, 1995 2,120,522 1,710,400 496,028 600,000 1,411,424 11,766 -- (2,048,891) 273,275
Issuance of common
stock upon exercise
of stock options for
cash at $0.007-$0.23
per share in 1996 -- -- -- -- 6,020 390 -- -- 390
Issuance of common
stock upon exercise
of a warrant at an
exercise price of
$0.07 per share for
cash in March and
May 1996 -- -- -- -- 1,001,907 70,000 -- -- 70,000
Issuance of common
stock at $0.70 per
share in exchange
for shares in
TherAtid in August
1996 (see Note 2),
including 115,420
shares to a related
party -- -- -- -- 692,520 485,000 -- -- 485,000
Deferred compensation
related to stock
option grants -- -- -- -- -- 52,000 (52,000) -- --
Amortization of
deferred
compensation -- -- -- -- -- -- 7,000 -- 7,000
Net loss -- -- -- -- -- -- -- (2,687,835) (2,687,835)
--------- ---------- ------- ------- --------- ------- ----- ---------- ---------
Balances at December
31, 1996 2,120,522 $1,710,400 496,028 $600,000 3,111,871 $619,156 $(45,000) $(4,736,726) $(1,852,170)
========= ========== ======= ======== ========= ======== ======== =========== ===========
</TABLE>
See accompanying notes.
F-6
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
INCEPTION
(DECEMBER 8,
YEAR ENDED DECEMBER 31, 1992) TO
--------------------------------- DECEMBER 31,
1994 1995 1996 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(705,111) $(876,866) $(2,687,835) $(4,736,726)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 5,414 4,110 14,160 23,553
Common stock issued for technology 2,900 -- 485,000 494,287
Changes in operating assets and liabilities:
Prepaid offering costs -- -- (102,514) (102,514)
Other assets (750) (8,744) (3,659) (13,284)
Accounts payable (4,662) 8,314 57,789 72,351
Accrued offering costs -- -- 44,000 44,000
Accrued liabilities -- -- 97,226 97,226
Accrued interest 3,882 2,528 195,575 201,985
-------- -------- ---------- ----------
Cash flows used in operating activities (698,327) (870,658) (1,900,258) (3,919,122)
-------- -------- ---------- ----------
Cash from investing activities:
Additions to property and equipment (5,490) (1,808) (17,133) (35,637)
Cash flows from financing activities:
Cash proceeds from issuance of preferred stock 800,000 600,000 -- 2,310,400
Proceeds from issuance of notes payable -- -- 3,000,000 3,063,249
Repayment of notes payable -- -- (42,124) (63,249)
Proceeds from issuance of common stock 59 33 70,390 72,869
-------- -------- --------- ---------
Cash flows provided by financing activities 800,059 600,033 3,028,266 5,383,269
------- ------- --------- ---------
Net increase (decrease) in cash 96,242 (272,433) 1,110,875 1,428,510
Cash and cash equivalents at the beginning of the period 493,826 590,068 317,635 --
------- ------- ------- ----------
Cash and cash equivalents at the end of the period $ 590,068 $ 317,635 $ 1,428,510 $1,428,510
========= ========= =========== ==========
</TABLE>
See accompanying notes.
F-7
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
Jenner Technologies, Inc. (the "Company") was incorporated in the State of
California on December 8, 1992 (see Note 7). The Company was organized to
develop immunotherapies to treat patients with cancer. Research and development
of the Company's products is primarily conducted by third parties under
contractual arrangements. The Company's activities to date have consisted
principally of raising capital, acquiring intellectual property, and contracting
for and managing research and development performed by others. Accordingly, the
Company is considered to be in the development stage, and expects to incur
increasing losses and require additional financial resources to achieve
commercialization of its products.
Through December 31, 1996, the Company had incurred cumulative losses since
inception amounting to $4.7 million, and management anticipates incurring
additional losses for the next several years. The Company is working on several
long-term development projects which involve extensive research and clinical
testing, may require many years and substantial expenditures to complete, and
which ultimately may be unsuccessful. Therefore, the Company's ability to
continue as a going concern depends on its ability to raise additional financing
to meet its business plan objectives and, ultimately, to fund its operations
from revenues. Management believes that it will be able to obtain additional
funding through the issuance of debt or equity securities to existing and new
investors, including the Company's proposed initial public offering or from
strategic collaborations with other corporations. If adequate financing is not
available, the Company may be required to delay, scale back or eliminate certain
of its research and development programs, to relinquish rights to certain of its
technologies, product candidates, to forego desired opportunities, or to license
third parties to commercialize products or technologies that the Company would
otherwise seek to develop itself.
ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements.
Actual results could differ from these estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
The Company invests its excess cash primarily in deposits with banks and
short-term securities. These securities consist of U.S. Treasury bills that
mature or are redeemable within 90 days. The Company has not recognized any
material gains or losses on its cash equivalents.
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such determination as of each balance sheet
date. Through December 31, 1996, the Company has classified its entire
investment portfolio as available-for-sale. Available-for- sale securities are
carried at amortized cost which approximates fair value at December 31, 1996.
The estimated fair value amounts have been determined by the Company using
available market information.
F-8
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
The amortized cost of debt securities is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included
in interest income. Realized gains and losses and declines in value judged to be
other-than-temporary are included in other income or expense. The cost of
securities sold is based on the specific identification method. Interest and
dividends are included in interest income.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the respective
assets, generally three to five years.
STOCK-BASED COMPENSATION
As permitted by Statement of Financial Accounting Standards No. 123,
"Accounting for Stock-Based Compensation" ("SFAS 123"), the Company has elected
to account for stock options granted to employees using the intrinsic value
method and, accordingly, does not recognize compensation expense for options
granted to employees at fair value.
NET LOSS PER SHARE
Except as noted below, historical net loss per share is computed using the
weighted average number of common shares outstanding. Common equivalent shares
from stock options and convertible preferred stock are excluded from the
computation as their effect is antidilutive, except that, pursuant to the
Securities and Exchange Commission Staff Accounting Bulletins, common and common
equivalent shares issued during the period beginning 12 months prior to the
initial filing of the proposed public offering at prices substantially below the
assumed public offering price have been included in the calculation as if they
were outstanding for all periods presented (using the treasury stock method and
the assumed public offering price for stock options).
Historical net loss per share information is as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Net loss per share $ (0.22) $ (0.27) $ (0.82)
========== =========== ===========
Shares used in computing net loss per share 3,263,447 3,275,374 3,275,848
========= ========= =========
</TABLE>
Pro forma net loss per share has been computed as described above and also
gives effect to the conversion of convertible preferred shares that will
automatically convert upon completion of the Company's initial public offering
(using the if-converted method) from the original date of issuance.
2. THERATID TRANSACTION
During 1996, the Company formed a subsidiary, TherAtid Incorporated
("TherAtid") for the purpose of entering into a license agreement with Novartis
Corporation ("Novartis," formerly Ciba-Geigy Limited) (see Note 3). The Company
contributed approximately $1,000,000 to TherAtid in exchange for 1,818,180
shares of Series A preferred stock and a warrant to purchase 981,820 additional
shares of Series A preferred stock at an exercise price of $2.03. TherAtid also
issued 692,520 shares of common stock to others, including 115,420 shares to an
individual who is a member of the Company's Board of Directors and the principal
stockholder of the Company, for nominal consideration in connection with their
assistance in securing the Novartis license.
F-9
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
2. THERATID TRANSACTION -- (CONTINUED)
In August 1996, TherAtid was merged with and into the Company. As a result
of the merger, the Series A preferred stock and the warrant issued to the
Company were canceled, and the outstanding shares of TherAtid common stock were
exchanged for an equal number of shares of the Company's common stock. Prior to
the merger transaction, TherAtid had no operations. In connection with this
transaction, the Company recognized $830,000 of research and development expense
which consists primarily of the fair value of common stock issued to complete
the merger and the initial license payment by TherAtid to Novartis under the
license agreement.
3. RESEARCH LICENSES AND AGREEMENTS
ELI LILLY AND COMPANY
The Company has a worldwide exclusive license with Eli Lilly & Company ("Eli
Lilly") for the rights from Eli Lilly to use or sublicense certain technology
and make, use or sell certain licensed products relating to the patent rights
for the use of the KSA tumor associated antigen (the antigen associated with the
Company's OncoVax-CL product candidate). The agreement calls for the Company to
make certain benchmark payments to Eli Lilly if certain milestones are met. No
benchmark payments were made or were due through 1996. If commercialization is
achieved, the Company will be required to pay Eli Lilly a royalty based on net
sales of the licensed products.
NOVARTIS
The Company is party to a license agreement with Novartis. Under the
agreement, Novartis granted the Company an exclusive worldwide license to
certain patent rights and proprietary know-how for the use of various macrophage
activators for the therapy of cancer and related diseases. In consideration for
this technology, the Company paid Novartis an up-front license fee and is
required to pay annual maintenance fees until certain conditions of Phase III
clinical trials relating to the technology are met. The Company is also required
to make benchmark payments if certain milestones are met. As of December 31,
1996, no milestones had been met. Upon commercialization of any licensed product
developed, the Company will pay royalties based on net sales.
OTHER RESEARCH AGREEMENTS
The Company has entered into several other agreements with universities and
other research organizations. Such agreements generally require the Company to
make research support payments and benchmark payments upon the achievement of
certain milestones. The Company generally owns or has the option to acquire an
exclusive license to the results of the research and must make royalty payments
on the net sales of any products developed. Such agreements are generally
cancelable at the option of the Company upon notice of up to 30 to 60 days.
Total expenses under such agreements amounted to $50,500, $114,000, $442,000 and
$606,500 in 1994, 1995, 1996 and from inception, respectively.
4. NOTES PAYABLE TO RELATED PARTIES
From March through May 1996, the Company received $3,000,000 from a
preferred stockholder in exchange for a promissory note bearing interest at 10%
per annum and the right to immediately exercise a warrant held by the
stockholder (see Note 5). No accounting value was ascribed to the value of the
warrant acceleration, as such amount was determined to be not material. All
principal and accrued interest under the Note is due and payable on May 6, 1999.
The Note is unsecured.
F-10
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
5. STOCKHOLDERS' EQUITY
STOCK SPLIT
On July 10, 1996, the Company filed restated Articles of Incorporation in
California to reduce the authorized shares of preferred and common stock to
30,000,000 and 5,000,000, respectively, and to effect a one-for-4.032 reverse
stock split of all outstanding shares of common stock, Series A and Series B
preferred stock, and common stock options and warrants. All common share and
preferred stock and per share data in the accompanying financial statements has
been adjusted to give effect to the reverse stock split.
COMMON STOCK
After liquidation preference distributions to Series A and Series B
preferred stockholders have been paid, the remaining assets of the Company
available for distribution to stockholders shall be distributed among the
holders of Series A preferred stock, Series B preferred stock and common stock
pro rata, based on the number of shares of common stock held (or deemed to be
held, on an as-converted basis for preferred shares).
In connection with the Company's merger with TherAtid, the Company assumed
the repurchase option related to 289,017 shares of common stock owned by a
director. One twenty-fourth of the shares subject to repurchase were released
from the repurchase option on April 30, 1996 and an additional one twenty-fourth
of the total number of shares are released from the repurchase option at the end
of each full month thereafter, based upon the director's continued relationship
with the Company. As of December 31, 1996, 180,636 shares remain subject to the
repurchase option at an aggregate option exercise price of $541.
CONVERTIBLE PREFERRED STOCK
Each share of Series A and Series B convertible preferred stock ("preferred
stock") is entitled to voting rights equivalent to the number of shares of
common stock into which each share can be converted and is convertible, at the
option of the holder, into one share of common stock (see Note 7). Conversion is
automatic upon the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, which results
in a price per share of not less than $13.97 and aggregate offering proceeds of
not less than $7,500,000 or upon the approval of more than 80% of all
outstanding preferred stock voting together as a single class. The Company has
reserved sufficient shares of common stock for issuance upon conversion of the
outstanding Series A and Series B preferred stock.
The Series A preferred shares are subject to liquidation preferences of
$0.8064 per share, plus an additional amount equal to $0.0605 per share
multiplied by the number of years the share was held prior to the effective date
of liquidation, plus all declared but unpaid dividends. The Series B preferred
shares are subject to liquidation preferences of $1.2096 per share plus an
additional amount equal to $0.0907 per share multiplied by the number of years
the share was held prior to the effective date of liquidation. Series A and
Series B preferred stockholders are entitled to noncumulative dividends at rates
of $0.0605 and $0.0907 per share, respectively, per annum, if declared by the
Board of Directors and in preference to common stock dividends. No dividends
have been declared or paid by the Company.
STOCK OPTIONS
During 1993, nonqualified stock options for 28,629 shares of common stock
were granted to consultants at an exercise price of $0.007 per share. At
December 31, 1996, 14,314 of these options remain outstanding and are
exercisable. The 1993 Stock Plan (the "Plan") was adopted in February 1993.
Stock options granted under the Plan may be either incentive stock options or
nonstatutory stock
F-11
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
5. STOCKHOLDERS' EQUITY -- (CONTINUED)
options. Incentive stock options may be granted to employees with exercise
prices of no less than the fair value and nonstatutory options may be granted to
employees or consultants at exercise prices of no less than 85% of the fair
value of the common stock on the grant date, as determined by the Board of
Directors. If, at the time the Company grants an option, the optionee directly
or by attribution owns stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, the option price shall be
at least 110% of the fair value and shall not be exercisable more than five
years after the date of grant. Options may be granted with different vesting
terms from time to time. Except as noted above, options expire no more than 10
years after the date of grant or earlier if employment is terminated.
During 1996, the Company adopted SFAS 123. The effect of applying the
minimum value method of SFAS 123 to options granted to employees in 1995 and
1996 did not result in pro forma net loss and loss per share amounts that are
materially different from historical amounts reported. Therefore, such pro forma
information is not presented herein. SFAS 123 is applicable only to options
granted subsequent to December 31, 1994, and should the Company successfully
complete the offering, it will no longer be able to utilize the minimum value
method, therefore, the pro forma effect determined in 1996 may not be
representative of the pro forma effect to be reported in future years. The
minimum value method was applied using the following weighted average
assumptions for 1995 and 1996, respectively: risk-free interest rates of 6.09%
and 6.53%; an expected option life of six years; and no annual dividends.
A summary of activity under the Plan for the years ended December 31
follows:
<TABLE>
<CAPTION>
1994 1995 1996
------------------- ------------------ ------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Outstanding at January 1 11,452 $0.14 17,463 $0.14 160,592 $ 0.20
Granted 7,443 $0.14 143,129 $0.21 111,076 $ 0.23
Exercised (359) $0.14 -- $ -- (1,591) $ 0.22
Forfeited (1,073) $0.14 -- $ -- -- $ --
------ ------- ------- ------
Outstanding at December 31 17,463 $0.14 160,592 $0.20 270,077 $ 0.19
====== ======= ======= ======
</TABLE>
Exercise prices of all options outstanding as of December 31, 1996 ranged
from $0.007 to $0.24 and 117,441 of such options were vested with a weighted
average exercise price of $0.18. As of December 31, 1996, the remaining
contractual life of outstanding options ranged from 6.2 years to 9.6 years with
a weighted average contractual life of 8.8 years.
In connection with grants of stock options to employees and directors during
1996, the Company recorded $52,000 for the difference between the deemed fair
value of the Company's common stock for financial statement presentation
purposes and the exercise price at the date of grant. Of such amount, $7,000
related to options that vested prior to December 31, 1996 and, accordingly, was
expensed in the year then ended. The remaining $45,000 is presented as a
component of stockholders' equity at December 31, 1996 and will be amortized
over the vesting period of the underlying options. The weighted average fair
value of options granted during 1996 with an exercise price below the deemed
fair value of the Company's common stock for financial statement presentation
purposes on the date of grant was $0.23.
F-12
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
5. STOCKHOLDERS' EQUITY -- (CONTINUED)
WARRANT
In connection with the sale of Series B preferred stock in 1995, the Company
issued a warrant to purchase 2,146,931 shares of common stock at an exercise
price of $0.04 per share to the Series B investor. In 1996, the stockholder
exercised a portion of the warrant to purchase 715,649 shares of common stock.
In May 1996, the Company entered into an agreement with the stockholder to
provide the stockholder with the right to immediately exercise the warrant as to
286,258 shares of the Company's common stock in exchange for terminating the
warrant with respect to all remaining shares. Under this agreement, the
stockholder exercised his right to purchase the 286,258 shares.
RESERVED SHARES
As of December 31, 1996, the Company has reserved shares of common stock for
future issuance as follows:
<TABLE>
<CAPTION>
<S> <C>
Stock option plan:
Outstanding options 270,077
Reserved for future grants (see Note 7) 85,809
Convertible preferred stock:
Issued and outstanding 1,510,015
---------
1,865,901
=========
</TABLE>
6. INCOME TAXES
The Company uses the liability method to account for income taxes as
required by Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." Under this method, deferred tax assets and liabilities are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using enacted tax rules and laws that
will be in effect when the differences are expected to reverse.
Significant components of the Company's deferred tax assets and liabilities
for federal and state income taxes as of December 31 are as follows:
<TABLE>
<CAPTION>
1995 1996
--------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 700,000 $ 1,400,000
Capitalized license agreement -- 300,000
Research credit carryforwards -- 100,000
Capitalized research and development -- 100,000
Other, net 100,000 100,000
------- -------
Net deferred tax assets 800,000 2,000,000
Valuation allowance (800,000) (2,000,000)
-------- ----------
Net deferred tax assets $ -- $ --
======== ==========
</TABLE>
The net valuation allowance increased by $130,000, $670,000 and $1,200,000
in 1994, 1995 and 1996, respectively.
F-13
JENNER TECHNOLOGIES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1996
6. INCOME TAXES -- (CONTINUED)
As of December 31, 1995 and 1996, the Company had federal net operating loss
carryforwards of approximately $1,800,000 and $3,700,000, respectively. As of
December 31, 1995 and 1996, the Company also had federal research and
development tax credit carryforwards of approximately $22,000 and $40,000,
respectively. The net operating loss and credit carryforwards will expire at
various dates beginning in 2008 and 2011, if not utilized.
Utilization of the net operating losses and credits may be subject to a
substantial annual limitation due to the "change in ownership" provisions of the
Internal Revenue Code of 1986 and similar state provisions. The annual
limitation may result in the expiration of net operating losses and credits
before utilization.
7. PROPOSED INITIAL PUBLIC OFFERING AND RELATED MATTERS
In January 1997, the Board of Directors authorized the reincorporation of
the Company in the State of Delaware and a one-for-1.7328 reverse stock split of
all outstanding shares of common stock and stock options. The reincorporation is
expected to occur in March 1997. The conversion ratio of all outstanding shares
of convertible preferred stock were adjusted such that each preferred share
converts into 0.577 shares of common stock. All common share and per share data
in the accompanying financial statements has been adjusted retroactively to give
effect to the reverse stock split.
In January 1997, the Board of Directors authorized management of the Company
to file a Registration Statement with the Securities and Exchange Commission
offering shares of its common stock and warrants to the public. If the offering
is consummated under the terms presently anticipated, all of the preferred stock
outstanding will automatically convert into 1,510,015 shares of common stock
upon the closing of the offering. Unaudited pro forma stockholders' equity (Net
Capital deficiency) as of December 31, 1996 as adjusted for the assumed
conversion of the preferred stock is set forth in the accompanying balance
sheet.
In January 1997, the Board of Directors approved the Company's 1997 Stock
Plan (the "1997 Plan") and initially reserved 350,000 shares for issuance
thereunder. The 1997 Plan provides for the grant of incentive stock options and
stock purchase rights to employees and employee directors and nonstatutory stock
options and stock purchase rights to employees, directors and consultants.
F-14
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO
MAKE SUCH OFFER OR SOLICITATION.
----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary 3
Risk Factors 7
Use of Proceeds 18
Dividend Policy 18
Capitalization 19
Dilution 20
Selected Financial Data 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 22
Business 24
Management 38
Certain Transactions 44
Principal Stockholders 45
Description of Securities 47
Shares Eligible for Future Sale 50
Underwriting 52
Legal Matters 54
Experts 54
Additional Information 54
Index to Financial Statements F-1
</TABLE>
UNTIL _________, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THE DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS WHO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
================================================================================
================================================================================
[LOGO]
JENNER TECHNOLOGIES, INC.
2,500,000 SHARES OF COMMON STOCK
AND
2,500,000 REDEEMABLE COMMON
STOCK PURCHASE WARRANTS
----------
PROSPECTUS
----------
NATIONAL SECURITIES
CORPORATION
, 1997
================================================================================
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the Company in connection
with the sale of the Securities being registered. All amounts are estimates
except the SEC registration fee, the NASD filing fee and the American Stock
Exchange application fee.
<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
-------
<S> <C>
SEC Registration Fee $ 18,522
NASD Filing Fee 6,612
American Stock Exchange Application Fee 33,000
Blue Sky Qualification Fees and Expenses 15,000
Printing and Engraving Expenses 120,000
Legal Fees and Expenses 250,000
Accounting Fees and Expenses 130,000
Transfer Agent and Registrar Fees 10,000
Miscellaneous 16,866
--------
Total $600,000
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law allows for the
indemnification of officers, directors and any corporate agents in the terms
sufficiently broad to indemnify such persons under certain circumstances for
liabilities (including reimbursement for expenses incurred) arising under the
Securities Act of 1933, as amended (the "Act"). The Registrant's Restated
Certificate of Incorporation to be filed upon the closing of the offering to
which this Registration Statement relates (Exhibit 3.3 hereto) and the
Registrant's Bylaws (Exhibit 3.5 hereto) provides for indemnification of the
Registrant's directors, officers, employees and other agents to the extent and
under the circumstances permitted by the Delaware General Corporation Law. The
Registrant also intends to enter into agreements with its directors and
executive officers that will require the Registrant among other things to
indemnify them against certain liabilities that may arise by reason of their
status or service as directors to the fullest extent not prohibited by Delaware
law.
The Underwriting Agreement provides for indemnification by the Underwriters
of the Registrant, its directors and officers, and by the Registrant of the
Underwriters, for certain liabilities, including liabilities arising under the
Act, and affords certain rights of contribution with respect thereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Since January 1994, the Registrant has sold and issued the
following securities:
1. On January 18, 1994, the Company issued and sold 992,056 shares of
Series A Preferred Stock to a director of the Company upon the exercise of a
warrant originally issued May 7, 1993 at an exercise price of $0.8060 per
share.
2. From April 18, 1994 to January 31, 1997, the Company granted stock
options under the Company's 1993 Incentive Stock Plan to purchase an
aggregate of 355,370 shares of Common Stock to 16 employees and consultants
at exercise prices ranging from $0.14 to $3.00 per share.
3. On April 29, 1994, the Company issued an aggregate of 20,756 shares of
Common Stock to two individuals and one entity at an issuance price of $0.14
per share in connection with a Settlement Agreement dated April 29, 1994.
II-1
4. From June 1, 1994 to March 5, 1996, the Company issued and sold 7,158
shares of Common Stock to a director of the Company upon the exercise of
non-plan stock options at an exercise price of $0.00693 per share.
5. On October 31, 1994, the Company issued and sold 359 shares of Common
Stock to one employee upon the exercise of stock options at an exercise
price of $0.14 per share pursuant to the Company's 1993 Incentive Stock
Plan.
6. From January 1, 1995 to November 30, 1996, the Company issued and sold
7,157 shares of Common Stock to one individual upon the exercise of non-plan
stock options at an exercise price of $0.00693 per share.
7. On July 25, 1995, the Company issued and sold 496,028 shares of Series
B Preferred Stock and a warrant exercisable for 2,146,931 shares of Common
Stock to a director of the Company for an aggregate purchase price of
$600,100.00. On March 18, 1996, the warrant was exercised for 715,649 shares
of Common Stock for an aggregate purchase price of $50,000. On May 6, 1996,
the warrant was exercised for 286,258 shares of Common Stock for an
aggregate purchase price of $20,000, and was then canceled pursuant to a
Warrant Amendment, Exercise and Termination Agreement.
8. On August 8, 1996, the Company issued an aggregate of 692,520 shares
of Common Stock to two directors of the Company in connection with the
acquisition of TherAtid Incorporated by the Company.
9. From October 31, 1996 to December 31, 1996, the Company issued and
sold 1,591 shares of Common Stock to a director of the Company upon the
exercise of stock options at an exercise price of $0.23 per share, pursuant
to the Company's 1993 Incentive Stock Plan.
The sales of the above securities were deemed to be exempt from registration
under the Securities Act in reliance on Section 4(2) of the Securities Act, or
Regulation D promulgated thereunder, or Rule 701 promulgated under Section 3(b)
of the Securities Act as transactions by an issuer not involving a public
offering or transactions pursuant to compensatory benefit plans and contracts
relating to compensation as provided under such Rule 701. The recipients of
securities in each such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in connection
with any distribution thereof and appropriate legends were affixed to the share
certificates and warrants issued in such transactions. All recipients had
adequate access, through their relationships with the Company, to information
about the Registrant.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
EXHIBIT
NO. TITLE
--- -----
1.1 -- Form of Underwriting Agreement.
3.1 -- Amended and Restated Articles of Incorporation as currently in effect.
3.2 -- Form of Restated Certificate of Incorporation to be filed after the
closing of this Offering made under this Registration Statement.
3.3 -- Bylaws of the Registrant as currently in effect.
3.4 -- Form of Bylaws of the Registrant to be effective upon the closing of
this Offering made under this Registration Statement.
4.1* -- Specimen Common Stock Certificate.
4.2* -- Specimen Warrant Certificate.
II-2
EXHIBIT
NO. TITLE
--- -----
4.3* -- Form of Representative's Warrant Agreement between the Registrant and
the Representative, including form of Representative's Warrant.
4.4* -- Form of Warrant Agreement between the Registrant and Continental Stock
Transfer and Trust Company, including form of Warrant.
5.1* -- Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.
10.1 -- Form of Indemnification Agreement for directors and officers.
10.2 -- 1993 Incentive Stock Plan.
10.3 -- 1997 Incentive Stock Plan and form of agreement thereunder.
10.4 -- Note Purchase Agreement between the Registrant and Hayden Leason
dated May 6, 1996, and Promissory Note issued pursuant thereto.
10.5** -- License Agreement between the Registrant(as successor) and Ciba-Geigy,
Ltd. dated April 4, 1996.
10.6** -- License Agreement between the Registrant and Eli Lilly and Company
dated June 15, 1994.
10.7** -- License Agreement between the Registrant and Research Corporation
Technologies, Inc., dated June 1, 1994.
10.8** -- License Agreement between the Registrant and Walter Reed Army
Institute of Research dated March 29, 1996.
10.9** -- Cooperative Research and Development Agreement between the Registrant
and Walter Reed Army Institute of Research dated September 30, 1993
and revised March 7, 1995.
10.10 -- Employment agreement between the Registrant and Anthony E. Maida, III.
dated November 20, 1994.
10.11 -- Employment Agreement between the Registrant and Dr. Lynn E. Spitler
dated November 20, 1994.
10.12 -- Employment Agreement between the Registrant and Thomas P.H. Twaddell,
M.D. dated January 6, 1997.
10.13 -- First Amended and Restated Investors Rights Agreement dated July 25,
1995.
10.14 -- Lease agreement between the Registrant and Bay Business Centers, Inc.
dated August 13, 1996.
11.1 -- Statement of computation of net loss per share.
23.1 -- Consent of Wilson Sonsini Goodrich & Rosati, P.C. (See Exhibit 5.1).
23.2 -- Consent of Ernst & Young LLP, Independent Auditors
25.1 -- Power of Attorney (See page II-5).
27.1 -- Financial Data Schedule.
- ---------
* To be filed by amendment.
** Confidential treatment requested.
(b) Financial Statements
(1) Financial Statements
The financial statements filed as part of this Registration Statement are
listed in the Index to Financial Statements of the Company on Page F-1.
II-3
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes that:
(a) It will provide to the Underwriters at the closing as specified in
the Underwriting Agreement certificates in such denominations and registered
in such names as required by the Underwriters to permit prompt delivery to
each purchaser.
(b) Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
(c) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(d) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
this Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar volume
of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide Offering thereof;
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-4
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE ACT, THE REGISTRANT HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED, IN THE CITY OF SAN RAMON, STATE OF CALIFORNIA, ON FEBRUARY 14,
1997.
JENNER TECHNOLOGIES, INC.
By: /s/ ANTHONY E. MAIDA, III
-------------------------
ANTHONY E. MAIDA, III,
CHIEF EXECUTIVE OFFICER
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints, Anthony E. Maida, III and Lynn E. Spitler, M.D.,
and each of them acting individually, as his attorney-in-fact, each with the
power of substitution, for him in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement,
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that such attorneys-in-fact and agents or any of them, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.
PURSUANT TO THE REQUIREMENTS OF THE ACT, THIS REGISTRATION STATEMENT HAS
BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ANTHONY E. MAIDA, III Chief Executive Officer and Director
- ------------------------------- (Principal Executive Officer) February 14, 1997
ANTHONY E. MAIDA, III
/s/ ANTHONY E. MAIDA, III Chief Financial Officer (Principal
- ------------------------------- Financial and Accounting Officer) February 14, 1997
ANTHONY E. MAIDA, III
/s/ LYNN E. SPITLER President, Chief Scientific
- ------------------------------- Officer and Director February 14, 1997
LYNN E. SPITLER, M.D.
/s/ JACK BOWMAN
- -------------------------------
JACK BOWMAN Director February 14, 1997
/s/ LOWELL M. DICKE
- -------------------------------
LOWELL M. DICKE Director February 14, 1997
/s/ ISAIAH J. FIDLER
- -------------------------------
ISAIAH J. FIDLER, D.V.M., PH.D. Director February 14, 1997
/s/ ROBERT A. FILDES
- -------------------------------
ROBERT A. FILDES, PH.D. Director February 14, 1997
/s/ HERBERT GROSSMAN
- -------------------------------
HERBERT GROSSMAN Director February 14, 1997
/s/ HAYDEN LEASON
- -------------------------------
HAYDEN LEASON Director February 14, 1997
</TABLE>
II-5
EXHIBIT 1.1
[Form of Underwriting Agreement - Subject to Additional Review]
2,500,000 SHARES OF COMMON STOCK
AND 2,500,000 REDEEMABLE WARRANTS
JENNER TECHNOLOGIES
UNDERWRITING AGREEMENT
New York, New York
, 1997
NATIONAL SECURITIES CORPORATION
As Representative of the
Several Underwriters listed on Schedule A hereto
1001 Fourth Avenue
Suite 2200
Seattle, Washington 98154
Ladies and Gentlemen:
Jenner Technologies, a California corporation (the "Company"), confirms
its agreement with National Securities Corporation ("National") and each of the
underwriters named in Schedule A hereto (collectively, the "Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 11), for whom National is acting as representative (in such capacity,
National shall hereinafter be referred to as "you" or the "Representative"),
with respect to the sale by the Company and the purchase by the Underwriters,
acting severally and not jointly, of the respective numbers of shares ("Shares")
of the Company's common stock, $.001 par value per share ("Common Stock"), and
redeemable common stock purchase warrants (the "Redeemable Warrants"), each to
purchase one share of Common Stock, set forth in Schedule A hereto. The
aggregate 2,500,000 Shares and 2,500,000 Redeemable Warrants will be separately
tradeable upon issuance and are hereinafter referred to as the "Firm
Securities." Each Redeemable Warrant is exercisable commencing on
____________, 1998 [12 months from the date of this Agreement] until
____________, 2002 [60 months from the date of this Agreement], unless
previously redeemed by the Company, at an initial exercise price of $_______
[140% of the initial public offering price] per share of Common Stock. The
Redeemable Warrants may be redeemed by the Company at a redemption price of
$.10 per Redeemable Warrant at any time after _____________, 1998 [18 months
from the date of this Agreement] on thirty (30) days' prior written notice,
provided that the closing bid price of the Common Stock equals or exceeds
$_______________ [160% of the initial public offering price of Common Stock]
per share, for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to the notice
of redemption, all in accordance with the terms and conditions of the Warrant
Agreement (herein defined).
Upon your request, as provided in Section 2(b) of this Agreement, the
Company shall also issue and sell to the Underwriters, acting severally and not
jointly, up to an additional 375,000 shares of Common Stock and/or 375,000
Redeemable Warrants for the purpose of covering over-allotments, if any. Such
375,000 shares of Common Stock and 375,000 Redeemable Warrants are hereinafter
collectively to as the "Option Securities." The Company also proposes to issue
and sell to you warrants (the "Representative's Warrants") pursuant to the
Representative's Warrant Agreement (the "Representative's Warrant Agreement")
for the purchase of an additional 250,000 shares of Common Stock and/or 250,000
Redeemable Warrants. The shares of Common Stock and Redeemable Warrants issuable
upon exercise of the Representative's Warrants are hereinafter referred to as
the "Representative's Securities." The Firm Securities, the Option Securities,
the Representative's Warrants and the Representative's Securities (collectively,
hereinafter referred to as the "Securities") are more fully described in the
Registration Statement and the Prospectus referred to below.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, each of the Underwriters as of the date
hereof, and as of the Closing Date (as hereinafter defined) and each Option
Closing Date (as hereinafter defined), if any, as follows:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and an
amendment or amendments thereto, on Form S-1 (No. 333-_________), including any
related preliminary prospectus ("Preliminary Prospectus"), for the registration
of the Firm Securities, the Option Securities and the Representative's
Securities under the Securities Act of 1933, as amended (the "Act"), which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (the "Regulations") of the Commission under the Act. The Company
will promptly file a further amendment to said registration statement in the
form heretofore delivered to the Underwriters and will not file any other
amendment thereto to which the Underwriters shall have objected in writing after
having been furnished with a copy thereof. Except as the context may otherwise
require, such registration statement, as amended, on file with the Commission at
the time the registration statement becomes effective (including the prospectus,
financial statements, schedules, exhibits and all other documents filed as a
part thereof or incorporated therein (including, but not limited to those
documents or information incorporated by reference therein) and all information
deemed
2
to be a part thereof as of such time pursuant to paragraph (b) of Rule 430(A) of
the Regulations), is hereinafter called the "Registration Statement", and the
form of prospectus in the form first filed with the Commission pursuant to Rule
424(b) of the Regulations, is hereinafter called the "Prospectus." For purposes
hereof, "Rules and Regulations" mean the rules and regulations adopted by the
Commission under either the Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable.
(b) Neither the Commission nor any state regulatory authority has
issued any order preventing or suspending the use of any Preliminary Prospectus,
the Registration Statement or Prospectus or any part of any thereof and no
proceedings for a stop order suspending the effectiveness of the Registration
Statement or any of the Company's securities have been instituted or are pending
or threatened. Each of the Preliminary Prospectus, the Registration Statement
and Prospectus at the time of filing thereof conformed with the requirements of
the Act and the Rules and Regulations, and none of the Preliminary Prospectus,
the Registration Statement or Prospectus at the time of filing thereof contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
that this representation and warranty does not apply to statements made in
reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by or on behalf of the Underwriters
expressly for use in such Preliminary Prospectus, Registration Statement or
Prospectus or any amendment thereof or supplement thereto.
(c) When the Registration Statement becomes effective and at all
times subsequent thereto up to the Closing Date (as defined herein) and each
Option Closing Date (as defined herein), if any, and during such longer period
as the Prospectus may be required to be delivered in connection with sales by
the Underwriters or a dealer, the Registration Statement and the Prospectus will
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and will conform to the requirements
of the Act and the Rules and Regulations; neither the Registration Statement nor
the Prospectus, nor any amendment or supplement thereto, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, provided, however,
that this representation and warranty does not apply to statements made or
statements omitted in reliance upon and in strict conformity with information
furnished to the Company in writing by or on behalf of any Underwriter expressly
for use in the Preliminary Prospectus, Registration Statement or Prospectus or
any amendment thereof or supplement thereto.
(d) Each of the Company, the Company's wholly-owned subsidiaries,
_____________________ (such subsidiaries being the only subsidiaries that are
"significant subsidiaries" (as defined in the Rules and Regulations) of the
Company, are hereinafter referred to individually as a "Subsidiary" and
collectively as the "Subsidiaries"), has been duly organized and is validly
existing as a corporation in good standing under the laws of the state of its
incorporation. Except as set forth in the Prospectus, none of the Company nor
the Subsidiaries owns an interest in any corporation, partnership, trust, joint
venture or other business entity. Each of the Company and the Subsidiaries is
duly qualified and licensed and in good standing
3
as a foreign corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations requires such qualification
or licensing. The Company owns, directly or indirectly, one hundred percent
(100%) of the outstanding capital stock of each of the Subsidiaries, and all of
such shares have been validly issued, are fully paid and non-assessable, were
not issued in violation of any preemptive rights, and, except as set forth in
the Prospectus, are owned free and clear of any liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions or
equities of any kind whatsoever. Each of the Company and the Subsidiaries has
all requisite power and authority (corporate and other), and has obtained any
and all necessary authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory officials and
bodies (including, without limitation, those having jurisdiction over
environmental or similar matters), to own or lease its properties and conduct
its business as described in the Prospectus; each of the Company and the
Subsidiaries is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all applicable federal, state, local and foreign laws, rules and
regulations; and none of the Company nor the Subsidiaries has received any
notice of proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise, or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially and adversely affect the condition,
financial or otherwise, or the earnings, position, prospects, value, operation,
properties, business or results of operations of the Company or the
Subsidiaries. The disclosures in the Registration Statement concerning the
effects of federal, state, local, and foreign laws, rules and regulations on the
Company's and the Subsidiaries' businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary to make the statements
contained therein not misleading in light of the circumstances under which they
were made.
(e) The Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus under "Capitalization" and
"Description of Securities" and will have the adjusted capitalization set forth
therein on the Closing Date and each Option Closing Date, if any, based upon the
assumptions set forth therein, and the Company is not a party to or bound by any
instrument, agreement or other arrangement providing for it to issue any capital
stock, rights, warrants, options or other securities, except for this Agreement,
the Warrant Agreement, the Representative's Warrant Agreement and as described
in the Prospectus. The Securities and all other securities issued or issuable by
the Company conform or, when issued and paid for, will conform, in all respects
to all statements with respect thereto contained in the Registration Statement
and the Prospectus. All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable
and the holders thereof have no rights of rescission with respect thereto, and
are not subject to personal liability by reason of being such holders; and none
of such securities were issued in violation of the preemptive rights of any
holders of any security of the Company or similar contractual rights granted by
the Company. The Securities are not and will not be subject to any preemptive or
other similar rights of any stockholder, have been duly authorized and, when
issued, paid for and delivered in accordance with the terms hereof, will be
validly issued, fully paid and non-assessable and will conform to the
description thereof contained in the Prospectus; the holders thereof will not be
subject to any liability solely as such holders; all corporate action required
4
to be taken for the authorization, issue and sale of the Securities has been
duly and validly taken; and the certificates representing the Securities will be
in due and proper form. Upon the issuance and delivery pursuant to the terms
hereof of the Securities to be sold by the Company hereunder, the Underwriters
or the Representative, as the case may be, will acquire good and marketable
title to such Securities free and clear of any lien, charge, claim, encumbrance,
pledge, security interest, defect or other restriction or equity of any kind
whatsoever.
(f) The consolidated financial statements of the Company and the
Subsidiaries, together with the related notes and schedules thereto, included in
the Registration Statement, each Preliminary Prospectus and the Prospectus
fairly present the financial position, income, changes in cash flow, changes in
stockholders' equity and the results of operations of the Company and the
Subsidiaries at the respective dates and for the respective periods to which
they apply and such financial statements have been prepared in conformity with
generally accepted accounting principles and the Rules and Regulations,
consistently applied throughout the periods involved and such financial
statements as are audited have been examined by Ernst & Young, LLP, who are
independent certified public accountants within the meaning of the Act and the
Rules and Regulations, as indicated in their reports filed therewith. There has
been no adverse change or development involving a prospective adverse change in
the condition, financial or otherwise, or in the earnings, position, prospects,
value, operation, properties, business, or results of operations of the Company
and the Subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, since the date of the financial statements included in the
Registration Statement and the Prospectus and the outstanding debt, the
property, both tangible and intangible, and the business of the Company and the
Subsidiaries, conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus. Financial
information (including, without limitation, any pro forma financial information)
set forth in the Prospectus under the headings "Summary Financial Information,"
"Selected Consolidated Financial Data," "Capitalization," and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
fairly present, on the basis stated in the Prospectus, the information set forth
therein, and have been derived from or compiled on a basis consistent with that
of the audited financial statements included in the Prospectus; and, in the case
of pro forma financial information, if any, the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The amounts shown as accrued for current and deferred income and other
taxes in such financial statements are sufficient for the payment of all accrued
and unpaid federal, state, local and foreign income taxes, interest, penalties,
assessments or deficiencies applicable to the Company and the Subsidiaries,
whether disputed or not, for the applicable period then ended and periods prior
thereto; adequate allowance for doubtful accounts has been provided for
unindemnified losses due to the operations of the Company and the Subsidiaries;
and the statements of income do not contain any items of special or nonrecurring
income not earned in the ordinary course of business, except as specified in the
notes thereto.
(g) Each of the Company and the Subsidiaries (i) has paid all
federal, state, local, and foreign taxes for which it is liable, including, but
not limited to, withholding taxes and amounts payable under Chapters 21 through
24 of the Internal Revenue Code of 1986, as amended (the "Code"), and has
furnished all information returns it is required to furnish pursuant to the
Code,
5
(ii) has established adequate reserves for such taxes which are not due and
payable, and (iii) does not have any tax deficiency or claims outstanding,
proposed or assessed against it.
(h) No transfer tax, stamp duty or other similar tax is payable by
or on behalf of the Underwriters in connection with (i) the issuance by the
Company of the Securities, (ii) the purchase by the Underwriters of the Firm
Securities and the Option Securities from the Company and the purchase by the
Representative of the Representative's Warrants from the Company, (iii) the
consummation by the Company of any of its obligations under this Agreement, or
(iv) resales of the Firm Securities and the Option Securities in connection with
the distribution contemplated hereby.
(i) Each of the Company and the Subsidiaries maintains insurance
policies, including, but not limited to, general liability, malpractice and
property insurance, which insures each of the Company, the Subsidiaries and
their respective employees, against such losses and risks generally insured
against by comparable businesses. None of the Company nor the Subsidiaries (A)
has failed to give notice or present any insurance claim with respect to any
matter, including but not limited to the Company's business, property or
employees, under any insurance policy or surety bond in a due and timely manner,
(B) has any disputes or claims against any underwriter of such insurance
policies or surety bonds or has failed to pay any premiums due and payable
thereunder, or (C) has failed to comply with all conditions contained in such
insurance policies and surety bonds. There are no facts or circumstances under
any such insurance policy or surety bond which would relieve any insurer of its
obligation to satisfy in full any valid claim of the Company or any Subsidiary.
(j) There is no action, suit, proceeding, inquiry, arbitration,
investigation, litigation or governmental proceeding (including, without
limitation, those having jurisdiction over environmental or similar matters),
domestic or foreign, pending or threatened against (or circumstances that may
give rise to the same), or involving the properties or business of, the Company
or the Subsidiaries which (i) questions the validity of the capital stock of the
Company, this Agreement, the Warrant Agreement or the Representative's Warrant
Agreement, or of any action taken or to be taken by the Company pursuant to or
in connection with this Agreement, the Warrant Agreement or the Representative's
Warrant Agreement, (ii) is required to be disclosed in the Registration
Statement which is not so disclosed (and such proceedings as are summarized in
the Registration Statement are accurately summarized in all material respects),
or (iii) might materially and adversely affect the condition, financial or
otherwise, or the earnings, position, prospects, stockholders' equity, value,
operation, properties, business or results of operations of the Company and the
Subsidiaries taken as a whole.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Securities, enter into this Agreement,
the Warrant Agreement and the Representative's Warrant Agreement and to
consummate the transactions provided for in this Agreement, the Warrant
Agreement and the Representative's Warrant Agreement; and this Agreement, the
Warrant Agreement and the Representative's Warrant Agreement have each been duly
and properly authorized, executed and delivered by the Company. Each of this
Agreement, the Warrant Agreement and the Representative's Warrant Agreement
constitutes a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its
6
terms, and none of the Company's issue and sale of the Securities, execution or
delivery of this Agreement, the Warrant Agreement or the Representative's
Warrant Agreement, its performance hereunder and thereunder, its consummation of
the transactions contemplated herein and therein, or the conduct of its business
as described in the Registration Statement, the Prospectus, and any amendments
or supplements thereto, conflicts with or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever upon, any property
or assets (tangible or intangible) of any of the Company or the Subsidiaries
pursuant to the terms of (i) the certificate of incorporation or by-laws of any
of the Company or the Subsidiaries, (ii) any license, contract, collective
bargaining agreement, indenture, mortgage, deed of trust, lease, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any other
agreement or instrument to which any of the Company or the Subsidiaries is a
party or by which any of the Company or the Subsidiaries is or may be bound or
to which either of its or their respective properties or assets (tangible or
intangible) is or may be subject, or any indebtedness, or (iii) any statute,
judgment, decree, order, rule or regulation applicable to any of the Company or
the Subsidiaries of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body (including, without limitation,
those having jurisdiction over environmental or similar matters), domestic or
foreign, having jurisdiction over any of the Company or the Subsidiaries or any
of its or their respective activities or properties.
(l) No consent, approval, authorization or order of, and no filing
with, any court, regulatory body, government agency or other body, domestic or
foreign, is required for the issuance of the Securities pursuant to the
Prospectus and the Registration Statement, the performance of this Agreement,
the Warrant Agreement and the Representative's Warrant Agreement and the
transactions contemplated hereby and thereby, including without limitation, any
waiver of any preemptive, first refusal or other rights that any entity or
person may have for the issue and/or sale of any of the Securities, except such
as have been or may be obtained under the Act or may be required under state
securities or Blue Sky laws in connection with the Underwriters' purchase and
distribution of the Firm Securities and the Option Securities, and the
Representative's Warrants to be sold by the Company hereunder.
(m) All executed agreements, contracts or other documents or
copies of executed agreements, contracts or other documents filed as exhibits to
the Registration Statement to which any of the Company or the Subsidiaries is a
party or by which it or they may be bound or to which its or their respective
assets, properties or business may be subject have been duly and validly
authorized, executed and delivered by the Company or the Subsidiaries, as the
case may be, and constitute the legal, valid and binding agreements of the
Company or the Subsidiaries, as the case may be, enforceable against each of
them in accordance with their respective terms. The descriptions in the
Registration Statement of agreements, contracts and other documents are accurate
and fairly present the information required to be shown with respect thereto by
Form SB-2, and there are no contracts or other documents which are required by
the Act to be described in the Registration Statement or filed as exhibits to
the Registration Statement which are not described or filed as required, and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.
7
(n) Subsequent to the respective dates as of which information is
set forth in the Registration Statement and Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, none of the Company
nor the Subsidiaries has (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, (ii) entered into any
transaction other than in the ordinary course of business, or (iii) declared or
paid any dividend or made any other distribution on or in respect of its capital
stock of any class, and there has not been any change in the capital stock, or
any change in the debt (long or short term) or liabilities or material adverse
change in or affecting the general affairs, management, financial operations,
stockholders' equity or results of operations of any of the Company or the
Subsidiaries.
(o) No default exists in the due performance and observance of any
term, covenant or condition of any license, contract, collective bargaining
agreement, indenture, mortgage, installment sale agreement, lease, deed of
trust, voting trust agreement, stockholders agreement, partnership agreement,
note, loan or credit agreement, purchase order, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which any of the Company or the Subsidiaries is a
party or by which any of the Company or the Subsidiaries may be bound or to
which the property or assets (tangible or intangible) of any of the Company or
the Subsidiaries is subject or affected.
(p) Each of the Company and the Subsidiaries has generally enjoyed
a satisfactory employer-employee relationship with its employees and is in
compliance with all federal, state, local, and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. There are no pending investigations involving
any of the Company or the Subsidiaries by the U.S. Department of Labor, or any
other governmental agency responsible for the enforcement of such federal,
state, local, or foreign laws and regulations. There is no unfair labor practice
charge or complaint against any of the Company or the Subsidiaries pending
before the National Labor Relations Board or any lockout, strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving any of the Company or the Subsidiaries, or any predecessor entity, and
none has ever occurred. No representation question exists respecting the
employees of any of the Company or the Subsidiaries, and no collective
bargaining agreement or modification thereof is currently being negotiated by
any of the Company or the Subsidiaries. No grievance or arbitration proceeding
is pending under any expired or existing collective bargaining agreements of any
of the Company or the Subsidiaries. No labor dispute with the employees of any
of the Company or the Subsidiaries exists, or, is imminent.
(q) None of the Company nor any of the Subsidiaries maintains,
sponsors or contributes to any program or arrangement that is an "employee
pension benefit plan," an "employee welfare benefit plan," or a "multiemployer
plan" as such terms are defined in Sections 3(2), 3(1) and 3(37), respectively,
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")
("ERISA Plans"). None of the Company nor the Subsidiaries maintains or
contributes, now or at any time previously, to a defined benefit plan, as
defined in Section 3(35) of ERISA. No ERISA Plan (or any trust created
thereunder) has engaged in a "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code, which could subject the
Company or the Subsidiaries to any tax penalty on prohibited
8
transactions and which has not adequately been corrected. Each ERISA Plan is in
compliance with all reporting, disclosure and other requirements of the Code and
ERISA as they relate to any such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a), stating that such ERISA Plan and
the attendant trust are qualified thereunder. None of the Company nor the
Subsidiaries has ever completely or partially withdrawn from a "multiemployer
plan."
(r) None of the Company, the Subsidiaries, nor any of its or their
respective employees, directors, stockholders, partners, or affiliates (within
the meaning of the Rules and Regulations) of any of the foregoing has taken or
will take, directly or indirectly, any action designed to or which has
constituted or which might be expected to cause or result in, under the Exchange
Act, or otherwise, stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Securities or otherwise.
(s) Except as otherwise disclosed in the Prospectus, none of the
patents, patent applications, trademarks, service marks, trade names and
copyrights, and licenses and rights to the foregoing presently owned or held by
any of the Company or the Subsidiaries, are in dispute so far as known by the
Company or are in any conflict with the right of any other person or entity.
Each of the Company and the Subsidiaries (i) owns or has the right to use, free
and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects or other restrictions or equities of any kind whatsoever, all
patents, trademarks, service marks, trade names and copyrights, technology and
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without infringing upon or
otherwise acting adversely to the right or claimed right of any person,
corporation or other entity under or with respect to any of the foregoing and
(ii) is not obligated or under any liability whatsoever to make any payment by
way of royalties, fees or otherwise to any owner or licensee of, or other
claimant to, any patent, trademark, service mark, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise.
(t) Each of the Company and the Subsidiaries has good and
marketable title to, or valid and enforceable leasehold estates in, all items of
real and personal property stated in the Prospectus to be owned or leased by it,
free and clear of all liens, charges, claims, encumbrances, pledges, security
interests, defects, or other restrictions or equities of any kind whatsoever,
other than those referred to in the Prospectus and liens for taxes not yet due
and payable.
(u) Ernst & Young, LLP, whose report is filed with the Commission
as a part of the Registration Statement, are independent certified public
accountants as required by the Act and the Rules and Regulations.
(v) The Company has caused to be duly executed legally binding and
enforceable agreements pursuant to which each of the Company's officers,
directors, stockholders and holders of securities exchangeable or exercisable
for or convertible into shares of Common Stock has agreed (i) not to, directly
or indirectly, issue, offer, offer to sell, sell, grant any option for
9
the sale or purchase of, assign, transfer, pledge, hypothecate or otherwise
encumber or dispose of any shares of Common Stock or securities convertible
into, exercisable or exchangeable for or evidencing any right to purchase or
subscribe for any shares of Common Stock (either pursuant to Rule 144 of the
Rules and Regulations or otherwise) or dispose of any beneficial interest
therein for a period of not less than twelve (12) months following the effective
date of the Registration Statement without the prior written consent of the
Representative and the Company and (ii) to waive all rights to request or demand
the registration pursuant to the Act of any securities of the Company which are
registered in the name of or beneficially owned by any such holder. During the
12 month period commencing on the effective date of the Registration Statement,
the Company shall not, without the prior written consent of the Representative,
sell, contract or offer to sell, issue, transfer, assign, pledge, distribute, or
otherwise dispose of, directly or indirectly, any shares of Common Stock or any
options, rights or warrants with respect to any shares of Common Stock. The
Company will cause the Transfer Agent (as hereinafter defined) to mark an
appropriate legend on the face of stock certificates representing all of such
securities and to place "stop transfer" orders on the Company's stock ledgers.
(w) There are no claims, payments, issuances, arrangements or
understandings, whether oral or written, for services in the nature of a
finder's or origination fee with respect to the sale of the Securities hereunder
or any other arrangements, agreements, understandings, payments or issuance with
respect to the Company, the Subsidiaries, or any of its or their respective
officers, directors, stockholders, partners, employees or affiliates, that may
affect the Underwriters' compensation, as determined by the National Association
of Securities Dealers, Inc. ("NASD").
(x) The Common Stock has been approved for quotation on the
American Stock Exchange ("Amex").
(y) None of the Company, the Subsidiaries, nor any of its or their
respective officers, employees, agents or any other person acting on behalf of
any of the Company or the Subsidiaries has, directly or indirectly, given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency (domestic or foreign) or instrumentality of any
government (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of any of the Company or the Subsidiaries (or assist
any of the Company or the Subsidiaries in connection with any actual or proposed
transaction) which (a) might subject any of the Company or the Subsidiaries, or
any other such person to any damage or penalty in any civil, criminal or
governmental litigation or proceeding (domestic or foreign), (b) if not given in
the past, might have had a material adverse effect on the assets, business or
operations of any of the Company or the Subsidiaries, or (c) if not continued in
the future, might adversely affect the assets, business, condition, financial or
otherwise, earnings, position, properties, value, operations or prospects of any
of the Company or the Subsidiaries. The Company's and each Subsidiary's internal
accounting controls are sufficient to cause each of the Company and the
Subsidiaries to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
10
(z) Except as set forth in the Prospectus, no officer, director,
stockholder or partner of the Company or of any Subsidiary, or any "affiliate"
or "associate" (as these terms are defined in Rule 405 promulgated under the
Rules and Regulations) of any of the foregoing persons or entities has or has
had, either directly or indirectly, (i) an interest in any person or entity
which (A) furnishes or sells services or products which are furnished or sold or
are proposed to be furnished or sold by any of the Company or the Subsidiaries,
or (B) purchases from or sells or furnishes to any of the Company or the
Subsidiaries any goods or services, or (ii) a beneficiary interest in any
contract or agreement to which the Company or any Subsidiary is a party or by
which it may be bound or affected. Except as set forth in the Prospectus under
"Certain Transactions," there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among the Company or any Subsidiary,
and any officer, director, or 5% or greater securityholder of the Company or any
Subsidiary, or any partner, affiliate or associate of any of the foregoing
persons or entities.
(aa) Any certificate signed by any officer of the Company or any
Subsidiary, and delivered to the Underwriters or to Underwriters' Counsel (as
defined herein) shall be deemed a representation and warranty by the Company to
the Underwriters as to the matters covered thereby.
(ab) The minute books of each of the Company and the Subsidiaries
have been made available to the Underwriters and contain a complete summary of
all meetings and actions of the directors (including committees thereof) and
stockholders of each of the Company and the Subsidiaries, since the time of its
incorporation, and reflect all transactions referred to in such minutes
accurately in all material respects.
(ac) Except and to the extent described in the Prospectus, no
holders of any securities of the Company or of any options, warrants or other
convertible or exchangeable securities of the Company have the right to include
any securities issued by the Company in the Registration Statement or any
registration statement to be filed by the Company or to require the Company to
file a registration statement under the Act and no person or entity holds any
anti-dilution rights with respect to any securities of the Company.
(ad) The Company has as of the effective date of the Registration
Statement (i) entered into an employment agreement with each of Anthony E.
Maida, III and Lynn E. Spitler, M.D. in the form filed as Exhibit ______ and
Exhibit __, respectively, to the Registration Statement and (ii) purchased term
key person insurance on the lives of each of Mr. Maida and Dr. Spitler in the
amount of $__ million which policies name the Company as the sole beneficiary
thereof.
(ae) As of the date hereof, the Company does not have more than
_________ shares of Common Stock issued and outstanding (including securities
with equivalent rights as the Common Stock and shares of Common Stock, or such
equivalent securities, issuable upon exercise of any and all options, warrants
and other contract rights and securities convertible directly or indirectly into
shares of Common Stock or such equivalent securities, but excluding up to
___________ shares of Common Stock issuable upon the exercise of options granted
under
11
the Company's 1996 Stock Option Plan at prices not less than the higher of the
market value of the shares at the date of the grant or the offering price per
share).
(af) Each of the Company and the Subsidiaries confirms as of the
date hereof that it is in compliance with all provisions of Section 1 of Laws of
Florida, Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and each of the Company and the Subsidiaries further agrees that if it or
any affiliate commences engaging in business with the government of Cuba or with
any person or affiliate located in Cuba after the date the Registration
Statement becomes or has become effective with the Commission or with the
Florida Department of Banking and Finance (the "Department"), whichever date is
later, or if the information reported or incorporated by reference in the
Prospectus, if any, concerning the Company's, any Subsidiary's or any
affiliate's, business with Cuba or with any person or affiliate located in Cuba
changes in any material way, the Company will provide the Department notice of
such business or change, as appropriate, in a form acceptable to the Department.
(ag) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus under the caption "Use of Proceeds"
will not be, an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
(ah) Each of the Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparations of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorizations; 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.
(ai) The Company has entered into a warrant agreement
substantially in the form filed as Exhibit ____ to the Registration Statement
(the "Warrant Agreement") with Continental Stock Transfer and Trust Company, as
Warrant Agent, in form and substance satisfactory to the Representative, with
respect to the Redeemable Warrants and providing for the payment of the
commission contemplated by Section 4(v).
2. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, and each Underwriter,
severally and not jointly, agrees to purchase from the Company at a price of
$_______ [92% of the public offering price] per Share and $_______ [92% of the
public offering price] per Redeemable Warrant, that number of Firm Securities
set forth in Schedule A opposite the name of such Underwriter, subject to such
adjustment as the Representative in its sole discretion shall make to eliminate
any sales or purchases of fractional
12
shares, plus any additional number of Firm Securities which such Underwriter may
become obligated to purchase pursuant to the provisions of Section 11 hereof.
(b) In addition, on the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company hereby grants an option to the
Underwriters, severally and not jointly, to purchase all or any part of an
additional 375,000 shares of Common Stock at a price of $ ____ [92% of the
public offering price] per share of Common Stock and/or an additional 375,000
Redeemable Warrants at a price of $______ [92% of the public offering price] per
Redeemable Warrant. The option granted hereby will expire forty-five (45) days
after (i) the date the Registration Statement becomes effective, if the Company
has elected not to rely on Rule 430A under the Rules and Regulations, or (ii)
the date of this Agreement if the Company has elected to rely upon Rule 430A
under the Rules and Regulations, and may be exercised in whole or in part from
time to time only for the purpose of covering over-allotments which may be made
in connection with the offering and distribution of the Firm Securities upon
notice by the Representative to the Company setting forth the number of Option
Securities as to which the several Underwriters are then exercising the option
and the time and date of payment and delivery for any such Option Securities.
Any such time and date of delivery (an "Option Closing Date") shall be
determined by the Representative, but shall not be later than three (3) full
business days after the exercise of said option, nor in any event prior to the
Closing Date, as hereinafter defined, unless otherwise agreed upon by the
Representative and the Company. Nothing herein contained shall obligate the
Underwriters to make any over-allotments. No Option Securities shall be
delivered unless the Firm Securities shall be simultaneously delivered or shall
theretofore have been delivered as herein provided.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Securities shall be made at the offices of the
Representative at 1001 Fourth Avenue, Suite 2200, Seattle, Washington 98154, or
at such other place as shall be agreed upon by the Representative and the
Company. Such delivery and payment shall be made at 10:00 a.m. (New York City
time) on _______________, 1997 or at such other time and date as shall be agreed
upon by the Representative and the Company, but not less than three (3) nor more
than five (5) full business days after the effective date of the Registration
Statement (such time and date of payment and delivery being herein called the
"Closing Date"). In addition, in the event that any or all of the Option
Securities are purchased by the Underwriters, payment of the purchase price for,
and delivery of certificates for, such Option Securities shall be made at the
above-mentioned office of the Representative or at such other place as shall be
agreed upon by the Representative and the Company on each Option Closing Date as
specified in the notice from the Representative to the Company. Delivery of the
certificates for the Firm Securities and the Option Securities, if any, shall be
made to the Underwriters against payment by the Underwriters, severally and not
jointly, of the purchase price for the Firm Securities and the Option
Securities, if any, to the order of the Company for the Firm Securities and the
Option Securities, if any, by New York Clearing House funds. In the event such
option is exercised, each of the Underwriters, acting severally and not jointly,
shall purchase that proportion of the total number of Option Securities then
being purchased which the number of Firm Securities set forth in Schedule A
hereto opposite the name of such Underwriter bears to the total number of Firm
Securities, subject in each case to such adjustments as the Representative in
its discretion shall make to eliminate any
13
sales or purchases of fractional shares. Certificates for the Firm Securities
and the Option Securities, if any, shall be in definitive, fully registered
form, shall bear no restrictive legends and shall be in such denominations and
registered in such names as the Underwriters may request in writing at least two
(2) business days prior to the Closing Date or the relevant Option Closing Date,
as the case may be. The certificates for the Firm Securities and the Option
Securities, if any, shall be made available to the Representative at such office
or such other place as the Representative may designate for inspection, checking
and packaging no later than 9:30 a.m. on the last business day prior to the
Closing Date or the relevant Option Closing Date, as the case may be.
(d) On the Closing Date, the Company shall issue and sell to the
Representative Representative's Warrants at a purchase price of $.0001 per
warrant, which Representative's Warrants shall entitle the holders thereof to
purchase an aggregate of 250,000 shares of Common Stock and/or 250,000
Redeemable Warrants. The Representative's Warrants shall be exercisable for a
period of four (4) years commencing one (1) year from the effective date of the
Registration Statement at a price equaling one hundred forty percent (140%) of
the respective initial public offering price of the Shares and the Redeemable
Warrants. The Representative's Warrant Agreement and form of Warrant Certificate
shall be substantially in the form filed as Exhibit [___] to the Registration
Statement. Payment for the Representative's Warrants shall be made on the
Closing Date.
3. Public Offering of the Shares and Redeemable Warrants. As soon after
the Registration Statement becomes effective as the Representative deems
advisable, the Underwriters shall make a public offering of the Shares and
Redeemable Warrants (other than to residents of or in any jurisdiction in which
qualification of the Shares and Redeemable Warrants is required and has not
become effective) at the price and upon the other terms set forth in the
Prospectus. The Representative may from time to time increase or decrease the
respective public offering price after distribution of the Shares and Redeemable
Warrants has been completed to such extent as the Representative, in its sole
discretion deems advisable. The Underwriters may enter into one of more
agreements as the Underwriters, in each of their sole discretion, deem advisable
with one or more broker-dealers who shall act as dealers in connection with such
public offering.
4. Covenants and Agreements of the Company. The Company covenants
and agrees with each of the Underwriters as follows:
(a) The Company shall use its best efforts to cause the
Registration Statement and any amendments thereto to become effective as
promptly as practicable and will not at any time, whether before or after the
effective date of the Registration Statement, file any amendment to the
Registration Statement or supplement to the Prospectus or file any document
under the Act or Exchange Act before termination of the offering of the Shares
and Redeemable Warrants by the Underwriters of which the Representative shall
not previously have been advised and furnished with a copy, or to which the
Representative shall have objected or which is not in compliance with the Act,
the Exchange Act or the Rules and Regulations.
14
(b) As soon as the Company is advised or obtains knowledge
thereof, the Company will advise the Representative and confirm the notice in
writing (i) when the Registration Statement, as amended, becomes effective, if
the provisions of Rule 430A promulgated under the Act will be relied upon, when
the Prospectus has been filed in accordance with said Rule 430A and when any
post-effective amendment to the Registration Statement becomes effective; (ii)
of the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of the Preliminary
Prospectus or the Prospectus, or any amendment or supplement thereto, or the
institution of proceedings for that purpose; (iii) of the issuance by the
Commission or by any state securities commission of any proceedings for the
suspension of the qualification of any of the Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose; (iv) of the receipt of any comments from the Commission; and (v)
of any request by the Commission for any amendment to the Registration Statement
or any amendment or supplement to the Prospectus or for additional information.
If the Commission or any state securities commission shall enter a stop order or
suspend such qualification at any time, the Company will make every effort to
obtain promptly the lifting of such order.
(c) The Company shall file the Prospectus (in form and substance
satisfactory to the Representative) or transmit the Prospectus by a means
reasonably calculated to result in filing with the Commission pursuant to Rule
424(b)(1) (or, if applicable and if consented to by the Representative, pursuant
to Rule 424(b)(4)) not later than the Commission's close of business on the
earlier of (i) the second business day following the execution and delivery of
this Agreement and (ii) the fifth business day after the effective date of the
Registration Statement.
(d) The Company will give the Representative notice of its
intention to file or prepare any amendment to the Registration Statement
(including any post-effective amendment) or any amendment or supplement to the
Prospectus (including any revised prospectus which the Company proposes for use
by the Underwriters in connection with the offering of the Securities which
differs from the corresponding prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the Rules and
Regulations), and will furnish the Representative with copies of any such
amendment or supplement a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file any such prospectus to
which the Representative or Orrick, Herrington & Sutcliffe LLP ("Underwriters'
Counsel") shall object.
(e) The Company shall endeavor in good faith, in cooperation with
the Representative, at or prior to the time the Registration Statement becomes
effective, to qualify the Securities for offering and sale under the securities
laws of such jurisdictions as the Representative may designate to permit the
continuance of sales and dealings therein for as long as may be necessary to
complete the distribution, and shall make such applications, file such documents
and furnish such information as may be required for such purpose; provided,
however, the Company shall not be required to qualify as a foreign corporation
or file a general or limited consent to service of process in any such
jurisdiction. In each jurisdiction where such qualification shall be effected,
the Company will, unless the Representative agrees that such action is not at
the time
15
necessary or advisable, use all reasonable efforts to file and make such
statements or reports at such times as are or may reasonably be required by the
laws of such jurisdiction to continue such qualification.
(f) During the time when a prospectus is required to be delivered
under the Act, the Company shall use all reasonable efforts to comply with all
requirements imposed upon it by the Act and the Exchange Act, as now and
hereafter amended and by the Rules and Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or dealings in
the Securities in accordance with the provisions hereof and the Prospectus, or
any amendments or supplements thereto. If at any time when a prospectus relating
to the Securities is required to be delivered under the Act, any event shall
have occurred as a result of which, in the opinion of counsel for the Company or
Underwriters' Counsel, the Prospectus, as then amended or supplemented, includes
an untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission an appropriate amendment or supplement in accordance with Section 10
of the Act, each such amendment or supplement to be satisfactory to
Underwriters' Counsel, and the Company will furnish to the Underwriters copies
of such amendment or supplement as soon as available and in such quantities as
the Underwriters may request.
(g) As soon as practicable, but in any event not later than
forty-five (45) days after the end of the 12-month period beginning on the day
after the end of the fiscal quarter of the Company during which the effective
date of the Registration Statement occurs (ninety (90) days in the event that
the end of such fiscal quarter is the end of the Company's fiscal year), the
Company shall make generally available to its security holders, in the manner
specified in Rule 158(b) of the Rules and Regulations, and to the
Representative, an earnings statement which will be in the detail required by,
and will otherwise comply with, the provisions of Section 11(a) of the Act and
Rule 158(a) of the Rules and Regulations, which statement need not be audited
unless required by the Act, covering a period of at least twelve (12)
consecutive months after the effective date of the Registration Statement.
(h) During a period of seven (7) years after the date hereof, the
Company will furnish to its stockholders, as soon as practicable, annual reports
(including financial statements audited by independent public accountants) and
unaudited quarterly reports of earnings, and will deliver to the Representative:
i. concurrently with furnishing such quarterly reports to its
stockholders, statements of income of the Company for each quarter in
the form furnished to the Company's stockholders and certified by the
Company's principal financial or accounting officer;
ii. concurrently with furnishing such annual reports to its
stockholders, a balance sheet of the Company as at the end of the
preceding fiscal year, together with statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal
year,
16
accompanied by a copy of the certificate thereon of independent
certified public accountants;
iii. as soon as they are available, copies of all reports
(financial or other) mailed to stockholders;
iv. as soon as they are available, copies of all reports and
financial statements furnished to or filed with the Commission, the NASD
or any securities exchange;
v. every press release and every material news item or article of
interest to the financial community in respect of the Company, or its
affairs, which was released or prepared by or on behalf of the Company;
and
vi. any additional information of a public nature concerning the
Company (and any future subsidiary) or its businesses which the
Representative may request.
During such seven-year period, if the Company has an active subsidiary,
the foregoing financial statements will be on a consolidated basis to the extent
that the accounts of the Company and its subsidiary(ies) are consolidated, and
will be accompanied by similar financial statements for any significant
subsidiary which is not so consolidated.
(i) The Company will maintain a transfer agent and warrant agent
("Transfer Agent") and, if necessary under the jurisdiction of incorporation of
the Company, a Registrar (which may be the same entity as the Transfer Agent)
for its Common Stock and Redeemable Warrants.
(j) The Company will furnish to the Representative or on the
Representative's order, without charge, at such place as the Representative may
designate, copies of each Preliminary Prospectus, the Registration Statement and
any pre-effective or post-effective amendments thereto (two of which copies will
be signed and will include all financial statements and exhibits), the
Prospectus, and all amendments and supplements thereto, including any prospectus
prepared after the effective date of the Registration Statement, in each case as
soon as available and in such quantities as the Representative may request.
(k) On or before the effective date of the Registration Statement,
the Company shall provide the Representative with true original copies of duly
executed, legally binding and enforceable agreements pursuant to which, for a
period of twelve (12) months from the effective date of the Registration
Statement, each of the Company's stockholders and holders of securities
exchangeable or exercisable for or convertible into shares of Common Stock
agrees that it or he or she (i) will not, directly or indirectly, issue, offer
to sell, sell, grant an option for the sale or purchase of, assign, transfer,
pledge, hypothecate or otherwise encumber or dispose of any shares of Common
Stock or securities convertible into, exercisable or exchangeable for or
evidencing any right to purchase or subscribe for any shares of Common Stock
(either pursuant to Rule 144 of the Rules and Regulations or otherwise) or
dispose of any beneficial interest therein without the prior consent of the
Representative (collectively, the "Lock-up Agreements") and (ii) waives, during
such 12 month period, any and all rights to request or demand the registration
pursuant to the Act, of any securities of the Company which are registered in
the
17
name of or beneficially owned by it or he or she, respectively. During the 12
month period commencing on the effective date of the Registration Statement, the
Company shall not, without the prior written consent of the Representative,
sell, contract or offer to sell, issue, transfer, assign, pledge, distribute, or
otherwise dispose of, directly or indirectly, any shares of Common Stock or any
options, rights or warrants with respect to any shares of Common Stock. On or
before the Closing Date, the Company shall deliver instructions to the Transfer
Agent authorizing it to place appropriate legends on the certificates
representing the securities subject to the Lock-up Agreements and to place
appropriate stop transfer orders on the Company's ledgers.
(l) None of the Company, the Subsidiaries, nor any of its or their
respective officers, directors, stockholders, nor any of its or their respective
affiliates (within the meaning of the Rules and Regulations) will take, directly
or indirectly, any action designed to, or which might in the future reasonably
be expected to cause or result in, stabilization or manipulation of the price of
any securities of the Company.
(m) The Company shall apply the net proceeds from the sale of the
Securities in the manner, and subject to the conditions, set forth under "Use of
Proceeds" in the Prospectus. No portion of the net proceeds will be used,
directly or indirectly, to acquire any securities issued by the Company.
(n) The Company shall timely file all such reports, forms or other
documents as may be required (including, but not limited to, a Form SR as may be
required pursuant to Rule 463 under the Act) from time to time, under the Act,
the Exchange Act, and the Rules and Regulations, and all such reports, forms and
documents filed will comply as to form and substance with the applicable
requirements under the Act, the Exchange Act, and the Rules and Regulations.
(o) The Company shall furnish to the Representative as early as
practicable prior to each of the date hereof, the Closing Date and each Option
Closing Date, if any, but no later than two (2) full business days prior
thereto, a copy of the latest available unaudited interim financial statements
of the Company (which in no event shall be as of a date more than thirty (30)
days prior to the date of the Registration Statement) which have been read by
the Company's independent public accountants, as stated in their letters to be
furnished pursuant to Sections 6(l) and 6(m) hereof.
(p) The Company shall cause the Common Stock and Redeemable
Warrants to be quoted on Nasdaq and, for a period of seven (7) years from the
date hereof, use its best efforts to maintain the Nasdaq quotation of the Common
Stock and the Redeemable Warrants to the extent outstanding.
(q) For a period of five (5) years from the Closing Date, the
Company shall furnish to the Representative at the Company's sole expense, (i)
daily consolidated transfer sheets relating to the Common Stock and Redeemable
Warrants (ii) the list of holders of all of the Company's securities and (iii) a
Blue Sky "Trading Survey" for secondary sales of the Company's securities
prepared by counsel to the Company.
18
(r) As soon as practicable, (i) but in no event more than five (5)
business days before the effective date of the Registration Statement, file a
Form 8-A with the Commission providing for the registration under the Exchange
Act of the Securities and (ii) but in no event more than thirty (30) days after
the effective date of the Registration Statement, take all necessary and
appropriate actions to be included in Standard and Poor's Corporation
Descriptions and Moody's OTC Manual and to continue such inclusion for a period
of not less than seven (7) years.
(s) The Company hereby agrees that it will not, for a period of
twelve (12) months from the effective date of the Registration Statement, adopt,
propose to adopt or otherwise permit to exist any employee, officer, director,
consultant or compensation plan or similar arrangement permitting (i) the grant,
issue, sale or entry into any agreement to grant, issue or sell any option,
warrant or other contract right (x) at an exercise price that is less than the
greater of the public offering price of the Shares set forth herein and the fair
market value on the date of grant or sale or (y) to any of its executive
officers or directors or to any holder of 5% or more of the Common Stock, except
as provided in subsection (ii) of this subparagraph; (ii) the maximum number of
shares of Common Stock or other securities of the Company purchasable at any
time pursuant to options or warrants issued by the Company to exceed the
aggregate _______ shares reserved for future issuance under the Company's Stock
Option Plans described in footnote one (1) to the "Prospectus Summary - The
Offering" section of the Prospectus; (iii) the payment for such securities with
any form of consideration other than cash; or (iv) the existence of stock
appreciation rights, phantom options or similar arrangements.
(t) Until the completion of the distribution of the Securities,
the Company shall not, without the prior written consent of the Representative
and Underwriters' Counsel, issue, directly or indirectly, any press release or
other communication or hold any press conference with respect to the Company or
its activities or the offering contemplated hereby, other than trade releases
issued in the ordinary course of the Company's business consistent with past
practices with respect to the Company's operations.
(u) For a period equal to the lesser of (i) seven (7) years from
the date hereof, and (ii) the sale to the public of the Representative's
Securities, the Company will not take any action or actions which may prevent or
disqualify the Company's use of Form SB-2 (or other appropriate form) for the
registration under the Act of the Representative's Securities. The Company
further agrees to use its best efforts to file such post-effective amendments to
the Registration Statement, as may be necessary, in order to maintain its
effectiveness and to keep such Registration Statement effective while any of the
Redeemable Warrants or Representative's Warrants remain outstanding.
(v) Commencing one year and one day from the date hereof, if the
Company engages the Representative as a warrant solicitation agent under the
terms of the Warrant Agreement, the Company shall pay the Representative a
commission equal to five percent (5%) of the exercise price of the Redeemable
Warrants, payable on the date of the exercise thereof on the terms provided in
the Warrant Agreement; provided, however, the Representative shall be entitled
to receive the commission contemplated by this Section 4(x) only if: (i) the
Representative has provided actual services in connection with the solicitation
of the exercise of a Redeemable Warrant by a Warrantholder and (ii) the
Warrantholder exercising a Redeemable
19
Warrant affirmatively designates in writing on the exercise form on the reverse
side of the Redeemable Warrant Certificate that the exercise of such
Warrantholder's Redeemable Warrant was solicited by the Representative.
5. Payment of Expenses.
(a) The Company hereby agrees to pay on each of the Closing Date
and the Option Closing Date (to the extent not paid at the Closing Date) all
expenses and fees (other than fees of Underwriters' Counsel, except as provided
in (iv) below) incident to the performance of the obligations of the Company
under this Agreement, the Warrant Agreement and the Representative's Warrant
Agreement, including, without limitation, (i) the fees and expenses of
accountants and counsel for the Company, (ii) all costs and expenses incurred in
connection with the preparation, duplication, printing (including mailing and
handling charges), filing, delivery and mailing (including the payment of
postage with respect thereto) of the Registration Statement and the Prospectus
and any amendments and supplements thereto and the printing, mailing (including
the payment of postage with respect thereto) and delivery of this Agreement, the
Warrant Agreement, the Representative's Warrant Agreement, the Agreement Among
Underwriters, the Selected Dealer Agreements, and related documents, including
the cost of all copies thereof and of the Preliminary Prospectuses and of the
Prospectus and any amendments thereof or supplements thereto supplied to the
Underwriters and such dealers as the Underwriters may request, in quantities as
hereinabove stated, (iii) the printing, engraving, issuance and delivery of the
Securities including, but not limited to, (x) the purchase by the Underwriters
of the Firm Securities and the Option Securities and the purchase by the
Representative of the Representative's Warrants from the Company, (y) the
consummation by the Company of any of its obligations under this Agreement, the
Warrant Agreement and the Representative's Warrant Agreement, and (z) resale of
the Firm Securities and the Option Securities by the Underwriters in connection
with the distribution contemplated hereby, (iv) the qualification of the
Securities under state or foreign securities or "Blue Sky" laws and
determination of the status of such securities under legal investment laws,
including the costs of printing and mailing the "Preliminary Blue Sky
Memorandum", the "Supplemental Blue Sky Memorandum" and "Legal Investments
Survey," if any, and disbursements and fees of counsel in connection therewith,
(v) advertising costs and expenses, including but not limited to costs and
expenses in connection with the "road show", information meetings and
presentations, bound volumes and prospectus memorabilia and "tomb-stone"
advertisement expenses, (vi) costs and expenses in connection with due diligence
investigations, including but not limited to the fees of any independent
counsel, expert or consultant retained, (vii) fees and expenses of the Transfer
Agent and registrar and all issue and transfer taxes, if any, (viii)
applications for assignment of a rating of the Securities by qualified rating
agencies, (ix) the fees payable to the Commission and the NASD, and (x) the fees
and expenses incurred in connection with the quotation of the Securities on
Nasdaq and any other exchange.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 6 or Section 12, the Company shall
reimburse and indemnify the Underwriters for all of their actual out-of-pocket
expenses, including the fees and disbursements of Underwriters' Counsel, less
any amounts already paid pursuant to Section 5(c) hereof.
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(c) The Company further agrees that, in addition to the expenses
payable pursuant to subsection (a) of this Section 5, it will pay to the
Representative on the Closing Date by certified or bank cashier's check or, at
the election of the Representative, by deduction from the proceeds of the
offering contemplated herein a non-accountable expense allowance of $500,000.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the Closing Date and each Option Closing Date, if any, as if they had been
made on and as of the Closing Date or each Option Closing Date, as the case may
be; the accuracy on and as of the Closing Date or Option Closing Date, if any,
of the statements of the officers of the Company made pursuant to the provisions
hereof; and the performance by the Company on and as of the Closing Date and
each Option Closing Date, if any, of its covenants and obligations hereunder and
to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 12:00 P.M., New York time, on the date of this Agreement or such
later date and time as shall be consented to in writing by the Representative,
and, at the Closing Date and each Option Closing Date, if any, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending or contemplated by the Commission and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Underwriters' Counsel. If the Company has elected to
rely upon Rule 430A of the Rules and Regulations, the price of the Shares and
Redeemable Warrants and any price-related information previously omitted from
the effective Registration Statement pursuant to such Rule 430A shall have been
transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules
and Regulations within the prescribed time period and, prior to the Closing
Date, the Company shall have provided evidence satisfactory to the
Representative of such timely filing, or a post-effective amendment providing
such information shall have been promptly filed and declared effective in
accordance with the requirements of Rule 430A of the Rules and Regulations.
(b) The Representative shall not have advised the Company that the
Registration Statement, or any amendment thereto, contains an untrue statement
of fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein not misleading, or
that the Prospectus, or any supplement thereto, contains an untrue statement of
fact which, in the Representative's opinion, is material, or omits to state a
fact which, in the Representative's opinion, is material and is required to be
stated therein or is necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) On or prior to each of the Closing Date and each Option
Closing Date, if any, the Representative shall have received from Underwriters'
Counsel, such opinion or opinions with respect to the organization of the
Company, the validity of the Securities, the Registration Statement, the
Prospectus and other related matters as the Representative may request and
Underwriters' Counsel shall have received such papers and information as they
request to enable them to pass upon such matters.
21
(d) At the Closing Date, the Underwriters shall have received the
favorable opinion of Wilson Sonsini Goodrich & Rosati, counsel to the Company
and the Subsidiaries, dated the Closing Date, addressed to the Underwriters and
in form and substance satisfactory to Underwriters' Counsel, to the effect that:
i. each of the Company and the Subsidiaries (A) has been duly
organized and is validly existing as a corporation in good standing
under the laws of its jurisdiction, (B) is duly qualified and licensed
and in good standing as a foreign corporation in each jurisdiction in
which its ownership or leasing of any properties or the character of its
operations requires such qualification or licensing, and (C) has all
requisite corporate power and authority, and has obtained any and all
necessary authorizations, approvals, orders, licenses, certificates,
franchises and permits of and from all governmental or regulatory
officials and bodies (including, without limitation, those having
jurisdiction over environmental or similar matters), to own or lease its
properties and conduct its business as described in the Prospectus; each
of the Company and the Subsidiaries is and has been doing business in
compliance with all such authorizations, approvals, orders, licenses,
certificates, franchises and permits and all federal, state and local
laws, rules and regulations; and, none of the Company nor the
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such authorization, approval, order,
license, certificate, franchise, or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would materially adversely affect the business, operations, condition,
financial or otherwise, or the earnings, business affairs, position,
prospects, value, operation, properties, business or results of
operations of the Company and the Subsidiaries taken as whole. The
disclosures in the Registration Statement concerning the effects of
federal, state and local laws, rules and regulations on each of the
Company's and the Subsidiaries' businesses as currently conducted and as
contemplated are correct in all material respects and do not omit to
state a fact required to be stated therein or necessary to make the
statements contained therein not misleading in light of the
circumstances in which they were made.
ii. The Company owns, directly or indirectly, one hundred percent
(100%) of the outstanding capital stock of each of the Subsidiaries, and
all such shares have been validly issued, are fully paid and
non-assessable, were not issued in violation of any preemptive rights
and are owned free and clear of any liens, charges, claims,
encumbrances, pledges, security interests, defects or other restrictions
or equities of any kind whatsoever;
iii. except as described in the Prospectus, none of the Company
nor the Subsidiaries owns an interest in any other corporation,
partnership, joint venture, trust or other business entity;
iv. the Company has a duly authorized, issued and outstanding
capitalization as set forth in the Prospectus, and any amendment or
supplement thereto, under "CAPITALIZATION", and the Company is not a
party to or bound by any instrument, agreement or other arrangement
providing for it to issue, sell, transfer, purchase or redeem any
capital stock, rights, warrants, options or other securities, except for
this Agreement, the Warrant Agreement and the Representative's Warrant
Agreement and as
22
described in the Prospectus. The Securities and all other securities
issued or issuable by the Company conform in all material respects to
all statements with respect thereto contained in the Registration
Statement and the Prospectus. All issued and outstanding securities of
the Company have been duly authorized and validly issued and are fully
paid and non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities
were issued in violation of the preemptive rights of any holders of any
security of the Company or any similar rights granted by the Company.
The Securities to be sold by the Company hereunder and under the Warrant
Agreement and the Representative's Warrant Agreement are not and will
not be subject to any preemptive or other similar rights of any
stockholder, have been duly authorized and, when issued, paid for and
delivered in accordance with the terms hereof, will be validly issued,
fully paid and non-assessable and conform to the description thereof
contained in the Prospectus; the holders thereof will not be subject to
any liability solely as such holders; all corporate action required to
be taken for the authorization, issue and sale of the Securities has
been duly and validly taken; and the certificates representing the
Securities are in due and proper form. The Representative's Warrants and
the Redeemable Warrants constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor,
the number and type of securities of the Company called for thereby.
Upon the issuance and delivery pursuant to this Agreement of the Firm
Securities and the Option Securities and the Representative's Warrants
to be sold by the Company, the Underwriters and the Representative,
respectively, will acquire good and marketable title to the Firm
Securities and the Option Securities and the Representative's Warrants
free and clear of any pledge, lien, charge, claim, encumbrance, pledge,
security interest, or other restriction or equity of any kind
whatsoever. No transfer tax is payable by or on behalf of the
Underwriters in connection with (A) the issuance by the Company of the
Securities, (B) the purchase by the Underwriters of the Firm Securities
and the Option Securities from the Company, and the purchase by the
Representative of the Representative's Warrants from the Company (C) the
consummation by the Company of any of its obligations under this
Agreement, the Warrant Agreement or the Representative's Warrant
Agreement, or (D) resales of the Firm Securities and the Option
Securities in connection with the distribution contemplated hereby.
v. the Registration Statement is effective under the Act, and, if
applicable, filing of all pricing information has been timely made in
the appropriate form under Rule 430A, and no stop order suspending the
use of the Preliminary Prospectus, the Registration Statement or
Prospectus or any part of any thereof or suspending the effectiveness of
the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or, to the best of such
counsel's knowledge, threatened or contemplated under the Act;
vi. each of the Preliminary Prospectus, the Registration
Statement, and the Prospectus and any amendments or supplements thereto
(other than the financial statements and other financial and statistical
data included therein, as to which no opinion need be rendered) comply
as to form in all material respects with the requirements of the Act and
the Rules and Regulations.
23
vii. to the best of such counsel's knowledge, (A) there are no
agreements, contracts or other documents required by the Act to be
described in the Registration Statement and the Prospectus and filed as
exhibits to the Registration Statement other than those described in the
Registration Statement (or required to be filed under the Exchange Act
if upon such filing they would be incorporated, in whole or in part, by
reference therein) and the Prospectus and filed as exhibits thereto, and
the exhibits which have been filed are correct copies of the documents
of which they purport to be copies; (B) the descriptions in the
Registration Statement and the Prospectus and any supplement or
amendment thereto of contracts and other documents to which the Company
or any Subsidiary is a party or by which it is bound, including any
document to which the Company or any Subsidiary is a party or by which
it is bound, incorporated by reference into the Prospectus and any
supplement or amendment thereto, are accurate and fairly represent the
information required to be shown by Form S-1; (C) there is not pending
or threatened against any of the Company or the Subsidiaries any action,
arbitration, suit, proceeding, inquiry, investigation, litigation,
governmental or other proceeding (including, without limitation, those
having jurisdiction over environmental or similar matters), domestic or
foreign, pending or threatened against (or circumstances that may give
rise to the same), or involving the properties or business of any of the
Company or the Subsidiaries which (x) is required to be disclosed in the
Registration Statement which is not so disclosed (and such proceedings
as are summarized in the Registration Statement are accurately
summarized in all respects), (y) questions the validity of the capital
stock of the Company or this Agreement, the Warrant Agreement or the
Representative's Warrant Agreement, or of any action taken or to be
taken by the Company pursuant to or in connection with any of the
foregoing; (D) no statute or regulation or legal or governmental
proceeding required to be described in the Prospectus is not described
as required; and (E) there is no action, suit or proceeding pending, or
threatened, against or affecting any of the Company or the Subsidiaries
before any court or arbitrator or governmental body, agency or official
(or any basis thereof known to such counsel) in which there is a
reasonable possibility of a decision which may result in a material
adverse change in the condition, financial or otherwise, or the
earnings, position, prospects, stockholders' equity, value, operation,
properties, business or results of operations of any of the Company or
the Subsidiaries, which could adversely affect the present or
prospective ability of the Company to perform its obligations under this
Agreement, the Warrant Agreement or the Representative's Warrant
Agreement or which in any manner draws into question the validity or
enforceability of this Agreement, the Warrant Agreement or the
Representative's Warrant Agreement;
viii. the Company has full legal right, power and authority to
enter into each of this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement, and to consummate the transactions
provided for therein; and each of this Agreement, the Warrant Agreement
and the Representative's Warrant Agreement has been duly authorized,
executed and delivered by the Company. Each of this Agreement, the
Warrant Agreement and the Representative's Warrant Agreement, assuming
due authorization, execution and delivery by each other party thereto
constitutes a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms
24
(except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general
application relating to or affecting enforcement of creditors' rights
and the application of equitable principles in any action, legal or
equitable, and except as rights to indemnity or contribution may be
limited by applicable law), and none of the Company's execution or
delivery of this Agreement, the Warrant Agreement and the
Representative's Warrant Agreement, its performance hereunder or
thereunder, its consummation of the transactions contemplated herein or
therein, or the conduct of its business as described in the Registration
Statement, the Prospectus, and any amendments or supplements thereto,
conflicts with or will conflict with or results or will result in any
breach or violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever
upon, any property or assets (tangible or intangible) of any of the
Company or the Subsidiaries pursuant to the terms of, (A) the
certificate of incorporation or by-laws of any of the Company or the
Subsidiaries, (B) any license, contract, collective bargaining
agreement, indenture, mortgage, deed of trust, lease, voting trust
agreement, stockholders agreement, note, loan or credit agreement or any
other agreement or instrument to which any of the Company or the
Subsidiaries is a party or by which it is or they are or may be bound or
to which any of its or their respective properties or assets (tangible
or intangible) is or may be subject, or any indebtedness, or (C) any
statute, judgment, decree, order, rule or regulation applicable to any
of the Company or the Subsidiaries of any arbitrator, court, regulatory
body or administrative agency or other governmental agency or body
(including, without limitation, those having jurisdiction over
environmental or similar matters), domestic or foreign, having
jurisdiction over any of the Company or the Subsidiaries or any of its
or their respective activities or properties.
ix. no consent, approval, authorization or order, and no filing
with, any court, regulatory body, government agency or other body (other
than such as may be required under Blue Sky laws, as to which no opinion
need be rendered) is required in connection with the issuance of the
Firm Securities and the Option Securities pursuant to the Prospectus and
the Registration Statement, the issuance of the Representative's
Warrants, the performance of this Agreement, the Warrant Agreement and
the Representative's Warrant Agreement, and the transactions
contemplated hereby and thereby;
x. the properties and business of each of the Company and the
Subsidiaries conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus; and each of
the Company and the Subsidiaries has good and marketable title to, or
valid and enforceable leasehold estates in, all items of real and
personal property stated in the Prospectus to be owned or leased by it,
in each case free and clear of all liens, charges, claims, encumbrances,
pledges, security interests, defects or other restrictions or equities
of any kind whatsoever, other than those referred to in the Prospectus
and liens for taxes not yet due and payable;
xi. none of the Company nor the Subsidiaries is in breach of, or
in default under, any term or provision of any license, contract,
collective bargaining agreement, indenture,
25
mortgage, installment sale agreement, deed of trust, lease, voting trust
agreement, stockholders' agreement, partnership agreement, note, loan or
credit agreement or any other agreement or instrument evidencing an
obligation for borrowed money, or any other agreement or instrument to
which any of the Company or the Subsidiaries is a party or by which any
of the Company or the Subsidiaries may be bound or to which the
respective properties or assets (tangible or intangible) of any of the
Company or the Subsidiaries is subject or affected; and none of the
Company nor the Subsidiaries is in violation of any term or provision of
its Articles of Incorporation or By-Laws or in violation of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation;
xii. the statements in the Prospectus under "RISK FACTORS," "THE
COMPANY," "BUSINESS," "MANAGEMENT," "PRINCIPAL STOCKHOLDERS," "CERTAIN
TRANSACTIONS," "DESCRIPTION OF SECURITIES," and "SHARES ELIGIBLE FOR
FUTURE SALE" have been reviewed by such counsel, and insofar as they
refer to statements of law, descriptions of statutes, licenses, rules or
regulations or legal conclusions, are correct in all material respects;
xiii. the Securities have been accepted for quotation on Amex;
xiv. the persons listed under the caption "PRINCIPAL STOCKHOLDERS"
in the Prospectus are the respective "beneficial owners" (as such phrase
is defined in regulation 13d-3 under the Exchange Act) of the securities
set forth opposite their respective names thereunder as and to the
extent set forth therein;
xv. none of the Company, the Subsidiaries nor any of their
respective officers, stockholders, employees or agents, nor any other
person acting on behalf of any of the Company or the Subsidiaries has,
directly or indirectly, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or
agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or
foreign) or other person who is or may be in a position to help or
hinder the business of any of the Company or the Subsidiaries (or assist
it in connection with any actual or proposed transaction) which (A)
might subject any of the Company or the Subsidiaries to any damage or
penalty in any civil, criminal or governmental litigation or proceeding,
(B) if not given in the past, might have had an adverse effect on the
assets, business or operations of the Company and the Subsidiaries taken
as a whole, as reflected in any of the financial statements contained in
the Registration Statement, or (C) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the
Company and the Subsidiaries taken as a whole;
xvi. no person, corporation, trust, partnership, association or
other entity has the right to include and/or register any securities of
the Company in the Registration Statement, require the Company to file
any registration statement or, if filed, to include any security in such
registration statement;
26
xvii. except as described in the Prospectus, there are no claims,
payments, issuances, arrangements or understandings for services in the
nature of a finder's or origination fee with respect to the sale of the
Securities hereunder or financial consulting arrangements or any other
arrangements, agreements, understandings, payments or issuances that may
affect the Underwriters' compensation, as determined by the NASD;
xviii. assuming due execution by the parties thereto other than
the Company, the Lock-up Agreements are legal, valid and binding
obligations of the parties thereto, enforceable against the party and
any subsequent holder of the securities subject thereto in accordance
with its terms (except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
laws of general application relating to or affecting enforcement of
creditors' rights and the application of equitable principles in any
action, legal or equitable, and except as rights to indemnity or
contribution may be limited by applicable law);
xix. except as described in the Prospectus, none of the Company
nor the Subsidiaries (A) maintains, sponsors or contributes to any ERISA
Plans, (B) maintains or contributes, now or at any time previously, to a
defined benefit plan, as defined in Section 3(35) of ERISA, and (C) has
ever completely or partially withdrawn from a "multiemployer plan";
xx. the minute books of each of the Company and the Subsidiaries
have been made available to the Underwriters and contain a complete
summary of all meetings and actions of the directors and stockholders of
the Company since the time of its incorporation and reflect all
transactions referred to in such minutes accurately in all material
respects;
xxi. except as set forth in the Prospectus and to the best
knowledge of such counsel, no officer, director or stockholder of any of
the Company or the Subsidiaries, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules and
Regulations) of any of the foregoing persons or entities has or has had,
either directly or indirectly, (A) an interest in any person or entity
which (x) furnishes or sells services or products which are furnished or
sold or are proposed to be furnished or sold by any of the Company or
the Subsidiaries, or (y) purchases from or sells or furnishes to any of
the Company or the Subsidiaries any goods or services, or (B) a
beneficial interest in any contract or agreement to which any of the
Company or the Subsidiaries is a party or by which it or they may be
bound or affected. Except as set forth in the Prospectus under "CERTAIN
TRANSACTIONS," there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements, arrangements,
understandings or transactions, between or among any of the Company or
the Subsidiaries, and any officer, director, or 5% or greater
securityholder of any of the Company or the Subsidiaries, or any
affiliate or associate of any such person or entity;
xxii. each of the Company and the Subsidiaries is in compliance
with all provisions of Section 1 of Laws of Florida, Chapter 92-198, An
Act Relating to Disclosure of Doing Business with Cuba;
27
xxiii. to the best of such counsel's knowledge, after due inquiry,
there is no action, suit, proceeding, inquiry, investigation, litigation
or governmental proceeding, domestic or foreign, pending or threatened
(or circumstances that may give rise to the same) involving the
Company's or any Subsidiary's production, use, testing, manufacturing or
marketing of any products or services, which (i) questions the authority
of the Company or any Subsidiary to produce, use, test, manufacture or
market any products or services as described in the Prospectus, (ii)
questions the completeness or accuracy of data generated by any trials,
tests or studies being conducted by or on behalf of the Company or any
of its Subsidiaries, (iii) is required to be disclosed in the Prospectus
which is not so disclosed, or (iv) might materially and adversely affect
the condition, financial or otherwise, or the earnings, prospects,
value, operations or business of the Company and the Subsidiaries, taken
as a whole.
xxiv. none of the Company, the Subsidiaries or any of their
respective affiliates shall be subject to the requirements of or shall
be deemed an "Investment Company," pursuant to and as defined under,
respectively, the Investment Company Act.
Such counsel shall state that such counsel has participated in
conferences with officers and other representatives of the Company and the
Subsidiaries, and representatives of the independent public accountants for the
Company and the Subsidiaries, at which conferences such counsel made inquiries
of such officers, representatives and accountants and discussed the contents of
the Preliminary Prospectus, the Registration Statement, the Prospectus, and
related matters and, although such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Preliminary Prospectus, the Registration Statement
and Prospectus, on the basis of the foregoing, no facts have come to the
attention of such counsel which lead them to believe that either the
Registration Statement or any amendment thereto, at the time such Registration
Statement or amendment became effective or the Preliminary Prospectus or
Prospectus or amendment or supplement thereto as of the date of such opinion
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements and schedules and other financial and
statistical data included in the Preliminary Prospectus, the Registration
Statement or the Prospectus). Such counsel shall further state that its opinions
may be relied upon by Underwriters' Counsel in rendering its opinion to the
Underwriters.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to Underwriters' Counsel) of
other counsel acceptable to Underwriters' Counsel, familiar with the applicable
laws; (B) as to matters of fact, to the extent they deem proper, on certificates
and written statements of responsible officers of each of the Company and the
Subsidiaries and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents respecting the
corporate existence or good standing of each of the Company and the
Subsidiaries, provided that copies of any such statements or certificates shall
be delivered to
28
Underwriters' Counsel if requested. The opinion of such counsel for the Company
and the Subsidiaries shall state that the opinion of any such other counsel is
in form satisfactory to such counsel and that the Representative, Underwriters'
Counsel and they are each justified in relying thereon. Any opinion of counsel
for the Company and the Subsidiaries shall not state that it is to be governed
or qualified by, or that it is otherwise subject to, any treatise, written
policy or other document relating to legal opinions, including, without
limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991)
or any comparable state accord.
(e) At the Closing Date, the Underwriters shall have received the
favorable opinion of Morrison & Foerster LLP, patent counsel to the Company and
the Subsidiaries, dated the Closing Date, addressed to the Underwriters, in form
and substance satisfactory to Underwriters' Counsel and in substantially the
form of Schedule B hereto.
(f) At each Option Closing Date, if any, the Underwriters shall
have received the favorable opinions of each of Wilson Sonini Goodrich & Rosati,
counsel to the Company and the Subsidiaries, and Morrison & Foerster LLP, patent
counsel to the Company and the Subsidiaries, dated such Option Closing Date,
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel confirming as of such Option Closing Date the statements
made by each of Wilson Sonsini Goodrich & Rosati, and Morrison & Foerster LLP,
in their respective opinions delivered on the Closing Date.
(g) On or prior to each of the Closing Date and each Option
Closing Date, if any, Underwriters' Counsel shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company, or herein contained.
(h) Prior to each of the Closing Date and each Option Closing Date, if
any, (i) there shall have been no material adverse change nor development
involving a prospective change in the condition, financial or otherwise,
earnings, position, value, properties, results of operations, prospects,
stockholders' equity or the business activities of any of the Company or the
Subsidiaries, whether or not in the ordinary course of business, from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus; (ii) there shall have been no transaction, not in the ordinary
course of business, entered into by any of the Company or the Subsidiaries, from
the latest date as of which the financial condition of the Company and the
Subsidiaries is set forth in the Registration Statement and Prospectus which is
adverse to the Company and the Subsidiaries taken as a whole; (iii) none of the
Company nor the Subsidiaries shall be in default under any provision of any
instrument relating to any outstanding indebtedness; (iv) none of the Company
nor the Subsidiaries shall have issued any securities (other than the
Securities) or declared or paid any dividend or made any distribution in respect
of its capital stock of any class and there has not been any change in the
capital stock or any material change in the debt (long or short term) or
liabilities or obligations of any of the Company or the Subsidiaries (contingent
or otherwise); (v) no material amount of the assets of any of the Company or the
Subsidiaries shall have been pledged or mortgaged, except as set forth in the
Registration Statement and Prospectus; (vi) no action, suit or proceeding, at
law or
29
in equity, shall have been pending or threatened (or circumstances giving rise
to same) against any of the Company or the Subsidiaries, or affecting any of its
or their respective properties or businesses before or by any court or federal,
state or foreign commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may adversely affect the business,
operations, earnings, position, value, properties, results of operations,
prospects or financial condition or income of the Company and the Subsidiaries
taken as a whole; and (vii) no stop order shall have been issued under the Act
and no proceedings therefor shall have been initiated, threatened or
contemplated by the Commission.
(i) At each of the Closing Date and each Option Closing Date, if
any, the Underwriters shall have received a certificate of the Company signed by
the principal executive officer and by the chief financial or chief accounting
officer of the Company, dated the Closing Date or Option Closing Date, as the
case may be, to the effect that each of such persons has carefully examined the
Registration Statement, the Prospectus and this Agreement, and that:
i. The representations and warranties of the Company in this
Agreement are true and correct, as if made on and as of the Closing Date
or the Option Closing Date, as the case may be, and the Company has
complied with all agreements and covenants and satisfied all conditions
contained in this Agreement on its part to be performed or satisfied at
or prior to such Closing Date or Option Closing Date, as the case may
be;
ii. No stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued, and no proceedings for
that purpose have been instituted or are pending or, to the best of each
of such person's knowledge, are contemplated or threatened under the
Act;
iii. The Registration Statement and the Prospectus and, if any,
each amendment and each supplement thereto, contain all statements and
information required to be included therein, and none of the
Registration Statement, the Prospectus nor any amendment or supplement
thereto includes any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading and neither the Preliminary
Prospectus or any supplement thereto included any untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
iv. Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, (a) none of the
Company nor the Subsidiaries has incurred up to and including the
Closing Date or the Option Closing Date, as the case may be, other than
in the ordinary course of its business, any material liabilities or
obligations, direct or contingent; (b) none of the Company nor the
Subsidiaries has paid or declared any dividends or other distributions
on its capital stock; (c) none of the Company nor the Subsidiaries has
entered into any transactions not in the ordinary course of business;
(d) there has not been any change in the capital stock or long-term debt
or any increase in the short-term borrowings (other than any increase in
the short-term borrowings in the ordinary course of business) of any of
the Company or the Subsidiaries;
30
(e) none of the Company nor the Subsidiaries has sustained any loss or
damage to its or their respective properties or assets, whether or not
insured; (f) there is no litigation which is pending or threatened (or
circumstances giving rise to same) against any of the Company or the
Subsidiaries or any affiliated party of any of the foregoing which is
required to be set forth in an amended or supplemented Prospectus which
has not been set forth; and (g) there has occurred no event required to
be set forth in an amended or supplemented Prospectus which has not been
set forth.
References to the Registration Statement and the Prospectus in this subsection
(j) are to such documents as amended and supplemented at the date of such
certificate.
(j) By the Closing Date, the Underwriters will have received
clearance from the NASD as to the amount of compensation allowable or payable to
the Underwriters, as described in the Registration Statement.
(k) At the time this Agreement is executed, the Underwriters shall
have received a letter, dated such date, addressed to the Underwriters in form
and substance satisfactory (including the non-material nature of the changes or
decreases, if any, referred to in clause (iii) below) in all respects to the
Underwriters and Underwriters' Counsel, from Ernst & Young, LLP:
i. confirming that they are independent certified public
accountants with respect to the Company and the Subsidiaries within the
meaning of the Act and the applicable Rules and Regulations;
ii. stating that it is their opinion that the consolidated
financial statements and supporting schedules of the Company and the
Subsidiaries included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the
Act and the Rules and Regulations thereunder and that the Representative
may rely upon the opinion of Ernst & Young, LLP with respect to the
consolidated financial statements and supporting schedules included in
the Registration Statement;
iii. stating that, on the basis of a limited review which included
a reading of the latest available unaudited interim financial statements
of each of the Company and the Subsidiaries, a reading of the latest
available minutes of the stockholders and board of directors and the
various committees of the boards of directors of each of the Company and
the Subsidiaries, consultations with officers and other employees of
each of the Company and the Subsidiaries responsible for financial and
accounting matters and other specified procedures and inquiries, nothing
has come to their attention which would lead them to believe that (A)
the unaudited consolidated financial statements and supporting schedules
of the Company and the Subsidiaries
31
included in the Registration Statement do not comply as to form in all
material respects with the applicable accounting requirements of the Act
and the Rules and Regulations or are not fairly presented in conformity
with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited consolidated financial
statements of the Company and the Subsidiaries included in the
Registration Statement, or (B) at a specified date not more than five
(5) days prior to the effective date of the Registration Statement,
there has been any change in the capital stock or long-term debt of any
of the Company or the Subsidiaries, or any decrease in the stockholders'
equity or net current assets or net assets of any of the Company or the
Subsidiaries as compared with amounts shown in the December 31, 1996
balance sheet included in the Registration Statement, other than as set
forth in or contemplated by the Registration Statement, or, if there was
any change or decrease, setting forth the amount of such change or
decrease, and (C) during the period from December 31, 1996 to a
specified date not more than five (5) days prior to the effective date
of the Registration Statement, there was any decrease in net revenues,
net earnings or increase in net earnings per common share of any of the
Company or the Subsidiaries, in each case as compared with the
corresponding period beginning December 31, 1995, other than as set
forth in or contemplated by the Registration Statement, or, if there was
any such decrease, setting forth the amount of such decrease;
iv. setting forth, at a date not later than five (5) days prior to
the date of the Registration Statement, the amount of liabilities of the
Company and the Subsidiaries taken as a whole (including a break-down of
commercial paper and notes payable to banks);
v. stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company and the
Subsidiaries set forth in the Prospectus in each case to the extent that
such amounts, numbers, percentages, statements and information may be
derived from the general accounting records, including work sheets, of
the Company and the Subsidiaries and excluding any questions requiring
an interpretation by legal counsel, with the results obtained from the
application of specified readings, inquiries and other appropriate
procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the
letter and found them to be in agreement;
vi. statements as to such other matters incident to the
transaction contemplated hereby as the Representative may request.
(l) At the Closing Date and each Option Closing Date, if any, the
Underwriters shall have received from Ernst & Young, LLP a letter, dated as of
the Closing Date or the Option Closing Date, as the case may be, to the effect
that they reaffirm that statements made in the letter furnished pursuant to
subsection (k) of this Section, except that the specified date referred to shall
be a date not more than five (5) days prior to the Closing Date or the Option
Closing Date, as the case may be, and, if the Company has elected to rely on
Rule 430A of the Rules and Regulations, to the further effect that they have
carried out procedures as specified in clause (v) of subsection (k) of this
Section with respect to certain amounts, percentages and financial information
as specified by the Representative and deemed to be a part of the Registration
Statement pursuant to Rule 430A(b) and have found such amounts, percentages and
financial information to be in agreement with the records specified in such
clause (v).
32
(m) On each of the Closing Date and each Option Closing Date, if
any, there shall have been duly tendered to the Representative for the several
Underwriters' accounts the appropriate number of Securities.
(n) No order suspending the sale of the Securities in any
jurisdiction designated by the Representative pursuant to subsection (e) of
Section 4 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(o) On or before the Closing Date, the Company shall have executed
and delivered to the Representative, (i) the Representative's Warrant Agreement
substantially in the form filed as Exhibit [___] to the Registration Statement,
in final form and substance satisfactory to the Representative, and (ii) the
Representative's Warrants in such denominations and to such designees as shall
have been provided to the Company.
(p) On or before the Closing Date, the Firm Securities and Option
Securities shall have been duly approved for quotation on Nasdaq, subject to
official notice of issuance.
(q) On or before the Closing Date, there shall have been delivered
to the Representative all of the Lock-up Agreements, in form and substance
satisfactory to Underwriters' Counsel.
(r) On or before the Closing Date, the Company shall have executed
and delivered to the Representative and the Transfer Agent the Warrant Agreement
substantially in the form filed as Exhibit [___] to the Registration Statement,
in final form and substance satisfactory to the Representative.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the Closing Date or the relevant Option Closing Date,
as the case may be, is not so fulfilled, the Representative may terminate this
Agreement or, if the Representative so elects, it may waive any such conditions
which have not been fulfilled or extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless each of the
Underwriters (for purposes of this Section 7 "Underwriter" shall include the
officers, directors, partners, employees, agents and counsel of the Underwriter,
including specifically each person who may be substituted for an Underwriter as
provided in Section 11 hereof), and each person, if any, who controls the
Underwriter ("controlling person") within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims, damages, expenses or liabilities, joint or several (and actions,
proceedings, investigations, inquiries, suits and litigation in respect
thereof), whatsoever (including but not limited to any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such claim, action, proceeding, investigation, inquiry, suit or litigation,
commenced or threatened, or any claim whatsoever), as such are incurred, to
which the Underwriter or such controlling person may become subject under the
Act, the Exchange Act or any other statute or at common law or
33
otherwise or under the laws of foreign countries, arising out of or based upon
(A) any untrue statement or alleged untrue statement of a material fact
contained (i) in any Preliminary Prospectus, the Registration Statement or the
Prospectus (as from time to time amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Securities; or (iii) in any application or other document
or written communication (in this Section 7 collectively called "application")
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Securities under the
securities laws thereof or filed with the Commission, any state securities
commission or agency, Nasdaq or any other securities exchange; (B) the omission
or alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein not misleading (in the case of the
Prospectus, in the light of the circumstances under which they were made), or
(C) any breach of any representation, warranty, covenant or agreement of the
Company contained herein or in any certificate by or on behalf of the Company or
any of its officers delivered pursuant hereto, unless, in the case of clause (A)
or (B) above, such statement or omission was made in reliance upon and in strict
conformity with written information furnished to the Company with respect to any
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment thereof or supplement thereto, or in any application, as the case may
be.
The indemnity agreement in this subsection (a) shall be in addition to
any liability which the Company may have at common law or otherwise.
(b) Each of the Underwriters agrees severally, but not jointly, to
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of the Act, to the same extent
as the foregoing indemnity from the Company to the Underwriters but only with
respect to statements or omissions, if any, made in any Preliminary Prospectus,
the Registration Statement or Prospectus or any amendment thereof or supplement
thereto or in any application made in reliance upon, and in strict conformity
with, written information furnished to the Company with respect to any
Underwriter by such Underwriter expressly for use in such Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment thereof or
supplement thereto or in any such application, provided that such written
information or omissions only pertain to disclosures in the Preliminary
Prospectus, the Registration Statement or Prospectus directly relating to the
transactions effected by the Underwriters in connection with this Offering. The
Company acknowledges that the statements with respect to the public offering of
the Firm Securities and the Option Securities set forth under the heading
"Underwriting" and the stabilization legend in the Prospectus have been
furnished by the Underwriters expressly for use therein and constitute the only
information furnished in writing by or on behalf of the Underwriters for
inclusion in the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any claim, action, suit,
investigation, inquiry, proceeding or litigation, such indemnified party shall,
if a claim in respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom indemnification is
to
34
be sought in writing of the commencement thereof (but the failure so to notify
an indemnifying party shall not relieve it from any liability which it may have
under this Section 7 except to the extent that it has been prejudiced in any
material respect by such failure or from any liability which it may have
otherwise). In case any such claim, action, suit, investigation, inquiry,
proceeding or litigation is brought against any indemnified party, and it
notifies an indemnifying party or parties of the commencement thereof, the
indemnifying party or parties will be entitled to participate therein, and to
the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any such case
but the fees and expenses of such counsel shall be at the expense of such
indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying parties in connection with
the defense of thereof at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably satisfactory to
such indemnified party to have charge of the defense thereof within a reasonable
time after notice of commencement thereof, or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties shall
not have the right to direct the defense thereof on behalf of the indemnified
party or parties), in any of which events such fees and expenses of one
additional counsel shall be borne by the indemnifying parties. In no event shall
the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one claim, action, suit,
investigation, inquiry, proceeding or litigation or separate but similar or
related claims, actions, suits, investigations, inquiries, proceedings or
litigation in the same jurisdiction arising out of the same general allegations
or circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim, action,
suit, investigation, inquiry, proceeding or litigation effected without its
written consent; provided, however, that such consent was not unreasonably
withheld. An indemnifying party will not, without the prior written consent of
the indemnified parties, settle, compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit,
investigation, inquiry, proceeding or litigation in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim, action, suit,
investigation, inquiry, proceeding or litigation), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit, investigation,
inquiry, proceeding or litigation and (ii) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) In order to provide for just and equitable contribution in any
case in which (i) an indemnified party makes claim for indemnification pursuant
to this Section 7, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Act may be required on the part of any
indemnified party, then each indemnifying party shall contribute to
35
the amount paid as a result of such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of the
contributing parties, on the one hand, and the party to be indemnified on the
other hand, from the offering of the Firm Securities and the Option Securities
or (B) if the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each of the contributing parties, on the one hand, and the party to be
indemnified on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. In any case where the Company is
the contributing party and the Underwriters are the indemnified party, the
relative benefits received by the Company on the one hand, and the Underwriters,
on the other, shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Firm Securities and the Option Securities
(before deducting expenses) bear to the total underwriting discounts received by
the Underwriters hereunder, in each case as set forth in the table on the Cover
Page of the Prospectus. Relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, or by the Underwriters, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, expenses or
liabilities (or actions in respect thereof) referred to above in this subsection
(d) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this subsection (d), the
Underwriters shall not be required to contribute any amount in excess of the
underwriting discount applicable to the Firm Securities and the Option
Securities purchased by the Underwriters hereunder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company or the Underwriter within the meaning of the Act,
each officer of the Company who has signed the Registration Statement, and each
director of the Company shall have the same rights to contribution as the
Company or the Underwriter, as the case may be, subject in each case to this
subsection (d). Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit or proceeding against such party
in respect to which a claim for contribution may be made against another party
or parties under this subsection (d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have hereunder or otherwise than under this
subsection (d), or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may have at common
law or otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto,
shall be deemed to be representations, warranties and agreements at the Closing
Date and the Option Closing Date, as the case may be, and such
36
representations, warranties and agreements of the Company and the indemnity
agreements contained in Section 7 hereof, shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company, any controlling person of any Underwriter or the
Company, and shall survive termination of this Agreement or the issuance and
delivery of the Securities to the Underwriters and the Representative, as the
case may be.
9. Effective Date. This Agreement shall become effective at 10:00 a.m.,
New York City time, on the next full business day following the date hereof, or
at such earlier time after the Registration Statement becomes effective as the
Representative, in its discretion, shall release the Securities for sale to the
public; provided, however, that the provisions of Sections 5, 7 and 10 of this
Agreement shall at all times be effective. For purposes of this Section 9, the
Securities to be purchased hereunder shall be deemed to have been so released
upon the earlier of dispatch by the Representative of telegrams to securities
dealers releasing such securities for offering or the release by the
Representative for publication of the first newspaper advertisement which is
subsequently published relating to the Securities.
10. Termination.
(a) Subject to subsection (b) of this Section 10, the
Representative shall have the right to terminate this Agreement, (i) if any
domestic or international event or act or occurrence has materially adversely
disrupted, or in the Representative's opinion will in the immediate future
materially adversely disrupt, the financial markets; or (ii) if any material
adverse change in the financial markets shall have occurred; or (iii) if trading
generally shall have been suspended or materially limited on or by, as the case
may be, any of the New York Stock Exchange, the American Stock Exchange, the
NASD, the Boston Stock Exchange, the Commission or any governmental authority
having jurisdiction over such matters; or (iv) if trading of any of the
securities of the Company shall have been suspended, or any of the securities of
the Company shall have been delisted, on any exchange or in any over-the-counter
market; (v) if the United States shall have become involved in a war or major
hostilities, or if there shall have been an escalation in an existing war or
major hostilities or a national emergency shall have been declared in the United
States; or (vi) if a banking moratorium has been declared by a state or federal
authority; or (vii) if a moratorium in foreign exchange trading has been
declared; or (viii) if the Company shall have sustained a loss material or
substantial to the Company by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Representative's opinion, make it
inadvisable to proceed with the offering, sale and/or delivery of the
Securities; or (ix) if there shall have been such a material adverse change in
the conditions or prospects of the Company, or such material adverse change in
the general market, political or economic conditions, in the United States or
elsewhere, that, in each case, in the Representative's judgment, would make it
inadvisable to proceed with the offering, sale and/or delivery of the Securities
or (x) if either of Anthony E. Maida, III or Lynn E. Spitler, M.D. shall no
longer serve the Company in his or her present capacity.
(b) If this Agreement is terminated by the Representative in
accordance with the provisions of Section 10(a) the Company shall promptly
reimburse and indemnify the
37
Representative for all of its actual out-of-pocket expenses, including the fees
and disbursements of counsel for the Underwriters (less amounts previously paid
pursuant to Section 5(c) above). Notwithstanding any contrary provision
contained in this Agreement, if this Agreement shall not be carried out within
the time specified herein, or any extension thereof granted to the
Representative, by reason of any failure on the part of the Company to perform
any undertaking or satisfy any condition of this Agreement by it to be performed
or satisfied (including, without limitation, pursuant to Section 6 or Section
12) then, the Company shall promptly reimburse and indemnify the Representative
for all of its actual out-of-pocket expenses, including the fees and
disbursements of counsel for the Underwriters (less amounts previously paid
pursuant to Section 5(c) above). In addition, the Company shall remain liable
for all Blue Sky counsel fees and disbursements, expenses and filing fees.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including, without limitation,
pursuant to Sections 6, 10, 11 and 12 hereof), and whether or not this Agreement
is otherwise carried out, the provisions of Section 5 and Section 7 shall not be
in any way affected by such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Substitution of the Underwriters. If one or more of the Underwriters
shall fail (otherwise than for a reason sufficient to justify the termination of
this Agreement under the provisions of Section 6, Section 10 or Section 12
hereof) to purchase the Securities which it or they are obligated to purchase on
such date under this Agreement (the "Defaulted Securities"), the Representative
shall have the right, within 24 hours thereafter, to make arrangement for one or
more of the non-defaulting Underwriters, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representative shall not have completed such arrangements within such 24-hour
period, then:
(a) if the number of Defaulted Securities does not exceed 10% of
the total number of Firm Securities to be purchased on such date, the
non-defaulting Underwriters shall be obligated to purchase the full
amount thereof in the proportions that their respective underwriting
obligations hereunder bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the number of Defaulted Securities exceeds 10% of the total
number of Firm Securities, this Agreement shall terminate without
liability on the part of any non-defaulting Underwriters (or, if such
default shall occur with respect to any Option Securities to be
purchased on an Option Closing Date, the Underwriters may at the
Representative's option, by notice from the Representative to the
Company, terminate the Underwriters' obligation to purchase Option
Securities from the Company on such date).
No action taken pursuant to this Section 11 shall relieve any defaulting
Underwriter from liability in respect of any default by such Underwriter under
this Agreement.
In the event of any such default which does not result in a termination
of this Agreement, the Representative shall have the right to postpone the
Closing Date for a period not exceeding
38
seven (7) days in order to effect any required changes in the Registration
Statement or Prospectus or in any other documents or arrangements.
12. Default by the Company. If the Company shall fail at the Closing
Date or at any Option Closing Date, as applicable, to sell and deliver the
number of Securities which it is obligated to sell hereunder on such date, then
this Agreement shall terminate (or, if such default shall occur with respect to
any Option Securities to be purchased on an Option Closing Date, the
Underwriters may at the Representative's option, by notice from the
Representative to the Company, terminate the Underwriters' obligation to
purchase Option Securities from the Company on such date) without any liability
on the part of any non-defaulting party other than pursuant to Section 5,
Section 7 and Section 10 hereof. No action taken pursuant to this Section 12
shall relieve the Company from liability, if any, in respect of such default.
13. Notices. All notices and communications hereunder, except as herein
otherwise specifically provided, shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard form of
telecommunication. Notices to the Underwriters shall be directed to the
Representative at National Securities Corporation, 1001 Fourth Avenue, Suite
2200, Seattle, Washington 98154, Attention: Steven A. Rothstein, Chairman, with
a copy to Orrick, Herrington & Sutcliffe LLP, 666 Fifth Avenue, New York, New
York 10103, Attention: Lawrence B. Fisher, Esq. Notices to the Company shall be
directed to the Company at 2010 Crow Canyon Place, Suite 100, Sam Ramon,
California, 94583, Attention: Anthony E. Maida, III, Chief Executive Officer,
with a copy to: Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California 94304, Attention: Blair W. Stewart, Jr., Esq.
14. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 7 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained. No purchaser of Securities from any Underwriter shall be deemed to be
a successor by reason merely of such purchase.
15. Construction. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the choice of law or conflict of laws principles.
16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
17. Entire Agreement; Amendments. This Agreement, the Warrant Agreement
and the Representative's Warrant Agreement constitute the entire agreement of
the parties hereto and supersede all prior written or oral agreements,
understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing, signed by the Representative
and the Company.
39
If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement among
us.
Very truly yours,
JENNER TECHNOLOGIES
By:
--------------------------------------
Anthony E. Maida, III
Chief Executive Officer
Confirmed and accepted as of
the date first above written.
NATIONAL SECURITIES CORPORATION
For itself and as Representative
of the several Underwriters named
in Schedule A hereto.
By:
--------------------------------
Steven A. Rothstein
Chairman
SCHEDULE A
NUMBER OF FIRM
SECURITIES
NAME OF UNDERWRITERS TO BE PURCHASED
- -------------------- ---------------
National Securities Corporation...........................
Total..................................................... 2,500,000
=========
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
JENNER TECHNOLOGIES
Anthony E. Maida III and Timothy Stevens certify that:
1. They are the duly elected and acting Chief Executive Officer and
Assistant Secretary, respectively of Jenner Technologies, a California
corporation (the "Corporation").
2. The Articles of Incorporation of the Corporation are hereby amended
and restated to read in their entirety as set forth on Exhibit A attached
hereto.
3. The attached Amended and Restated Articles of Incorporation have
been duly approved by the Board of Directors of the Corporation.
4. The attached Amended and Restated Articles of Incorporation have
been duly approved by the required vote of the outstanding shares of Common
Stock and Preferred Stock entitled to vote in accordance with the Articles of
Incorporation of this Corporation and Sections 902 and 903 of the California
Corporations Code. The total number of outstanding shares of each class entitled
to vote with respect to the attached amendment and restatement was (i)
16,867,827 shares of Common Stock and (ii) 10,550,000 shares of Preferred Stock
(consisting of 8,550,000 shares of Series A Preferred Stock and 2,000,000 shares
of Series B Preferred Stock). The number of shares of Common Stock and Preferred
Stock voting in favor of the amendment equaled or exceeded the vote required.
The vote required was a majority of the outstanding shares of Common Stock and
Preferred Stock each voting separately as a class.
The undersigned further declare under penalty of perjury under the laws
of the State of California that the matters set forth in this certificate are
true and correct of their own knowledge.
Executed at Palo Alto, California on June 18, 1996.
/s/ ANTHONY E. MAIDA III
-------------------------
Anthony E. Maida III
Chief Executive Officer
/s/ TIMOTHY STEVENS
-------------------------
Timothy Stevens
Assistant Secretary
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EXHIBIT A
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
JENNER TECHNOLOGIES
I.
The name of this corporation is Jenner Technologies.
II.
The purpose of this corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of California, other than the banking business, the trust company business,
or the practice of a profession permitted to be incorporated by the California
Corporations Code.
III.
This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total number
of shares which the corporation is authorized to issue is 35,000,000 shares, of
which 30,000,000 shares are Common Stock, $0.001 par value, and 5,000,000 shares
are Preferred Stock, $0.001 par value. Preferred Stock may be issued from time
to time in one or more series.
Subject to the provisions set forth in Section 5 of this Article IV
hereof, the board of directors of the corporation is authorized to fix the
number of shares of any series of any Preferred Stock and to determine or alter
the rights, preferences, privileges and restrictions granted to or imposed upon
any wholly unissued series of Preferred Stock and, within the limits and
restrictions stated in any resolution or resolutions of the board of directors
of the corporation originally fixing the number of shares constituting any
series of Preferred Stock, to increase or decrease, but not below the number of
shares of any such series then outstanding, the number of shares of any such
series subsequent to the issue of shares of that series. The first series of
Preferred Stock shall be designated "Series A Preferred" and shall consist of
2,137,500 shares. The second series of Preferred Stock shall be designated
"Series B Preferred" and shall consist of 500,000 shares. The Series A Preferred
and the Series B Preferred are sometimes collectively referred to herein as the
"Preferred Stock."
Upon the filing of these Restated Articles of Incorporation, each
outstanding share of Common Stock, Series A Preferred Stock and Series B
Preferred Stock shall be split up and converted into 0.248013819 shares of
Common Stock, Series A Preferred Stock and Series B Preferred Stock,
respectively. In lieu of any fractional shares to which a holder of Common
Stock, Series A Preferred Stock and Series B Preferred Stock would otherwise be
entitled, the holder shall receive one whole share of Common Stock, Series A
Preferred Stock or Series B Preferred Stock, as the case may be.
IV.
The rights, preferences, privileges and restrictions granted to or
imposed upon the Common Stock and Preferred Stock are as follows:
1. Dividends. The holders of Preferred Stock shall be entitled, when
and if declared by the board of directors of the corporation, to dividends out
of assets of the corporation legally available therefor at the rate of $0.0605
per share in the case of the Series A Preferred and $0.0907 per share in the
case of the Series B Preferred, per annum. Dividends on the Preferred Stock
shall be payable in preference and prior to any payment of any dividend on the
Common Stock of the corporation. Thereafter, the holders of Common Stock and
Preferred Stock shall be entitled, when and if declared by the board of
directors of the corporation, to dividends out of assets of the corporation
legally available therefor, provided, however, that no such dividend may be
declared or paid on any shares of Common Stock or Preferred Stock unless at the
same time an equivalent dividend is declared or paid on all outstanding shares
of Common Stock and Preferred Stock, and provided further that the dividend on
any series of any Preferred Stock shall be payable at the same rate per share as
would be payable on the shares of Common Stock or other securities into which
such series of Preferred Stock is convertible immediately prior to the record
date of such dividend. The right to dividends on shares of the Common Stock and
Preferred Stock shall not be cumulative, and no right shall accrue to holders of
Common Stock or Preferred Stock by reason of the fact that dividends on said
shares are not declared in any prior period.
Dividends, if paid or declared and set apart for payment, must be paid
or declared and set apart for payment in full on each series of Preferred Stock
contemporaneously, or if less than full dividends are paid or declared and set
apart for payment on each series of Preferred Stock, the same percentage of
dividends shall be paid or declared and set apart for payment on each such
series of Preferred Stock, based on the aggregate dividend preference of each
such series.
2. Liquidation Preference.
(a) Preference. In the event of any liquidation, dissolution
or winding up of the corporation, either voluntarily or involuntarily, the
holders of Preferred Stock shall be entitled to receive, prior and in preference
to any distribution of any of the assets or surplus funds of the corporation to
the holders of Common Stock of the corporation, an amount equal to: (i) $0.8064
per share of Series A Preferred then held, plus a further amount equal to (A)
the number of shares of Series A Preferred then held multiplied by .0605,
multiplied by (B) the number of years such shares were held prior to the
-2-
effective date of the liquidation, dissolution or winding up of the corporation;
and (ii) $1.2096 per share of Series B Preferred then held, plus a further
amount equal to (A) the number of shares of Series B Preferred then held
multiplied by .0907, multiplied by (B) the number of years such shares were held
prior to the effective date of the liquidation, dissolution or winding up of the
corporation.
If upon such liquidation, dissolution or winding up of the
corporation, the assets of the corporation are insufficient to provide for the
cash payment to such holders of the full preferential aforesaid preferential
amounts, then the remaining assets of the corporation shall be distributed among
the holders of Preferred Stock in the proportion that the aggregate preferential
amount of shares of Preferred Stock held by each such holder bears to the
aggregate preferential amount of all shares of Preferred Stock.
After the payment or setting apart of payment to the holders
of the Preferred Stock of the preferential amounts so payable to them, the
holders of Common Stock shall be entitled to receive pro rata the remaining
assets of the corporation.
(b) Consolidation or Merger. A consolidation or merger of the
corporation with or into any other corporation or corporations, or a sale of all
or substantially all of the assets of the corporation, or a series of related
transactions in which more than 50% of the voting power of the corporation is
disposed of, shall not be deemed to be a liquidation, dissolution or winding up
within the meaning of this paragraph 2.
(c) Noncash Distributions. If any of the assets of the
corporation are to be distributed other than in cash under this paragraph 2 or
for any purpose, then the board of directors of the corporation shall promptly
engage independent competent appraisers to determine the value of the assets to
be distributed to the holders of Preferred Stock. The corporation shall, upon
receipt of such appraiser's valuation, give prompt written notice to each holder
of shares of Preferred Stock of the appraiser's valuation.
(d) Repurchase of Shares. In connection with repurchases by
this corporation of its Common Stock, pursuant to its agreements with certain of
the holders thereof, Section 502 and 503 of the California General Corporation
Law shall not apply in all or in part with respect to such repurchases.
3. Conversion. The holders of the Preferred Stock shall have conversion
rights as follows (the "Conversion Rights"):
(a) Right to Convert. Each share of Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the date of
issuance of such share at the office of the corporation or any transfer agent
for the Preferred Stock. Each share of each series of Preferred Stock shall be
convertible into the number of fully paid and nonassessable shares of Common
Stock which results from dividing the Conversion Value (as hereinafter defined)
per share in effect for such series at the time of conversion by the per share
Conversion Price (as hereinafter defined) of such series. The initial Conversion
Price per share of Series A Preferred Stock shall be $0.8064 and the per share
Conversion
-3-
Value of Series A Preferred shall be $0.8064. The initial Conversion Price per
share of Series B Preferred shall be $1.2096 and the Conversion Value per share
of Series B Preferred shall be $1.2096. The initial Conversion Price of each
series shall be subject to adjustment from time to time as provided below. The
number of shares of Common Stock into which a series of Preferred Stock is
convertible is hereinafter referred to as the "Conversion Rate" of such series.
(b) Automatic Conversion. Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at its then effective
Conversion Rate (i) immediately upon the closing of an underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended, the aggregate gross proceeds to the corporation of
which exceed $7,500,000 and the per share price to the public of which is at
least $8.00, prior to deduction of underwriting commissions and offering
expenses; or (ii) upon the effective date of the affirmative vote of holders of
more than 80% of all outstanding series Preferred Stock voting together as a
single class.
(c) Mechanics of Conversion. Before any holder of Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of the corporation or of any transfer agent for the Preferred
Stock and shall give written notice to the corporation at such office that he or
she elects to convert the same (except that no such written notice of election
to convert shall be necessary in the event of an automatic conversion pursuant
to paragraph 3(b) hereof). The corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Preferred Stock a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled. Such conversion shall be deemed to have been made
immediately before the close of business on the date of such surrender of the
shares of Preferred Stock to be converted, (except that in the case of an
automatic conversion pursuant to paragraph 3(b)(i) such conversion shall be
deemed to have been made immediately before the closing of the offering referred
to in paragraph 3(b)(i)) and the person or persons entitled to receive the
shares of Common Stock issuable upon such conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock at such
time.
(d) Fractional Shares. In lieu of any fractional shares to
which the holder of a series Preferred Stock would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the fair market
value of one share of such series of Preferred Stock as determined by the board
of directors of the corporation.
(e) Adjustment of Conversion Price. The Conversion Price of
each series of Preferred Stock shall be subject to adjustment from time to time
as follows:
(i) If the corporation shall issue any Common Stock
other than "Excluded Stock", as defined below, for a consideration per share
less than the Conversion Price of such series in effect immediately prior to the
issuance of such Common Stock (excluding stock dividends, subdivisions,
split-ups, combinations or dividend which are covered by paragraph 3(e)(iii),
(iv), (v) and (vi)), the Conversion Price of such series in effect after each
such issuance shall thereafter (except as provided in this Section 3(e)) be
adjusted to a price equal to the quotient obtained by dividing:
-4-
(A) an amount equal to the sum of
(x) the total number of shares of
Common Stock outstanding (including any shares of Common Stock issuable upon
conversion of the Preferred Stock, or deemed to have been issued pursuant to
subdivision (3) of this clause (i) and to clause (ii) below) immediately prior
to such issuance multiplied by the Conversion Price of such series in effect
immediately prior to such issuance, plus
(y) the consideration received by
the corporation upon such issuance, by
(B) the total number of shares of Common
Stock outstanding (including any shares of Common Stock issuable upon conversion
of the Preferred Stock or deemed to have been issued pursuant to subdivision (3)
of this clause (i) and to clause (ii) below) immediately prior to such issuance
plus the additional shares of Common Stock deemed to be issued in such issuance
(but not including any additional shares of Common Stock deemed to be issued as
a result of any adjustment in the Conversion Price resulting from such
issuance).
For the purposes of any adjustment of the
Conversion Price pursuant to this clause (i), the following provisions shall be
applicable:
(1) In the case of the issuance of
Common Stock for cash, the consideration shall be deemed to be the amount of
cash paid therefor after deducting any discounts or commissions paid or incurred
by the corporation in connection with the issuance and sale thereof.
(2) In the case of the issuance of
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair value thereof as
determined by the board of directors of the corporation, in accordance with
generally accepted accounting treatment.
(3) In the case of the issuance of
(i) options to purchase or rights to subscribe for Common Stock (other than
Excluded Stock), (ii) securities by their terms con vertible into or
exchangeable for Common Stock (other than Excluded Stock), or (iii) options to
purchase or rights to subscribe for such convertible or exchangeable securities:
(A) the aggregate maximum
number of shares of Common Stock deliverable upon exercise of such options to
purchase or rights to subscribe for Common Stock shall be deemed to have been
issued at the time such options or rights were issued and for a consideration
equal to the consideration (determined in the manner provided in subdivisions
(1) and (2) above), if any, received by the corporation upon the issuance of
such options or rights plus the minimum purchase price provided in such options
or rights for the Common Stock covered thereby;
-5-
(B) the aggregate maximum
number of shares of Common Stock deliverable upon conversion of or in exchange
for any such convertible or exchangeable securities, or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof, shall be deemed to
have been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration received
by the corporation for any such securities and related options or rights
(excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received by the
corporation upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in subdivisions (1) and (2) above);
(C) on any change in the
number of shares of Common Stock deliverable upon exercise of any such options
or rights or conversion of or exchange for such convertible or exchangeable
securities, or on any change in the minimum purchase price of such options,
rights or securities, other than a change resulting from the antidilution
provisions of such options, rights or securities, the Conversion Price shall
forthwith be readjusted to such Conversion Price as would have obtained had the
adjustment made upon (x) the issuance of such options, rights or securities not
exercised, converted or exchanged prior to such change, as the case may be, been
made upon the basis of such change or (y) the options or rights related to such
securities not converted or exchanged prior to such change, as the case may be,
been made upon the basis of such change; and
(D) on the expiration of
any such options or rights, the termination of any such rights to convert or
exchange or the expiration of any options or rights related to such convertible
or exchangeable securities, the Conversion Price shall forthwith be readjusted
to such Conversion Price as would have obtained had the adjustment made upon the
issuance of such options, rights, convertible or exchangeable securities or
options or rights related to such convertible or exchangeable securities, as the
case may be, been made upon the basis of the issuance of only the number of
shares of Common Stock actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such convertible or exchangeable
securities or upon the exercise of the options or rights related to such
convertible or exchangeable securities, as the case may be.
(ii) "Excluded Stock" shall mean:
(A) all shares of Common Stock and
securities convertible into Common Stock issued and outstanding on the date this
document is filed with the California Secretary of State;
(B) all shares of Common Stock into which
the shares of Preferred Stock are convertible;
(C) all shares of Common Stock or other
securities to be issued after the date of filing these Amended and Restated
Articles to consultants, directors or employees of the corporation which are
approved by the board of directors of the corporation and any shares of Common
-6-
Stock or other securities currently outstanding repurchased from consultants,
directors or employees of the corporation;
(D) all shares issued to equipment lessors,
banks or financial institutions in connection with equipment financing, lines of
credit or similar transactions or shares issued in connection with a transaction
involving a technology license, distribution rights or similar rights.
All outstanding shares of Excluded Stock
(including shares issuable upon conversion of the Preferred Stock) shall be
deemed to be outstanding for all purposes of the computations of subparagraph
3(e)(i) above.
(iii) If the number of shares of Common Stock
outstanding at any time after the date hereof is increased by a stock dividend
payable in shares of Common Stock or by a subdivision or split-up of shares of
Common Stock, then, on the date such payment is made or such change is
effective, the Conversion Price shall be appropriately decreased so that the
number of shares of Common Stock issuable on conversion of the Preferred Stock
shall be increased in proportion to such increase of outstanding shares.
(iv) If the number of shares of Common Stock
outstanding at any time after the date hereof is decreased by a combination of
the outstanding shares of Common Stock, then, on the effective date of such
combination, the Conversion Price shall be appropriately increased so that the
number of shares of Common Stock issuable on conversion of the Preferred Stock
shall be decreased in proportion to such decrease in outstanding shares.
(v) In case the corporation shall declare a cash
dividend upon its Common Stock payable otherwise than out of retained earnings
or shall distribute to holders of its Common Stock shares of its capital stock
(other than Common Stock), stock or other securities of other persons, evidences
of indebtedness issued by the corporation or other persons, assets (excluding
cash dividends) or options or rights (excluding options to purchase and rights
to subscribe for Common Stock or other securities of the corporation convertible
into or exchangeable for Common Stock), then, in each such case, the holders of
Preferred Stock shall, concurrent with the distribution to holders of Common
Stock, receive a like distribution based upon the number of shares of Common
Stock into which the Series A Preferred or Series B Preferred, as the case may
be, is then convertible.
(vi) In case, at any time after the date hereof, of
any capital reorganization, or any reclassification of the stock of the
corporation (other than as a result of a stock dividend or subdivision, split-up
or combination of shares), or the consolidation or merger of the corporation
with or into another person (other than a consolidation or merger in which the
corporation is the continuing entity and which does not result in any change in
the Common Stock), or of the sale or other disposition of all or substantially
all the properties and assets of the corporation, the shares of Preferred Stock
shall, after such reorganization, reclassification, consolidation, merger, sale
or other disposition, be convertible into the kind and number of shares of stock
or other securities or property of the corporation or otherwise to which such
holder would have been entitled if immediately prior to such reorganization,
-7-
reclassification, consolidation, merger, sale or other disposition such holder
had converted his or her shares of Preferred Stock into Common Stock. The
provisions of this clause (vi) shall similarly apply to successive
reorganizations, reclassifications, consolidations, mergers, sales or other
dispositions.
(vii) All calculations under this paragraph 3(e)
shall be made to the nearest cent or to the nearest one hundredth (1/100) of a
share, as the case may be.
(f) Minimal Adjustments. No adjustment in the Conversion Price
need be made if such adjustment would result in a change in the Conversion Price
of less than $0.01. Any adjustment of less than $0.01 which is not made shall be
carried forward and shall be made at the time of and together with any
subsequent adjustment which, on a cumulative basis, amounts to an adjustment of
$0.01 or more in the Conversion Price.
(g) No Impairment. The corporation will not, through any
reorganization, recapitalization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the corporation, but will at all times in good faith
assist in the carrying out of all the provisions of this paragraph 3 and in the
taking of all such action as may be necessary or appropriate in order to protect
the Conversion Rights of the holders of the Preferred Stock against impairment.
This provision shall not restrict the corporation's right to amend its Articles
of Incorporation with the requisite shareholder consent.
(h) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Rate pursuant to this paragraph 3,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon written request at any time
of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (i) such adjustments and readjustments,
(ii) the Conversion Rate at the time in effect, and (iii) the number of shares
of Common Stock and the amount, if any, of other property which at the time
would be received upon the conversion of Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property or to receive any other right, the corporation
shall mail to each holder of Preferred Stock at least twenty (20) days prior to
such record date, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution or right, and the amount
and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock solely for the
-8-
purpose of effecting the conversion of the shares of the Preferred Stock such
number of its shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of the Preferred Stock; and if
at any time the number of authorized but unissued shares of Common Stock shall
not be sufficient to effect the conversion of all then outstanding shares of the
Preferred Stock, the corporation will take such corporate action as may, in the
opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purpose.
(k) Notices. Any notice required by the provisions of this
paragraph 3 to be given to the holder of shares of the Preferred Stock shall be
deemed given if deposited in the United States mail, postage prepaid, and
addressed to each holder of record at his address appearing on the books of the
corporation.
4. Voting Rights. The holder of each share of Preferred Stock shall be
entitled to the number of votes equal to the number of shares of Common Stock
into which each share of Preferred Stock could be converted on the record date
for the vote or consent of shareholders and, except as otherwise required by
law, shall have voting rights and powers equal to the voting rights and powers
of the Common Stock. The holder of each share of Preferred Stock shall be
entitled to notice of any shareholders' meeting in accordance with the bylaws of
the corporation and shall vote with holders of the Common Stock upon the
election of directors and upon any other matter submitted to a vote of
shareholders, except those matters required by law to be submitted to a class
vote. Fractional votes shall not, however, be permitted and any fractional
voting rights resulting from the above formula (after aggregating all shares of
Common Stock into which shares of Preferred Stock held by each holder could be
converted) shall be rounded to the nearest whole number (with one-half rounded
upward to one).
5. Protective Provisions.
(a) Preferred Stock. In addition to any other rights provided
by law, so long as any Preferred Stock shall be outstanding, the corporation
shall not without first obtaining the approval of the holders of more than 50
percent of all outstanding series of Preferred Stock voting together as a single
class:
(i) Change the authorized number of shares of
Preferred Stock;
(ii) Alter or change the rights, preferences or
privileges of the Preferred Stock materially and adversely; or
(iii) Create any new class of shares having
preference over or being on parity with the Preferred Stock.
6. Residual Rights. All rights accruing to the outstanding shares of
the corporation not expressly provided for to the contrary herein shall be
vested with the Common Stock.
-9-
V.
1. Limitation of Directors' Liability. The liability of the directors
of this corporation for monetary damages shall be eliminated to the fullest
extent permissible under California law.
2. Indemnification of Corporate Agents. This corporation is authorized
to indemnify the directors and officers of the corporation to the fullest extent
permissible under California law.
3. Repeal or Modification. Any repeal or modification of the foregoing
provisions of this Article V shall not adversely affect any right of
indemnification or limitation of liability of an agent of this corporation
relating to acts or omissions occurring prior to such repeal or modification.
* * *
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EXHIBIT 3.2
RESTATED CERTIFICATE OF INCORPORATION
OF
JENNER TECHNOLOGIES, INC.
Jenner Technologies, Inc., a corporation organized and existing under
the laws of the State of Delaware, hereby certifies as follows:
A. The name of the Corporation is Jenner Technologies, Inc.. The
Corporation was originally incorporated under the same name and the original
Certificate of Incorporation of the Corporation was filed with the Delaware
Secretary of State on January 23, 1997.
B. Pursuant to Sections 242 and 245 of the General Corporation Law of
the State of Delaware, this Restated Certificate of Incorporation restates and
amends the provisions of the Certificate of Incorporation of this Corporation.
C. The text of the Certificate of Incorporation is hereby amended and
restated in its entirety
to read as follows:
ARTICLE I
The name of the corporation is Jenner Technologies, Inc. (the
"Corporation").
ARTICLE II
The address of the Corporation's registered office in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle,
Delaware 19801. The name of its registered agent at such address is The
Corporation Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
ARTICLE IV
The Corporation is authorized to issue two classes of shares of stock
to be designated, respectively, Common Stock, $0.001 par value, and Preferred
Stock, $0.001 par value. The total number of shares that the Corporation is
authorized to issue is 35,000,000 shares. The number of shares of Common Stock
authorized is 30,000,000. The number of shares of Preferred Stock authorized is
5,000,000.
The Preferred Stock may be issued from time to time in one or more
series pursuant to a resolution or resolutions providing for such issue duly
adopted by the Board of Directors (authority to do so being hereby expressly
vested in the board). The Board of Directors is further authorized to determine
or alter the rights, preferences, privileges and restrictions granted to or
imposed upon any wholly unissued series of Preferred Stock and to fix the number
of shares of any series of Preferred Stock and the designation of any such
series of Preferred Stock. The Board of Directors, within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series, may increase or
decrease (but not below the number of shares in any such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
The authority of the Board of Directors with respect to each such class
or series shall include, without limitation of the foregoing, the right to
determine and fix:
(a) the distinctive designation of such class or series and
the number of shares to constitute such class or series;
(b) the rate at which dividends on the shares of such class or
series shall be declared and paid, or set aside for payment, whether dividends
at the rate so determined shall be cumulative or accruing, and whether the
shares of such class or series shall be entitled to any participating or other
dividends in addition to dividends at the rate so determined, and if so, on what
terms;
(c) the right or obligation, if any, of the corporation to
redeem shares of the particular class or series of Preferred Stock and, if
redeemable, the price, terms and manner of such redemption;
(d) the special and relative rights and preferences, if any,
and the amount or amounts per share, which the shares of such class or series of
Preferred Stock shall be entitled to receive upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation;
(e) the terms and conditions, if any, upon which shares of
such class or series shall be convertible into, or exchangeable for, shares of
capital stock of any other class or series, including the price or prices or the
rate or rates of conversion or exchange and the terms of adjustment, if any;
(f) the obligation, if any, of the corporation to retire,
redeem or purchase shares of such class or series pursuant to a sinking fund or
fund of a similar nature or otherwise, and the terms and conditions of such
obligation;
(g) voting rights, if any, on the issuance of additional
shares of such class or series or any shares of any other class or series of
Preferred Stock;
(h) limitations, if any, on the issuance of additional shares
of such class or series or any shares of any other class or series of Preferred
Stock; and
-2-
(i) such other preferences, powers, qualifications, special or
relative rights and privileges thereof as the Board of Directors of the
corporation, acting in accordance with this Restated Certificate of
Incorporation, may deem advisable and are not inconsistent with law and the
provisions of this Restated Certificate of Incorporation.
ARTICLE V
The Corporation reserves the right to amend, alter, change, or repeal
any provision contained in this Certificate of Incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon the
stockholders herein are granted subject to this right.
ARTICLE VI
The Corporation is to have perpetual existence.
ARTICLE VII
1. Limitation of Liability. To the fullest extent permitted by the
General Corporation Law of the State of Delaware as the same exists or as may
hereafter be amended, a director of the Corporation shall not be personally
liable to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director.
2. Indemnification. The Corporation may indemnify to the fullest extent
permitted by law any person made or threatened to be made a party to an action
or proceeding, whether criminal, civil, administrative or investigative, by
reason of the fact that such person or his or her testator or intestate is or
was a director, officer or employee of the Corporation, or any predecessor of
the Corporation, or serves or served at any other enterprise as a director,
officer or employee at the request of the Corporation or any predecessor to the
Corporation.
3. Amendments. Neither any amendment nor repeal of this Article VII,
nor the adoption of any provision of the Corporation's Certificate of
Incorporation inconsistent with this Article VII, shall eliminate or reduce the
effect of this Article VII, in respect of any matter occurring, or any action or
proceeding accruing or arising or that, but for this Article VII, would accrue
or arise, prior to such amendment, repeal, or adoption of an inconsistent
provision.
ARTICLE VIII
In the event any shares of Preferred Stock shall be redeemed or
converted pursuant to the terms hereof, the shares so converted or redeemed
shall not revert to the status of authorized but unissued shares, but instead
shall be canceled and shall not be re-issuable by the Corporation.
-3-
ARTICLE IX
Holders of stock of any class or series of this corporation shall not
be entitled to cumulate their votes for the election of directors or any other
matter submitted to a vote of the stockholders.
ARTICLE X
1. Number of Directors. The number of directors which constitutes the
whole Board of Directors of the corporation shall be designated in the Bylaws of
the corporation.
2. Election of Directors. Elections of directors need not be by written
ballot unless the Bylaws of the corporation shall so provide.
ARTICLE XI
In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the corporation.
ARTICLE XII
No action shall be taken by the stockholders of the corporation except
at an annual or special meeting of the stockholders called in accordance with
the Bylaws and no action shall be taken by the stockholders by written consent.
The affirmative vote of sixty-six and two-thirds percent (66 2/3%) of the then
outstanding voting securities of the corporation, voting together as a single
class, shall be required for the amendment, repeal or modification of the
provisions of Article IX, Article X or Article XII of this Restated Certificate
of Incorporation or Sections 2.3 (Special Meeting), 2.5 (Advance Notice of
Stockholder Nominees and Stockholder Business), 2.9 (Voting) or 2.12
(Stockholder Action by Written Consent Without a Meeting) of the Corporation's
Bylaws.
ARTICLE XIII
Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provision contained in the statutes) outside of the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
In witness whereof, the Corporation has caused this Certificate to be
signed by Anthony E. Maida III, its Chief Executive Officer, as of
_________________, 1997.
_____________________________________________
Anthony E. Maida III, Chief Executive Officer
-4-
BYLAWS
OF
JENNER TECHNOLOGIES
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I - CORPORATE OFFICES....................................................1
1.1 PRINCIPAL OFFICE...............................................1
1.2 OTHER OFFICES..................................................1
ARTICLE II - MEETINGS OF SHAREHOLDERS............................................1
2.1 PLACE OF MEETINGS..............................................1
2.2 ANNUAL MEETING.................................................1
2.3 SPECIAL MEETING................................................2
2.4 NOTICE OF SHAREHOLDERS' MEETINGS...............................2
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE...................3
2.6 QUORUM.........................................................4
2.7 ADJOURNED MEETING; NOTICE......................................4
2.8 VOTING.........................................................4
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT..............5
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT
A MEETING.............................................6
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING
CONSENTS..............................................7
2.12 PROXIES........................................................8
2.13 INSPECTORS OF ELECTION.........................................8
ARTICLE III - DIRECTORS..........................................................9
3.1 POWERS.........................................................9
3.2 NUMBER OF DIRECTORS............................................9
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS......................10
3.4 RESIGNATION AND VACANCIES.....................................10
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE......................11
3.6 REGULAR MEETINGS..............................................11
3.7 SPECIAL MEETINGS; NOTICE......................................11
3.8 OUORUM........................................................12
3.9 WAIVER OF NOTICE..............................................12
3.10 ADJOURNMENT...................................................13
3.11 NOTICE OF ADJOURNMENT.........................................13
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.............13
3.13 FEES AND COMPENSATION OF DIRECTORS............................13
3.14 APPROVAL OF LOANS TO OFFICERS.................................13
ARTICLE IV - COMMITTEES.........................................................14
4.1 COMMITTEES OF DIRECTORS.......................................14
4.2 MEETINGS AND ACTION OF COMMITTEE..............................15
-i-
ARTICLE V - OFFICERS............................................................15
5.1 OFFICERS......................................................15
5.2 ELECTION OF OFFICERS..........................................15
5.3 SUBORDINATE OFFICERS..........................................16
5.4 REMOVAL AND RESIGNATION OF OFFICERS...........................16
5.5 VACANCIES IN OFFICES..........................................16
5.6 CHAIRMAN OF THE BOARD.........................................16
5.7 PRESIDENT.....................................................17
5.8 VICE PRESIDENTS...............................................17
5.9 SECRETARY.....................................................17
5.10 CHIEF FINANCIAL OFFICER.......................................18
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS.....................................18
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.....................18
6.2 INDEMNIFICATION OF OTHERS.....................................19
6.3 PAYMENT OF EXPENSES IN ADVANCE................................19
6.4 INDEMNITY NOT EXCLUSIVE.......................................19
6.5 INSURANCE INDEMNIFICATION.....................................20
6.6 CONFLICTS.....................................................20
ARTICLE VII - RECORDS AND REPORTS...............................................20
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER..................20
7.2 MAINTENANCE AND INSPECTION OF BYLAWS..........................21
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS.........21
7.4 INSPECTION BY DIRECTORS.......................................22
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER.........................22
7.6 FINANCIAL STATEMENTS..........................................22
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS................23
ARTICLE VIII - GENERAL MATTERS..................................................23
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING ........23
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS.....................24
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED.............24
8.4 CERTIFICATES FOR SHARES.......................................24
8.5 LOST CERTIFICATES.............................................25
8.6 CONSTRUCTION; DEFINITIONS.....................................25
ARTICLE IX - AMENDMENTS.........................................................25
9.1 AMENDMENT BY SHAREHOLDERS.....................................25
9.2 AMENDMENT BY DIRECTORS........................................25
</TABLE>
-ii-
BYLAWS
OF
JENNER TECHNOLOGIES
ARTICLE I
CORPORATE OFFICES
1.1 PRINCIPAL OFFICE
The board of directors shall fix the location of the principal
executive office of the corporation at any place within or outside the State of
California. If the principal executive office is located outside such state and
the corporation has one or more business offices in such state, then the board
of directors shall fix and designate a principal business office in the State of
California.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF SHAREHOLDERS
2.1 PLACE OF MEETINGS
Meetings of shareholders shall be held at any place within or outside
the State of California designated by the board of direc tors. In the absence of
any such designation, shareholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of shareholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of shareholders shall be held on the first
Thursday of April in each year at 10:00 A.M. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next
succeeding full business day. At the meeting, directors shall be elected, and
any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the shareholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president, or by
one or more shareholders holding shares in the aggregate entitled to cast not
less than ten percent (10%) of the votes at that meeting.
If a special meeting is called by any person or persons other than the
board of directors or the president or the chairman of the board, then the
request shall be in writing, specifying the time of such meeting and the general
nature of the business proposed to be transacted, and shall be delivered
personally or sent by registered mail or by telegraphic or other facsimile
transmission to the chairman of the board, the president, any vice president or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the shareholders enti tled to vote, in accordance
with the provisions of Sections 2.4 and 2.5 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of shareholders called by action of the board of directors may be held.
2.4 NOTICE OF SHAREHOLDERS' MEETINGS
All notices of meetings of shareholders shall be sent or otherwise
given in accordance with Section 2.5 of these bylaws not less than ten (10) (or,
if sent by third-class mail pursuant to Section 2.5 of these bylaws, thirty
(30)) nor more than sixty (60) days before the date of the meeting. The notice
shall specify the place, date, and hour of the meeting and (i) in the case o a
special meeting, the general nature of the business to be trans acted (no
business other than that specified in the notice may be transacted) or (ii) in
the case of the annual meeting, those matters which the board of directors, at
the time of giving the notice, intends to present for action by the shareholders
(but subject to the provisions of the next paragraph of this Section 2.4 any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected
-2-
shall include the name of any nominee or nominees who, at the time of the
notice, the board intends to present for election.
If action is proposed to be taken at any meeting for approval of (i) a
contract or transaction in which a director has a direct or indirect financial
interest, pursuant to Section 310 of the Cor porations Code of California (the
"Code"), (ii) an amendment of the articles of incorporation, pursuant to Section
902 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, (iv) a voluntary dissolution of the corporation, pur suant to
Section 1900 of the Code, or (v) a distribution in dis solution other than in
accordance with the rights of outstanding preferred shares, pursuant to Section
2007 of the Code, then the notice shall also state the general nature of that
proposal.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of shareholders shall be given either (i)
personally or (ii) by first-class mail or (iii) by third-class mail but only if
the corporation has outstanding shares held of record by five hundred (500) or
more persons (determined as provided in Section 605 of the Code) on the record
date for the shareholders' meeting, or (iv) by telegraphic or other written com
munication. Notices not personally delivered shall be sent charges prepaid and
shall be addressed to the shareholder at the address of that shareholder
appearing on the books of the corporation or given by the shareholder to the
corporation for the purpose of notice. If no such address appears on the
corporation's books or is given, notice shall be deemed to have been given if
sent to that share holder by mail or telegraphic or other written communication
to the corporation's principal executive office, or if published at least once
in a newspaper of general circulation in the county where that office is
located. Notice shall be deemed to have been given at the time when delivered
personally or deposited in the mail or sent by telegram or other means of
written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the corporation is returned to the
corporation by the United States Postal Service marked to indicate that the
United States Postal Service is unable to deliver the notice to the shareholder
at that address, then all future notices or reports shall be deemed to have been
duly given without further mailing if the same shall be available to the
shareholder on written demand of the shareholder at the principal executive
office of the corporation for a period of one (1) year from the date of the
giving of the notice.
-3-
An affidavit of the mailing or other means of giving any notice of any
shareholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
2.6 QUORUM
The presence in person or by proxy of the holders of a major ity of the
shares entitled to vote thereat constitutes a quorum for the transaction of
business at all meetings of shareholders. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders to
leave less than a quorum, if any action taken (other than adjournment) is
approved by at least a majority of the shares required to constitute a quorum.
2.7 ADJOURNED MEETING; NOTICE
Any shareholders' meeting, annual or special, whether or not a quorum
is present, may be adjourned from time to time by the vote of the majority of
the shares represented at that meeting, either in person or by proxy. In the
absence of a quorum, no other busi ness may be transacted at that meeting except
as provided in Section 2.6 of these bylaws.
When any meeting of shareholders, either annual or special, is
adjourned to another time or place, notice need not be given of the adjourned
meeting if the time and place are announced at the meet ing at which the
adjournment is taken. However, if a new record date for the adjourned meeting is
fixed or if the adjournment is for more than forty-five (45) days from the date
set for the origi nal meeting, then notice of the adjourned meeting shall be
given. Notice of any such adjourned meeting shall be given to each share holder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 2.4 and 2.5 of these bylaws. At any adjourned meeting the
corporation may transact any business which might have been transacted at the
original meeting.
2.8 VOTING
The shareholders entitled to vote at any meeting of share holders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 702 through 704 of the Code (relating to
voting shares held by a fiduciary, in the name of a corporation or in joint
ownership).
-4-
The shareholders' vote may be by voice vote or by ballot; pro vided,
however, that any election for directors must be by ballot if demanded by any
shareholder at the meeting and before the voting has begun.
Except as provided in the last paragraph of this Section 2.8, or as may
be otherwise provided in the articles of incorporation, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote of the shareholders. Any shareholder entitled to vote on any matter may
vote part of the shares in favor of the proposal and refrain from voting the
remain ing shares or, except when the matter is the election of directors, may
vote them against the proposal; but, if the shareholder fails to specify the
number of shares which the shareholder is voting affirmatively, it will be
conclusively presumed that the share holder's approving vote is with respect to
all shares which the shareholder is entitled to vote.
If a quorum is present, the affirmative vote of the majority of the
shares represented and voting at a duly held meeting (which shares voting
affirmatively also constitute at least a majority of the required quorum) shall
be the act of the shareholders, unless the vote of a greater number or a vote by
classes is required by the Code or by the articles of incorporation.
At a shareholders' meeting at which directors are to be elec ted, a
shareholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such shareholder normally
is entitled to cast) if the candidates' names have been placed in nomination
prior to commence ment of the voting and the shareholder has given notice prior
to commencement of the voting of the shareholder's intention to cumu late votes.
If any shareholder has given such a notice, then every shareholder entitled to
vote may cumulate votes for candidates in nomination either (i) by giving one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which that shareholder's shares are
normally entitled or (ii) by distributing the shareholder's votes on the same
principle among any or all of the candidates, as the share holder thinks fit.
The candidates receiving the highest number of affirmative votes, up to the
number of directors to be elected, shall be elected; votes against any candidate
and votes withheld shall have no legal effect.
2.9 VALIDATION OF MEETINGS; WAIVER OF NOTICE; CONSENT
The transactions of any meeting of shareholders, either annual or
special, however called and noticed, and wherever held, shall be as valid as
though they had been taken at a meeting duly held after
-5-
regular call and notice, if a quorum be present either in person or by proxy,
and if, either before or after the meeting, each person entitled to vote, who
was not present in person or by proxy, signs a written waiver of notice or a
consent to the holding of the meet ing or an approval of the minutes thereof.
The waiver of notice or consent or approval need not specify either the business
to be transacted or the purpose of any annual or special meeting of
shareholders, except that if action is taken or proposed to be taken for
approval of any of those matters specified in the second paragraph of Section
2.4 of these bylaws, the waiver of notice or consent or approval shall state the
general nature of the proposal. All such waivers, consents, and approvals shall
be filed with the corporate records or made a part of the minutes of the
meeting.
Attendance by a person at a meeting shall also constitute a waiver of
notice of and presence at that meeting, except when the person objects at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or con vened. Attendance at a meeting is not a waiver of
any right to object to the consideration of matters required by the Code to be
included in the notice of the meeting but not so included, if that objection is
expressly made at the meeting.
2.10 SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action which may be taken at any annual or special meeting of
shareholders may be taken without a meeting and without prior notice, if a
consent in writing, setting forth the action so taken, is signed by the holders
of outstanding shares having not less than the minimum number of votes that
would be necessary to authorize or take that action at a meeting at which all
shares entitled to vote on that action were present and voted.
In the case of election of directors, such a consent shall be effective
only if signed by the holders of all outstanding shares entitled to vote for the
election of directors. However, a direc tor may be elected at any time to fill
any vacancy on the board of directors, provided that it was not created by
removal of a direc tor and that it has not been filled by the directors, by the
writ ten consent of the holders of a majority of the outstanding shares entitled
to vote for the election of directors.
All such consents shall be maintained in the corporate records. Any
shareholder giving a written consent, or the share holder's proxy holders, or a
transferee of the shares, or a per sonal representative of the shareholder, or
their respective proxy holders, may revoke the consent by a writing received by
the secre tary of the corporation before written consents of the number of
-6-
shares required to authorize the proposed action have been filed with the
secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders has not been received, then the secretary shall give prompt notice
of the corporate action approved by the shareholders without a meeting. Such
notice shall be given to those shareholders entitled to vote who have not
consented in writ ing and shall be given in the manner specified in Section 2. c
these bylaws. In the case of approval of (i) a contract or trans action in which
a director has a direct or indirect financial interest, pursuant to Section 310
of the Code, (ii) indemnification of a corporate "agent," pursuant to Section
317 of the Code, (iii) a reorganization of the corporation, pursuant to Section
1201 of the Code, and (iv) a distribution in dissolution other than in
accordance with the rights of outstanding preferred shares, pur suant to Section
2007 of the Code, the notice shall be given at least ten (10) days before the
consummation of any action authorized by that approval.
2.11 RECORD DATE FOR SHAREHOLDER NOTICE; VOTING; GIVING
CONSENTS
For purposes of determining the shareholders entitled to notice of any
meeting or to vote thereat or entitled to give con sent to corporate action
without a meeting, the board of directors may fix, in advance, a record date,
which shall not be more than sixty (60) days nor less than ten (10) days before
the date of any such meeting nor more than sixty (60) days before any such
action without a meeting, and in such event only shareholders of record on the
date so fixed are entitled to notice and to vote or to give consents, as the
case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date, except as otherwise provided in the Code.
If the board of directors does not so fix a record date:
(a) the record date for determining shareholders enti tled to
notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given or,
if notice is waived, at the close of business on the business day next preceding
the day on which the meeting is held; and
(b) the record date for determining shareholders enti tled to
give consent to corporate action in writing without a meet ing, (i) when no
prior action by the board has been taken, shall be
-7-
the day on which the first written consent is given, or (ii) when prior action
by the board has been taken, shall be at the close of business on the day on
which the board adopts the resolution relat ing to that action, or the sixtieth
(60th) day before the date of such other action, whichever is later.
The record date for any other purpose shall be as provided in Article
VIII of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation. A proxy shall be deemed signed if the shareholder's name is
placed on the proxy (whether by manual signature, typewriting, telegraphic
transmission or otherwise) by the shareholder or the shareholder's attorney-in
fact. A validly executed proxy which does not state that it is irrevocable shall
continue in full force and effect unless (i) the person who executed the proxy
revokes it prior to the time of vot ing by delivering a writing to the
corporation-stating that the proxy is revoked or by executing a subsequent proxy
and presenting it to the meeting or by voting in person at the meeting, or (ii)
written notice of the death or incapacity of the maker of that proxy is received
by the corporation before the vote pursuant to that proxy is counted; provided,
however, that no proxy shall be valid after the expiration of eleven (11) months
from the date of the proxy, unless otherwise provided in the proxy. The dates
con tained on the forms of proxy presumptively determine the order of execution,
regardless of the postmark dates on the envelopes in which they are mailed. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Sections 705(e) and 705(f) of the Code.
2.13 INSPECTORS OF ELECTION
Before any meeting of shareholders, the board of directors may appoint
an inspector or inspectors of election to act at the meet ing or its
adjournment. If no inspector of election is so appointed, then the chairman of
the meeting may, and on the request of any shareholder or a shareholder's proxy
shall, appoint an inspector or inspectors of election to act at the meeting. The
number of inspectors shall be either one (1) or three (3). If inspectors are
appointed at a meeting pursuant to the request of one (1) or more shareholders
or proxies, then the holders of a majority of shares or their proxies present at
the meeting shall determine whether one (1) or three (3) inspectors are to be
appointed. If any person appointed as inspector fails to appear or
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fails or refuses to act, then the chairman of the meeting may, and upon the
request of any shareholder or a shareholder's proxy shall, appoint a person to
fill that vacancy.
Such inspectors shall:
(a) determine the number of shares outstanding and the voting
power of each, the number of shares represented at the meet ing, the existence
of a quorum, and the authenticity, validity, and effect of proxies;
(b) receive votes, ballots or consents;
(c) hear and determine all challenges and questions in
any way arising in connection with the right to vote;
(d) count and tabulate all votes or consents;
(e) determine when the polls shall close;
(f) determine the result; and
(g) do any other acts that may be proper to conduct the
election or vote with fairness to all shareholders.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the Code and any limitations in the
articles of incorporation and these bylaws relating to action required to be
approved by the shareholders or by the outstanding shares, the business and
affairs of the corporation shall be managed and all corporate powers shall be
exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be not less than five
(5) nor more than nine (9). The exact number of directors shall be eight(8)until
changed, within the limits specified above, by a bylaw amending this Section
3.2, duly adopted by the board of directors or by the shareholders. The
indefinite number of directors may be changed, or a definite number may be fixed
without provision for an indefinite number, by a duly adopted amendment to the
articles of incorporation or by an amendment to
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this bylaw duly adopted by the vote or written consent of holders of a majority
of the outstanding shares entitled to vote; provided, however, that an amendment
reducing the fixed number or the minimum number of directors to a number less
than five (5) cannot be adopted if the votes cast against its adoption at a
meeting, or the shares not consenting in the case of an action by written
consent, are equal to more than sixteen and two-thirds percent (16-2/3%) of the
outstanding shares entitled to vote thereon. No amendment may change the stated
maximum number of authorized directors to a number greater than two (2) times
the stated minimum number of directors minus one (1).
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Directors shall be elected at each annual meeting of share holders to
hold office until the next annual meeting. Each direc tor, including a director
elected to fill a vacancy, shall hold office until the expiration of the term
for which elected and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a major ity of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote or
written consent of the shareholders or by court order may be filled only by the
affirmative vote of a majority of the shares represented and voting at a duly
held meet ing at which a quorum is present (which shares voting affirmatively
also constitute a majority of the required quorum), or by the unanimous written
consent of all shares entitled to vote thereon. Each director so elected shall
hold office until the next annual meeting of the shareholders and until a
successor has been elected and qualified.
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A vacancy or vacancies in the board of directors shall be deemed to
exist (i) in the event of the death, resignation or removal of any director,
(ii) if the board of directors by resolu tion declares vacant the office of a
director who has been declared of unsound mind by an order of court or convicted
of a felony, (iii) if the authorized number of directors is increased, or (iv)
if the shareholders fail, at any meeting of shareholders at which any director
or directors are elected, to elect the number of directors to be elected at that
meeting.
The shareholders may elect a director or directors at any time to fill
any vacancy or vacancies not filled by the directors, but any such election
other than to fill a vacancy created by removal, if by written consent, shall
require the consent of the holders of a majority of the outstanding shares
entitled to vote thereon.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of California that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meet ings of the board may be held at any place within or outside the
State of California that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting, regular or special, may be held by conference telephone or
similar communication equipment, so long as all direc tors participating in the
meeting can hear one another; and all such directors shall be deemed to be
present in person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
if the times of such meetings are fixed by the board of directors.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
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Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail or
telegram, charges prepaid, addressed to each director at that director's address
as it is shown on the records of the corporation. If the notice is mailed, it
shall be deposited in the United States mail at least four (4) days before the
time of the holding of the meeting. If the notice is delivered personally or by
telephone or telegram, it shall be delivered personally or by telephone or to
the telegraph company at least forty-eight (48) hours before the time of the
holding of the meeting. Any oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. The notice need not specify the purpose or the place of the
meeting, if the meeting is to be held at the principal executive office of the
corporation.
3.8 OUORUM
A majority of the authorized number of directors shall consti tute a
quorum for the transaction of business, except to adjourn as provided in Section
3.10 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of
Section 310 of the Code (as to approval of contracts or transactions in which a
director has a direct or indirect material financial interest), Section 311 of
the Code (as to appointment of committees), Section 317(e) of the Code (as to
indemnification of directors), the articles of incorporation, and other
applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the required quorum for that
meeting.
3.9 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meet ing, or (ii) who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such direc tors. All such waivers, consents, and approvals shall be
filed with the corporate records or made part of the minutes of the meeting. A
waiver of notice need not specify the purpose of any regular or special meeting
of the board of directors.
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3.10 ADJOURNMENT
A majority of the directors present, whether or not consti tuting a
quorum, may adjourn any meeting to another time and place.
3.11 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting need not
be given unless the meeting is adjourned for more than twenty-four (24) hours.
If the meeting is adjourned for more than twenty-four (24) hours, then notice of
the time and place of the adjourned meeting shall be given before the adjourned
meeting takes place, in the manner specified in Section 3.7 of these bylaws, to
the directors who were not present at the time of the adjournment.
3.12 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board.
3.13 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compen sation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.13 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.14 APPROVAL OF LOANS TO OFFICERS*
The corporation may, upon the approval of the board of directors alone,
make loans of money or property to, or guarantee the obligations of, any officer
of the corporation or its parent or subsidiary, whether or not a director, or
adopt an employee benefit plan or plans authorizing such loans or guaranties
provided that (i) the board of directors determines that such a loan or guaranty
or plan may reasonably be expected to benefit the corporation, (ii) the
corporation has outstanding shares held of record by 100
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* This section is effective only if it has been approved by the
shareholders in accordance with Sections 315(b) and 152 of the Code.
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or more persons (determined as provided in Section 605 of the Code) on the date
of approval by the board of directors, and (iii) the approval of the board of
directors is by a vote sufficient without counting the vote of any interested
director or directors.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a major ity of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent member at any meeting of the committee.
The appointment of members or alternate members of a committee requires the vote
of a majority of the authorized number of directors. Any committee, to the
extent provided in the resolution of the board, shall have all the authority of
the board, except with respect to:
(a) the approval of any action which, under the Code, also
requires shareholders' approval or approval of the outstanding shares;
(b) the filling of vacancies on the board of directors or in
any committee;
(c) the fixing of compensation of the directors for serving,
on the board or any committee;
(d) the amendment or repeal of these bylaws or the adoption of
new bylaws;
(e) the amendment or repeal of any resolution of the board of
directors which by its express terms is not so amendable or repealable;
(f) a distribution to the shareholders of the corpora tion,
except at a rate or in a periodic amount or within a price range determined by
the board of directors; or
(g) the appointment of any other committees of the board of
directors or the members of such committees.
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4.2 MEETINGS AND ACTION OF COMMITTEE
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the provisions of Article III of these bylaws, Section
3.5 (place of meetings), Section 3.6 (regular meetings), Section 3.7 (special
meetings and notice), Section 3.8 (quorum), Section 3.9 (waiver of notice),
Section 3.10 (adjourn ment), Section 3.11 (notice of adjournment), and Section
3.12 (action without meeting), with such changes in the context of those bylaws
as are necessary to substitute the committee and its members for the board of
directors and its members; provided, however, that the time of regular meetings
of committees may be determined either by resolution of the board of directors
or by resolution of the committee, that special meetings of committees may also
be called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate mem bers, who shall
have the right to attend all meetings of the com mittee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a president, a secre tary, and
a chief financial officer. The corporation may also have, at the discretion of
the board of directors, a chairman of the board, one or more vice presidents,
one or more assistant sec retaries, one or more assistant treasurers, and such
other officers as may be appointed in accordance with the provisions of Section
5.3 of these bylaws. Any number of offices may be held by the same person.
5.2 ELECTION OF OFFICERS
The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board, subject to the rights, if any, of an
officer under any contract of employment.
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5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the presi dent to
appoint, such other officers as the business of the corpo ration may require,
each of whom shall hold office for such period, have such authority, and perform
such duties as are provided in these bylaws or as the board of directors may
from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any con tract of
employment, any officer may be removed, either with or without cause, by the
board of directors at any regular or special meeting of the board or, except in
case of an officer chosen by the board of directors, by any officer upon whom
such power of removal may be conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the accep tance of the resignation shall not be
necessary to make it effec tive. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
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5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
unless otherwise designated by the board, the president shall be the chief
executive officer of the corporation and shall, subject to the control of the
board of directors, have general supervision, direction, and control of the
business and the officers of the corporation. The president shall preside at all
meetings of the shareholders and, in the absence or nonexistence of a chairman
of the board, at all meetings of the board of directors. The president shall
have the general powers and duties of manage ment usually vested in the office
of president of a corporation, and shall have such other powers and duties as
may be prescribed by the board of directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presi dents, if
any, in order of their rank as fixed by the board of directors or, if not
ranked, a vice president designated by the board of directors, shall perform all
the duties of the president and when so acting shall have all the powers of, and
be subject to all the restrictions upon, the president. The vice presidents
shall have such other powers and perform such other duties as from time to time
may be prescribed for them respectively by the board of directors, these bylaws,
the president or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of
directors, committees of directors and shareholders. The minutes shall show the
time and place of each meeting, whether regular or special (and, if special, how
authorized and the notice given), the names of those present at directors'
meetings or com mittee meetings, the number of shares present or represented at
shareholders' meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the princi pal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolu tion of the board of
directors, a share register, or a duplicate share register, showing the names of
all shareholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares, and the
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number and date of cancellation of every certificate surrendered for
cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the board of directors required to be given by law or
by these bylaws. He shall keep the seal of the corporation, if one be adopted,
in safe custody and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the cor poration, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositories as may
be designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
president and direc tors, whenever they request it, an account of all of his
trans actions as chief financial officer and of the financial condition of the
corporation, and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or these bylaws.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES,
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the Code, indemnify each of its directors and officers against
expenses (as defined in Section 317(a) of the Code), judg ments, fines,
settlements, and other amounts actually and reason ably incurred in connection
with any proceeding (as defined in Section 317(a) of the Code), arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Article VI, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the
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corporation as a director or officer of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was a director or officer of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the Code, to indemnify each of its employees and agents (other than
directors and officers) against expenses (as defined in Section 317(a) of the
Code), judgments, fines, settle ments, and other amounts actually and reasonably
incurred in con nection with any proceeding (as defined in Section 317(a) of the
Code), arising by reason of the fact that such person is or was an agent of the
corporation. For purposes of this Article VI, an employee or "agent" of the
corporation (other than a director or officer) includes any person (i) who is or
was an employee or agent of the corporation, (ii) who is or was serving at the
request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 PAYMENT OF EXPENSES IN ADVANCE
Expenses incurred in defending any civil or criminal action or
proceeding for which indemnification is required pursuant to Section 6.1 or for
which indemnification is permitted pursuant to Section 6.2 following
authorization thereof by the Board of Direc tors shall be paid by the
corporation in advance of the final disposition of such action or proceeding
upon receipt of an under taking by or on behalf of the indemnified party to
repay such amount if it shall ultimately be determined that the indemnified
party is not entitled to be indemnified as authorized in this Article VI.
6.4 INDEMNITY NOT EXCLUSIVE
The indemnification provided by this Article VI shall not be deemed
exclusive of any other rights to which those seeking indem nification may be
entitled under any bylaw, agreement, vote of shareholders or disinterested
directors or otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office, to the extent that such
additional rights to indemnification are authorized in the Articles of
Incorporation.
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6.5 INSURANCE INDEMNIFICATION
The corporation shall have the power to purchase and maintain insurance
on behalf of any person who is or was a director, offi cer, employee or agent of
the corporation against any liability asserted against or incurred by such
person in such capacity or arising out of such person's status as such, whether
or not the corporation would have the power to indemnify him against such
liability under the provisions of this Article VI.
6.6 CONFLICTS
No indemnification or advance shall be made under this Article VI,
except where such indemnification or advance is mandated by law or the order,
judgment or decree of any court of competent jurisdiction, in any circumstance
where it appears:
(1) That it would be inconsistent with a provision of the
Articles of Incorporation, these bylaws, a resolution of the shareholders or an
agreement in effect at the time of the accrual of the alleged cause of the
action asserted in the proceeding in which the expenses were incurred or other
amounts were paid, which prohibits or otherwise limits indemnification; or
(2) That it would be inconsistent with any condition expressly
imposed by a court in approving a settlement.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF SHARE REGISTER
The corporation shall keep either at its principal executive office or
at the office of its transfer agent or registrar (if either be appointed), as
determined by resolution of the board of directors, a record of its shareholders
listing the names and addresses of all shareholders and the number and class of
shares held by each shareholder.
A shareholder or shareholders of the corporation who holds at least
five percent (5%) in the aggregate of the outstanding voting shares of the
corporation or who holds at least one percent (1%) of such voting shares and has
filed a Schedule 14B with the Securities and Exchange Commission relating to the
election of directors, may (i) inspect and copy the records of shareholders'
names, addresses, and shareholdings during usual business hours on five (5)
days' prior written demand on the corporation, (ii) obtain from the
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transfer agent of the corporation, on written demand and on the tender of such
transfer agent's usual charges for such list, a list of the names and addresses
of the shareholders who are entitled to vote for the election of directors, and
their shareholdings, as of the most recent record date for which that list has
been compiled or as of a date specified by the shareholder after the date of
demand. Such list shall be made available to any such shareholder by the
transfer agent on or before the later of five (5) days after the demand is
received or five (5) days after the date specified in the demand as the date as
of which the list is to be compiled.
The record of shareholders shall also be open to inspection on the
written demand of any shareholder or holder of a voting trust certificate, at
any time during usual business hours, for a purpose reasonably related to the
holder's interests as a shareholder or as the holder of a voting trust
certificate.
Any inspection and copying under this Section 7.1 may be made in person
or by an agent or attorney of the shareholder or holder of a voting trust
certificate making the demand.
7.2 MAINTENANCE AND INSPECTION OF BYLAWS
The corporation shall keep at its principal executive office or, if its
principal executive office is not in the State of Cali fornia, at its principal
business office in California the original or a copy of these bylaws as amended
to date, which bylaws shall be open to inspection by the shareholders at all
reasonable times during office hours. If the principal executive office of the
cor poration is outside the State of California and the corporation has no
principal business office in such state, then the secretary shall, upon the
written request of any shareholder, furnish to that shareholder a copy of these
bylaws as amended to date.
7.3 MAINTENANCE AND INSPECTION OF OTHER CORPORATE RECORDS
The accounting books and records and the minutes of proceed ings of the
shareholders, of the board of directors, and of any committee or committees of
the board of directors shall be kept at such place or places as are designated
by the board of directors or, in absence of such designation, at the principal
executive office of the corporation. The minutes shall be kept in written form,
and the accounting books and records shall be kept either in written form or in
any other form capable of being converted into written form.
The minutes and accounting books and records shall be open to
inspection upon the written demand of any shareholder or holder of a voting
trust certificate, at any reasonable time during usual
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business hours, for a purpose reasonably related to the holder's interests as a
shareholder or as the holder of a voting trust cer tificate. The inspection may
be made in person or by an agent or attorney and shall include the right to copy
and make extracts. Such rights of inspection shall extend to the records of each
subsidiary corporation of the corporation.
7.4 INSPECTION BY DIRECTORS
Every director shall have the absolute right at any reasonable time to
inspect all books, records, and documents of every kind as well as the physical
properties of the corporation and each of its subsidiary corporations. Such
inspection by a director may be made in person or by an agent or attorney. The
right of inspection includes the right to copy and make extracts of documents.
7.5 ANNUAL REPORT TO SHAREHOLDERS; WAIVER
The board of directors shall cause an annual report to be sent to the
shareholders not later than one hundred twenty (120) days after the close of the
fiscal year adopted by the corporation. Such report shall be sent at least
fifteen (15) days (or, if sent by third-class mail, thirty-five (35) days)
before the annual meet ing of shareholders to be held during the next fiscal
year and in the manner specified in Section 2.5 of these bylaws for giving
notice to shareholders of the corporation.
The annual report shall contain (i) a balance sheet as of the end of
the fiscal year, (ii) an income statement, (iii) a statement of changes in
financial position for the fiscal year, and (iv) any report of independent
accountants or, if there is no such report, the certificate of an authorized
officer of the corporation that the-statements were prepared without audit from
the books and records of the corporation.
The foregoing requirement of an annual report shall be waived so long
as the shares of the corporation are held by fewer than one hundred (100)
holders of record.
7.6 FINANCIAL STATEMENTS
If no annual report for the fiscal year has been sent to shareholders,
then the corporation shall, upon the written request of any shareholder made
more than one hundred twenty (120) days after the close of such fiscal year,
deliver or mail to the person making the request, within thirty (30) days
thereafter, a copy of a balance sheet as of the end of such fiscal year and an
income statement and statement of changes in financial position for such fiscal
year.
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If a shareholder or shareholders holding at least five percent (5%) of
the outstanding shares of any class of stock of the corpo ration makes a written
request to the corporation for an income statement of the corporation for the
three-month, six-month or nine-month period of the then current fiscal year
ended more than thirty (30) days before the date of the request, and for a
balance sheet of the corporation as of the end of that period, then the chief
financial officer shall cause that statement to be prepared, if not already
prepared, and shall deliver personally or mail that statement or statements to
the person making the request within thirty (30) days after the receipt of the
request. If the corpora tion has not sent to the shareholders its annual report
for the last fiscal year, the statements referred to in the first paragraph of
this Section 7.6 shall likewise be delivered or mailed to the shareholder or
shareholders within thirty (30) days after the request.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accountants engaged by the corporation or by the cer tificate of an authorized
officer of the corporation that the financial statements were prepared without
audit from the books and records of the corporation.
7.7 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the president, any vice president, the chief
financial officer, the secretary or assistant secretary of this corporation, or
any other person authorized by the board of directors or the president or a vice
president, is authorized to vote, represent, and exercise on behalf of this
corporation all rights incident to any and all shares of any other corporation
or corporations standing in the name of this corporation. The authority herein
granted may be exercised either by such person directly or by any other person
authorized to do so by proxy or power of attorney duly executed by such person
having the authority.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the shareholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
shareholders entitled to exercise any rights in respect of any other lawful
action (other than action by share-
-23-
holders by written consent without a meeting), the board of direc tors may fix,
in advance, a record date, which shall not be more than sixty (60) days before
any such action. In that case, only shareholders of record at the close of
business on the date so fixed are entitled to receive the dividend, distribution
or allot ment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
the record date so fixed, except as otherwise provided in the Code.
If the board of directors does not so fix a record date, then the
record date for determining shareholders for any such purpose shall be at the
close of business on the day on which the board adopts the applicable resolution
or the sixtieth (60th) day before the date of that action, whichever is later.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.4 CERTIFICATES FOR SHARES
A certificate or certificates for shares of the corporation shall be
issued to each shareholder when any of such shares are fully paid. The board of
directors may authorize the issuance of certificates for shares partly paid
provided that these certifi cates shall state the total amount of the
consideration to be paid for them and the amount actually paid. All certificates
shall be signed in the name of the corporation by the chairman of the board or
the vice chairman of the board or the president or a vice presi dent and by the
chief financial officer or an assistant treasurer or the secretary or, an
assistant secretary, certifying the number
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of shares and the class or series of shares owned by the share holder. Any or
all of the signatures on the certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed on a certifi cate ceases to be that
officer, transfer agent or registrar before that certificate is issued, it may
be issued by the corporation with the same effect as if that person were an
officer, transfer agent or registrar at the date of issue.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certifi cate unless the latter is
surrendered to the corporation and can celled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certifi cates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corpora tion against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the Code shall govern the construction of these
bylaws. Without limiting the generality of this provision, the singular number
includes the plural, the plural number includes the singular, and the term
"person" includes both a corporation and a natural person.
ARTICLE IX
AMENDMENTS
9.1 AMENDMENT BY SHAREHOLDERS
New bylaws may be adopted or these bylaws may be amended or repealed by
the vote or written consent of holders of a majority of the outstanding shares
entitled to vote; provided, however, that if the articles of incorporation of
the corporation set forth the number of authorized directors of the corporation,
then the autho-
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rized number of directors may be changed only by an amendment of the articles of
incorporation.
9.2 AMENDMENT BY DIRECTORS
Subject to the rights of the shareholders as provided in Section 9.1 of
these bylaws, bylaws, other than a bylaw or an amendment of a bylaw changing the
authorized number of directors (except to fix the authorized number of directors
pursuant to a bylaw providing for a variable number of directors), may be
adopted, amended or repealed by the board of directors.
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CERTIFICATE OF ADOPTION OF BYLAWS
OF
JENNER TECHNOLOGIES
Adoption by Incorporator
The undersigned person appointed in the Articles of Incorpo ration to
act as the Incorporator of Jenner Technologies hereby adopts the foregoing
bylaws, comprising twenty-five (25) pages, as the Bylaws of the corporation.
Executed this 10 DAY OF December 1992.
/s/ LYNN E. SPITLER, M.D.
-------------------------
Lynn E. Spitler, M.D.,
Incorporator
Certificate by Secretary of Adoption by Incorporator
The undersigned hereby certifies that he is the duly elected,
qualified, and acting Secretary of Jenner Technologies and that the foregoing
Bylaws, comprising twenty-five (25) pages, were adopted as the Bylaws of the
corporation on December 10, 1992, by the person appointed in the Articles of
Incorporation to act as the Incorporator of the corporation.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and
affixed the corporate seal this 10th day of December, 1992.
/s/ Mario M. Rosati
--------------------------
Mario M. Rosati, Secretary
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EXHIBIT 3.4
AMENDED AND RESTATED BYLAWS
OF
JENNER TECHNOLOGIES, INC.
(a Delaware corporation)
AMENDED AND RESTATED BYLAWS OF
JENNER TECHNOLOGIES, INC.
(a Delaware corporation)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - CORPORATE OFFICES......................................................1
1.1 REGISTERED OFFICE.............................................1
1.2 OTHER OFFICES.................................................1
ARTICLE II - MEETINGS OF STOCKHOLDERS..............................................1
2.1 PLACE OF MEETINGS.............................................1
2.2 ANNUAL MEETING................................................1
2.3 SPECIAL MEETING...............................................1
2.4 NOTICE OF STOCKHOLDERS' MEETINGS..............................2
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES
AND STOCKHOLDER BUSINESS......................................2
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE..................3
2.7 QUORUM........................................................4
2.8 ADJOURNED MEETING; NOTICE.....................................4
2.9 VOTING........................................................4
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT
WITHOUT A MEETING.............................................5
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING....................5
2.12 PROXIES.......................................................5
2.13 ORGANIZATION..................................................5
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE.........................6
2.15 WAIVER OF NOTICE..............................................6
ARTICLE III - DIRECTORS............................................................6
3.1 POWERS........................................................6
3.2 NUMBER OF DIRECTORS...........................................6
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS......................7
3.4 RESIGNATION AND VACANCIES.....................................7
3.5 REMOVAL OF DIRECTORS..........................................8
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE......................8
-i-
TABLE OF CONTENTS
(Continued)
Page
3.7 FIRST MEETINGS................................................8
3.8 REGULAR MEETINGS..............................................9
3.9 SPECIAL MEETINGS; NOTICE......................................9
3.10 QUORUM........................................................9
3.11 WAIVER OF NOTICE..............................................9
3.12 ADJOURNMENT..................................................10
3.13 NOTICE OF ADJOURNMENT........................................10
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING............10
3.15 FEES AND COMPENSATION OF DIRECTORS...........................10
3.16 APPROVAL OF LOANS TO OFFICERS................................10
ARTICLE IV - COMMITTEES...........................................................11
4.1 COMMITTEES OF DIRECTORS......................................11
4.2 MEETINGS AND ACTION OF COMMITTEES............................11
4.3 COMMITTEE MINUTES............................................12
ARTICLE V - OFFICERS............................................................. 12
5.1 OFFICERS.....................................................12
5.2 ELECTION OF OFFICERS.........................................12
5.3 SUBORDINATE OFFICERS.........................................12
5.4 REMOVAL AND RESIGNATION OF OFFICERS..........................12
5.5 VACANCIES IN OFFICES.........................................13
5.6 CHAIRMAN OF THE BOARD........................................13
5.7 PRESIDENT....................................................13
5.8 VICE PRESIDENTS..............................................13
5.9 SECRETARY....................................................14
5.10 CHIEF FINANCIAL OFFICER......................................14
5.11 ASSISTANT SECRETARY..........................................14
5.12 ADMINISTRATIVE OFFICERS......................................15
5.13 AUTHORITY AND DUTIES OF OFFICERS.............................15
ARTICLE VI - INDEMNIFICATION OF DIRECTORS, OFFICERS,
EMPLOYEES AND OTHER AGENTS...................................15
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS....................15
-ii-
TABLE OF CONTENTS
(Continued)
Page
6.2 INDEMNIFICATION OF OTHERS....................................16
6.3 INSURANCE....................................................16
ARTICLE VII - RECORDS AND REPORTS.................................................17
7.1 MAINTENANCE AND INSPECTION OF RECORDS........................17
7.2 INSPECTION BY DIRECTORS......................................17
7.3 ANNUAL STATEMENT TO STOCKHOLDERS.............................17
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS...............17
7.5 CERTIFICATION AND INSPECTION OF BYLAWS.......................18
ARTICLE VIII - GENERAL MATTERS....................................................18
8.1 RECORD DATE FOR PURPOSES OTHER THAN
NOTICE AND VOTING............................................18
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS....................18
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
............................................................18
8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES.............19
8.5 SPECIAL DESIGNATION ON CERTIFICATES..........................19
8.6 LOST CERTIFICATES............................................20
8.7 TRANSFER AGENTS AND REGISTRARS...............................20
8.8 CONSTRUCTION; DEFINITIONS....................................20
ARTICLE IX - AMENDMENTS...........................................................20
</TABLE>
-iii-
AMENDED AND RESTATED BYLAWS
OF
JENNER TECHNOLOGIES, INC.
(a Delaware corporation)
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be fixed in the
certificate of incorporation of the corporation.
1.2 OTHER OFFICES
The board of directors may at any time establish branch or subordinate
offices at any place or places where the corporation is qualified to do
business.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place within or outside
the State of Delaware designated by the board of directors. In the absence of
any such designation, stockholders' meetings shall be held at the principal
executive office of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held each year on a date
and at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the second
Wednesday of June in each year at 10:00 a.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected,
and any other proper business may be transacted.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, or by the chairman of the board, or by the president. No
other person or persons are permitted to call a special meeting.
If a special meeting is called by any person or persons other than the
board of directors, then the request shall be in writing, specifying the time of
such meeting and the general nature of the business proposed to be transacted,
and shall be delivered personally or sent by registered mail or by telegraphic
or other facsimile transmission to the chairman of the board, the president, or
the secretary of the corporation. The officer receiving the request shall cause
notice to be promptly given to the stockholders entitled to vote, in accordance
with the provisions of Sections 2.4 and 2.6 of these bylaws, that a meeting will
be held at the time requested by the person or persons calling the meeting, so
long as that time is not less than thirty-five (35) nor more than sixty (60)
days after the receipt of the request. If the notice is not given within twenty
(20) days after receipt of the request, then the person or persons requesting
the meeting may give the notice. Nothing contained in this paragraph of this
Section 2.3 shall be construed as limiting, fixing or affecting the time when a
meeting of stockholders called by action of the board of directors may be held.
2.4 NOTICE OF STOCKHOLDERS' MEETINGS
All notices of meetings of stockholders shall be sent or otherwise
given in accordance with Section 2.6 of these bylaws not less than ten (10) nor
more than sixty (60) days before the date of the meeting. The notice shall
specify the place, date and hour of the meeting and (i) in the case of a special
meeting, the purpose or purposes for which the meeting is called (no business
other than that specified in the notice may be transacted) or (ii) in the case
of the annual meeting, those matters which the board of directors, at the time
of giving the notice, intends to present for action by the stockholders (but any
proper matter may be presented at the meeting for such action). The notice of
any meeting at which directors are to be elected shall include the name of any
nominee or nominees who, at the time of the notice, the board intends to present
for election.
2.5 ADVANCE NOTICE OF STOCKHOLDER NOMINEES AND STOCKHOLDER
BUSINESS
Subject to the rights of holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation, (a)
nominations for the election of directors, and (b) business proposed to be
brought before any stockholder meeting may be made by the board of directors or
proxy committee appointed by the board of directors or by any stockholder
entitled to vote in the election of directors generally if such nomination or
business proposed is otherwise proper business before such meeting. However, any
such stockholder may nominate one or more persons for election as directors at a
meeting or propose business to be brought before a meeting, or both, only if
such stock holder has given timely notice in proper written form of their intent
to make such nomination or nominations or to propose such business. To be
timely, such stockholder's notice must be delivered to or mailed and received at
the principal executive offices of the corporation not less than one hundred
twenty (120) calendar days in advance of the date specified in the corporation's
proxy statement released to stockholders in connection with the previous year's
annual meeting of stockholders; provided, however, that in the event that no
annual meeting was held in the previous year or the date of the annual meeting
has been changed by more than thirty (30) days from the date contemplated at the
time of the previous year's proxy statement, notice by the stockholder to be
timely must be so received a reasonable
-2-
time before the solicitation is made. To be in proper form, a stockholder's
notice to the secretary shall set forth:
(i) the name and address of the stockholder who intends to make
the nominations or propose the business and, as the case may
be, of the person or persons to be nominated or of the
business to be proposed;
(ii) a representation that the stockholder is a holder of record of
stock of the corporation entitled to vote at such meeting and,
if applicable, intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the
notice;
(iii) if applicable, a description of all arrangements or
understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made
by the stockholder;
(iv) such other information regarding each nominee or each matter
of business to be proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to
the proxy rules of the Securities and Exchange Commission had
the nominee been nominated, or intended to be nominated, or
the matter been proposed, or intended to be proposed by the
board of directors; and
(v) if applicable, the consent of each nominee to serve as
director of the corporation if so elected.
The chairman of the meeting shall refuse to acknowledge the nomination
of any person or the proposal of any business not made in compliance with the
foregoing procedure.
2.6 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders shall be given either
personally or by first-class mail or by telegraphic or other written
communication. Notices not personally delivered shall be sent charges prepaid
and shall be addressed to the stockholder at the address of that stockholder
appearing on the books of the corporation or given by the stockholder to the
corporation for the purpose of notice. Notice shall be deemed to have been given
at the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
An affidavit of the mailing or other means of giving any notice of any
stockholders' meeting, executed by the secretary, assistant secretary or any
transfer agent of the corporation giving the notice, shall be prima facie
evidence of the giving of such notice.
-3-
2.7 QUORUM
The holders of a majority in voting power of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stock holders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum is not present or
represented at any meeting of the stockholders, then either (i) the chairman of
the meeting or (ii) the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting in accordance
with Section 2.7 of these bylaws.
When a quorum is present at any meeting, the vote of the holders of a
majority of the stock having voting power present in person or represented by
proxy shall decide any question brought before such meeting, unless the question
is one upon which, by express provision of the laws of the State of Delaware or
of the certificate of incorporation or these bylaws, a different vote is
required, in which case such express provision shall govern and control the
decision of the question.
If a quorum be initially present, the stockholders may continue to
transact business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum, if any action taken is approved by a
majority of the stockholders initially constituting the quorum.
2.8 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time and place, unless these
bylaws otherwise require, notice need not be given of the adjourned meeting if
the time and place thereof are announced at the meeting at which the adjournment
is taken. At the adjourned meeting the corporation may transact any business
that might have been transacted at the original meeting. If the adjournment is
for more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
2.9 VOTING
The stockholders entitled to vote at any meeting of stockholders shall
be determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint
owners, and to voting trusts and other voting agreements).
Except as may be otherwise provided in the certificate of incorporation
or these bylaws, each stockholder shall be entitled to one vote for each share
of capital stock held by such stockholder and stockholders shall not be entitled
to cumulate their votes in the election of directors or with respect to any
matter submitted to a vote of the stockholders.
-4-
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
No action shall be taken by the stockholders except at an annual or
special meeting of the stockholders called in accordance with these by-laws and
no action shall be taken by the stockholders by written consent.
2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING
For purposes of determining the stockholders entitled to notice of any
meeting or to vote thereat, the board of directors may fix, in advance, a record
date, which shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors and which shall not be more
than sixty (60) days nor less than ten (10) days before the date of any such
meeting, and in such event only stockholders of record on the date so fixed are
entitled to notice and to vote, notwithstanding any transfer of any shares on
the books of the corporation after the record date.
If the board of directors does not so fix a record date, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the business day next
preceding the day on which notice is given, or, if notice is waived, at the
close of business on the business day next preceding the day on which the
meeting is held.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting
unless the board of directors fixes a new record date for the adjourned meeting,
but the board of directors shall fix a new record date if the meeting is
adjourned for more than thirty (30) days from the date set for the original
meeting.
The record date for any other purpose shall be as provided in Section
8.1 of these bylaws.
2.12 PROXIES
Every person entitled to vote for directors, or on any other matter,
shall have the right to do so either in person or by one or more agents
authorized by a written proxy signed by the person and filed with the secretary
of the corporation, but no such proxy shall be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period. A proxy
shall be deemed signed if the stockholder's name is placed on the proxy (whether
by manual signature, typewriting, telegraphic transmission, telefacsimile or
otherwise) by the stockholder or the stockholder's attorney-in-fact. The
revocability of a proxy that states on its face that it is irrevocable shall be
governed by the provisions of Section 212(e) of the General Corporation Law of
Delaware.
2.13 ORGANIZATION
The president, or in the absence of the president, the chairman of the
board, or, in the absence of the president and the chairman of the board, one of
the corporation's vice presidents, shall call the meeting of the stockholders to
order, and shall act as chairman of the meeting. In the absence of the
president, the chairman of the board, and all of the vice presidents, the
stockholders shall appoint a
-5-
chairman for such meeting. The chairman of any meeting of stockholders shall
determine the order of business and the procedures at the meeting, including
such matters as the regulation of the manner of voting and the conduct of
business. The secretary of the corporation shall act as secretary of all
meetings of the stockholders, but in the absence of the secretary at any meeting
of the stockholders, the chairman of the meeting may appoint any person to act
as secretary of the meeting.
2.14 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
2.15 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the
General Corporation Law of Delaware or of the certificate of incorporation or
these bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware
and to any limitations in the certificate of incorporation or these bylaws
relating to action required to be approved by the stockholders or by the
outstanding shares, the business and affairs of the corporation shall be managed
and all corporate powers shall be exercised by or under the direction of the
board of directors.
-6-
3.2 NUMBER OF DIRECTORS
The number of directors which shall constitute the whole board
shall not be less than one nor more than nine in number. The exact number of
directors shall be fixed by the board. Directors need not be stockholders.
No reduction of the authorized number of directors shall have the
effect of removing any director before that director's term of office expires.
3.3 ELECTION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, directors shall be
elected at each annual meeting of stockholders to hold office until the next
annual meeting. Each director, including a director elected or appointed to fill
a vacancy, shall hold office until the expiration of the term for which elected
and until a successor has been elected and qualified.
3.4 RESIGNATION AND VACANCIES
Any director may resign effective on giving written notice to the
chairman of the board, the president, the secretary or the board of directors,
unless the notice specifies a later time for that resignation to become
effective. If the resignation of a director is effective at a future time, the
board of directors may elect a successor to take office when the resignation
becomes effective.
Vacancies in the board of directors may be filled by a majority of the
remaining directors, even if less than a quorum, or by a sole remaining
director; however, a vacancy created by the removal of a director by the vote of
the stockholders or by court order may be filled only by the affirmative vote of
a majority of the shares represented and voting at a duly held meeting at which
a quorum is present (which shares voting affirmatively also constitute a
majority of the required quorum). Each director so elected shall hold office
until the next annual meeting of the stockholders and until a successor has been
elected and qualified.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from
any increase in the authorized number of directors elected by all of the
stockholders having the right to vote as a single class may be filled by a
majority of the directors then in office, although less than a quorum, or by a
sole remaining director.
(ii) Whenever the holders of any class or classes of stock or
series thereof are entitled to elect one or more directors by the provisions of
the certificate of incorporation, vacancies and newly created directorships of
such class or classes or series may be filled by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
-7-
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created
directorship, the directors then in office constitute less than a majority of
the whole board (as constituted immediately prior to any such increase), then
the Court of Chancery may, upon application of any stockholder or stockholders
holding at least ten (10) percent of the total number of the shares at the time
outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 REMOVAL OF DIRECTORS
Unless otherwise restricted by statute, by the certificate of
incorporation or by these bylaws, any director or the entire board of directors
may be removed, with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
3.6 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
Regular meetings of the board of directors may be held at any place
within or outside the State of Delaware that has been designated from time to
time by resolution of the board. In the absence of such a designation, regular
meetings shall be held at the principal executive office of the corporation.
Special meetings of the board may be held at any place within or outside the
State of Delaware that has been designated in the notice of the meeting or, if
not stated in the notice or if there is no notice, at the principal executive
office of the corporation.
Any meeting of the board, regular or special, may be held by conference
telephone or similar communication equipment, so long as all directors
participating in the meeting can hear one another; and all such participating
directors shall be deemed to be present in person at the meeting.
3.7 FIRST MEETINGS
The first meeting of each newly elected board of directors shall be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected board of directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
board of directors, or as shall be specified in a written waiver signed by all
of the directors.
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3.8 REGULAR MEETINGS
Regular meetings of the board of directors may be held without notice
at such time as shall from time to time be determined by the board of directors.
If any regular meeting day shall fall on a legal holiday, then the meeting shall
be held at the same time and place on the next succeeding full business day.
3.9 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes
may be called at any time by the chairman of the board, the president, any vice
president, the secretary or any two directors.
Notice of the time and place of special meetings shall be delivered
personally or by telephone to each director or sent by first-class mail,
telecopy or telegram, charges prepaid, addressed to each director at that
director's address as it is shown on the records of the corporation. If the
notice is mailed, it shall be deposited in the United States mail at least four
(4) days before the time of the holding of the meeting. If the notice is
delivered personally or by telephone, telecopy or telegram, it shall be
delivered personally or by telephone or to the telegraph company at least
forty-eight (48) hours before the time of the holding of the meeting. Any oral
notice given personally or by telephone may be communicated either to the
director or to a person at the office of the director who the person giving the
notice has reason to believe will promptly communicate it to the director. The
notice need not specify the purpose or the place of the meeting, if the meeting
is to be held at the principal executive office of the corporation.
3.10 QUORUM
A majority of the authorized number of directors shall constitute a
quorum for the transaction of business, except to adjourn as provided in Section
3.12 of these bylaws. Every act or decision done or made by a majority of the
directors present at a duly held meeting at which a quorum is present shall be
regarded as the act of the board of directors, subject to the provisions of the
certificate of incorporation and applicable law.
A meeting at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of directors, if any action
taken is approved by at least a majority of the quorum for that meeting.
3.11 WAIVER OF NOTICE
Notice of a meeting need not be given to any director (i) who signs a
waiver of notice, whether before or after the meeting, or (ii) who attends the
meeting other than for the express purposed of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. All such waivers shall be filed with the corporate records
or made part of the minutes of the meeting. A waiver of notice need not specify
the purpose of any regular or special meeting of the board of directors.
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3.12 ADJOURNMENT
A majority of the directors present, whether or not constituting a
quorum, may adjourn any meeting of the board to another time and place.
3.13 NOTICE OF ADJOURNMENT
Notice of the time and place of holding an adjourned meeting of the
board need not be given unless the meeting is adjourned for more than
twenty-four (24) hours. If the meeting is adjourned for more than twenty-four
(24) hours, then notice of the time and place of the adjourned meeting shall be
given before the adjourned meeting takes place, in the manner specified in
Section 3.9 of these bylaws, to the directors who were not present at the time
of the adjournment.
3.14 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or permitted to be taken by the board of directors
may be taken without a meeting, provided that all members of the board
individually or collectively consent in writing to that action. Such action by
written consent shall have the same force and effect as a unanimous vote of the
board of directors. Such written consent and any counterparts thereof shall be
filed with the minutes of the proceedings of the board of directors.
3.15 FEES AND COMPENSATION OF DIRECTORS
Directors and members of committees may receive such compensation, if
any, for their services and such reimbursement of expenses as may be fixed or
determined by resolution of the board of directors. This Section 3.15 shall not
be construed to preclude any director from serving the corporation in any other
capacity as an officer, agent, employee or otherwise and receiving compensation
for those services.
3.16 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or any of its
subsidiaries, including any officer or employee who is a director of the
corporation or any of its subsidiaries, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing contained in this section shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
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ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution adopted by a majority of the
authorized number of directors, designate one (1) or more committees, each
consisting of two or more directors, to serve at the pleasure of the board. The
board may designate one (1) or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
committee, to the extent provided in the resolution of the board, shall have and
may exercise all the powers and authority of the board, but no such committee
shall have the power or authority to (i) amend the certificate of incorporation
(except that a committee may, to the extent authorized in the resolution or
resolutions providing for the issuance of shares of stock adopted by the board
of directors as provided in Section 151(a) of the General Corporation Law of
Delaware, fix the designations and any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation), (ii) adopt an agreement of
merger or consolidation under Sections 251 or 252 of the General Corporation Law
of Delaware, (iii) recommend to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and assets, (iv)
recommend to the stockholders a dissolution of the corporation or a revocation
of a dissolution or (v) amend the bylaws of the corporation; and, unless the
board resolution establishing the committee, the bylaws or the certificate of
incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and
taken in accordance with, the following provisions of Article III of these
bylaws: Section 3.6 (place of meetings; meetings by tele phone), Section 3.8
(regular meetings), Section 3.9 (special meetings; notice), Section 3.10
(quorum), Section 3.11 (waiver of notice), Section 3.12 (adjournment), Section
3.13 (notice of adjournment) and Section 3.14 (board action by written consent
without meeting), with such changes in the context of those bylaws as are
necessary to substitute the committee and its members for the board of directors
and its members; provided, however, that the time of regular meetings of
committees may be determined either by resolution of the board of directors or
by resolution of the committee, that special meetings of committees may also be
called by resolution of the board of directors, and that notice of special
meetings of committees shall also be given to all alternate members, who shall
have the right to attend all meetings of the committee. The board of directors
may adopt rules for the government of any committee not inconsistent with the
provisions of these bylaws.
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4.3 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report
the same to the board of directors when required.
ARTICLE V
OFFICERS
5.1 OFFICERS
The Corporate Officers of the corporation shall be a president, a
secretary and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, one or more vice
presidents (however denominated), one or more assistant secretaries, a treasurer
and one or more assistant treasurers, and such other officers as may be
appointed in accordance with the provisions of Section 5.3 of these bylaws. Any
number of offices may be held by the same person.
In addition to the Corporate Officers of the Company described above,
there may also be such Administrative Officers of the corporation as may be
designated and appointed from time to time by the president of the corporation
in accordance with the provisions of Section 5.12 of these bylaws.
5.2 ELECTION OF OFFICERS
The Corporate Officers of the corporation, except such officers as may
be appointed in accordance with the provisions of Section 5.3 or Section 5.5 of
these bylaws, shall be chosen by the board of directors, subject to the rights,
if any, of an officer under any contract of employment, and shall hold their
respective offices for such terms as the board of directors may from time to
time determine.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or may empower the president to
appoint, such other Corporate Officers as the business of the corporation may
require, each of whom shall hold office for such period, have such power and
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
The president may from time to time designate and appoint
Administrative Officers of the corporation in accordance with the provisions of
Section 5.12 of these bylaws.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of a Corporate Officer under any
contract of employment, any Corporate Officer may be removed, either with or
without cause, by the board of directors at any regular or special meeting of
the board or, except in case of a Corporate Officer chosen by the board of
directors, by any Corporate Officer upon whom such power of removal may be
conferred by the board of directors.
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Any Corporate Officer may resign at any time by giving written notice
to the corporation. Any resignation shall take effect at the date of the receipt
of that notice or at any later time specified in that notice; and, unless
otherwise specified in that notice, the acceptance of the resignation shall not
be necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the Corporate
Officer is a party.
Any Administrative Officer designated and appointed by the president
may be removed, either with or without cause, at any time by the president. Any
Administrative Officer may resign at any time by giving written notice to the
president or to the secretary of the corporation.
5.5 VACANCIES IN OFFICES
A vacancy in any office because of death, resignation, removal,
disqualification or any other cause shall be filled in the manner prescribed in
these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise such other
powers and perform such other duties as may from time to time be assigned to him
by the board of directors or as may be prescribed by these bylaws. If there is
no president, then the chairman of the board shall also be the chief executive
officer of the corporation and shall have the powers and duties prescribed in
Section 5.7 of these bylaws.
5.7 PRESIDENT
Subject to such supervisory powers, if any, as may be given by the
board of directors to the chairman of the board, if there be such an officer,
the president shall be the chief executive officer of the corporation and shall,
subject to the control of the board of directors, have general supervision,
direction and control of the business and the officers of the corporation. He or
she shall preside at all meetings of the stockholders and, in the absence or
nonexistence of a chairman of the board, at all meetings of the board of
directors. He or she shall have the general powers and duties of management
usually vested in the office of president of a corporation, and shall have such
other powers and perform such other duties as may be prescribed by the board of
directors or these bylaws.
5.8 VICE PRESIDENTS
In the absence or disability of the president, and if there is no
chairman of the board, the vice presidents, if any, in order of their rank as
fixed by the board of directors or, if not ranked, a vice president designated
by the board of directors, shall perform all the duties of the president and
when so acting shall have all the powers of, and be subject to all the
restrictions upon, the president. The vice presidents shall have such other
powers and perform such other duties as from time to time may be prescribed for
them respectively by the board of directors, these bylaws, the president or the
chairman of the board.
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5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal
executive office of the corporation or such other place as the board of
directors may direct, a book of minutes of all meetings and actions of the board
of directors, committees of directors and stockholders. The minutes shall show
the time and place of each meeting, whether regular or special (and, if special,
how authorized and the notice given), the names of those present at directors'
meetings or committee meetings, the number of shares present or represented at
stockholders' meetings and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal
executive office of the corporation or at the office of the corporation's
transfer agent or registrar, as determined by resolution of the board of
directors, a share register or a duplicate share register, showing the names of
all stockholders and their addresses, the number and classes of shares held by
each, the number and date of certificates evidencing such shares and the number
and date of cancellation of every certificate surrendered for cancellation.
The secretary shall give, or cause to be given, notice of all meetings
of the stockholders and of the board of directors required to be given by law or
by these bylaws. He or she shall keep the seal of the corporation, if one be
adopted, in safe custody and shall have such other powers and perform such other
duties as may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be
kept and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings and shares. The books of account shall at all reasonable times
be open to inspection by any director for a purpose reasonably related to his
position as a director.
The chief financial officer shall deposit all money and other valuables
in the name and to the credit of the corporation with such depositaries as may
be designated by the board of directors. He or she shall disburse the funds of
the corporation as may be ordered by the board of directors, shall render to the
president and directors, whenever they request it, an account of all of his or
her transactions as chief financial officer and of the financial condition of
the corporation, and shall have such other powers and perform such other duties
as may be prescribed by the board of directors or these bylaws.
5.11 ASSISTANT SECRETARY
The assistant secretary, if any, or, if there is more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his or her inability or refusal
to act, perform the duties and exercise the powers of the secretary and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
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5.12 ADMINISTRATIVE OFFICERS
In addition to the Corporate Officers of the corporation as provided in
Section 5.1 of these bylaws and such subordinate Corporate Officers as may be
appointed in accordance with Section 5.3 of these bylaws, there may also be such
Administrative Officers of the corporation as may be designated and appointed
from time to time by the president of the corporation. Administrative Officers
shall perform such duties and have such powers as from time to time may be
determined by the president or the board of directors in order to assist the
Corporate Officers in the furtherance of their duties. In the performance of
such duties and the exercise of such powers, however, such Administrative
Officers shall have limited authority to act on behalf of the corporation as the
board of directors shall establish, including but not limited to limitations on
the dollar amount and on the scope of agreements or commitments that may be made
by such Administrative Officers on behalf of the corporation, which limitations
may not be exceeded by such individuals or altered by the president without
further approval by the board of directors.
5.13 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing powers, authority and duties, all officers
of the corporation shall respectively have such authority and powers and perform
such duties in the management of the business of the corporation as may be
designated from time to time by the board of directors.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES
AND OTHER AGENTS
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner
permitted by the General Corporation Law of Delaware as the same now exists or
may hereafter be amended, indemnify any person against expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement actually and
reasonably incurred in connection with any threatened, pending or completed
action, suit, or proceeding in which such person was or is a party or is
threatened to be made a party by reason of the fact that such person is or was a
director or officer of the corporation. For purposes of this Section 6.1, a
"director" or "officer" of the corporation shall mean any person (i) who is or
was a director or officer of the corporation, (ii) who is or was serving at the
request of the corporation as a director or officer of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was a
director or officer of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
The corporation shall be required to indemnify a director or officer in
connection with an action, suit, or proceeding (or part thereof) initiated by
such director or officer only if the initiation of such action, suit, or
proceeding (or part thereof) by the director or officer was authorized by the
Board of Directors of the corporation.
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The corporation shall pay the expenses (including attorney's fees)
incurred by a director or officer of the corporation entitled to indemnification
hereunder in defending any action, suit or proceeding referred to in this
Section 6.1 in advance of its final disposition; provided, however, that payment
of expenses incurred by a director or officer of the corporation in advance of
the final disposition of such action, suit or proceeding shall be made only upon
receipt of an undertaking by the director or officer to repay all amounts
advanced if it should ultimately be determined that the director of officer is
not entitled to be indemnified under this Section 6.1 or otherwise.
The rights conferred on any person by this Article shall not be
exclusive of any other rights which such person may have or hereafter acquire
under any statute, provision of the corporation's Certificate of Incorporation,
these bylaws, agreement, vote of the stockholders or disinterested directors or
otherwise.
Any repeal or modification of the foregoing provisions of this Article
shall not adversely affect any right or protection hereunder of any person in
respect of any act or omission occurring prior to the time of such repeal or
modification.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the maximum extent and in the
manner permitted by the General Corporation Law of Delaware as the same now
exists or may hereafter be amended, to indemnify any person (other than
directors and officers) against expenses (including attorneys' fees), judgments,
fines, and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit, or
proceeding, in which such person was or is a party or is threatened to be made a
party by reason of the fact that such person is or was an employee or agent of
the corporation. For purposes of this Section 6.2, an "employee" or "agent" of
the corporation (other than a director or officer) shall mean any person (i) who
is or was an employee or agent of the corporation, (ii) who is or was serving at
the request of the corporation as an employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, or (iii) who was an
employee or agent of a corporation which was a predecessor corporation of the
corporation or of another enterprise at the request of such predecessor
corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him or her and incurred
by him or her in any such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify him or her
against such liability under the provisions of the General Corporation Law of
Delaware.
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ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
The corporation shall, either at its principal executive office or at
such place or places as designated by the board of directors, keep a record of
its stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books and other records of its business and properties.
Any stockholder of record, in person or by attorney or other agent,
shall, upon written demand under oath stating the purpose thereof, have the
right during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine (and to make copies of)
the corporation's stock ledger, a list of its stockholders and its other books
and records for a purpose reasonably related to his or her position as a
director.
7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
7.4 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, if any, the president, any vice president,
the chief financial officer, the secretary or any assistant secretary of this
corporation, or any other person authorized by the board of directors or the
president or a vice president, is authorized to vote, represent and exercise on
behalf of this corporation all rights incident to any and all shares of the
stock of any other corporation or corporations standing in the name of this
corporation. The authority herein granted may be exercised either by such person
directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
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7.5 CERTIFICATION AND INSPECTION OF BYLAWS
The original or a copy of these bylaws, as amended or otherwise altered
to date, certified by the secretary, shall be kept at the corporation's
principal executive office and shall be open to inspection by the stockholders
of the corporation, at all reasonable times during office hours.
ARTICLE VIII
GENERAL MATTERS
8.1 RECORD DATE FOR PURPOSES OTHER THAN NOTICE AND VOTING
For purposes of determining the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not
precede the date upon which the resolution fixing the record date is adopted and
which shall not be more than sixty (60) days before any such action. In that
case, only stockholders of record at the close of business on the date so fixed
are entitled to receive the dividend, distribution or allotment of rights, or to
exercise such rights, as the case may be, notwithstanding any transfer of any
shares on the books of the corporation after the record date so fixed, except as
otherwise provided by law.
If the board of directors does not so fix a record date, then the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
applicable resolution.
8.2 CHECKS; DRAFTS; EVIDENCES OF INDEBTEDNESS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.3 CORPORATE CONTRACTS AND INSTRUMENTS: HOW EXECUTED
The board of directors, except as otherwise provided in these bylaws,
may authorize and empower any officer or officers, or agent or agents, to enter
into any contract or execute any instrument in the name of and on behalf of the
corporation; such power and authority may be general or confined to specific
instances. Unless so authorized or ratified by the board of directors or within
the agency power of an officer, no officer, agent or employee shall have any
power or authority to bind the corporation by any contract or engagement or to
pledge its credit or to render it liable for any purpose or for any amount.
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8.4 STOCK CERTIFICATES; TRANSFER; PARTLY PAID SHARES
The shares of the corporation shall be represented by certificates,
provided that the board of directors of the corporation may provide by
resolution or resolutions that some or all of any or all classes or series of
its stock shall be uncertificated shares. Any such resolution shall not apply to
shares represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and, upon request,
every holder of uncertificated shares, shall be entitled to have a certificate
signed by, or in the name of the corporation by, the chairman or vice-chairman
of the board of directors, or the president or vice-president, and by the
treasurer or an assistant treasurer, or the secretary or an assistant secretary
of such corporation representing the number of shares registered in certificate
form. Any or all of the signatures on the certificate may be a facsimile. In
case any officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue.
Certificates for shares shall be of such form and device as the board
of directors may designate and shall state the name of the record holder of the
shares represented thereby; its number; date of issuance; the number of shares
for which it is issued; a summary statement or reference to the powers,
designations, preferences or other special rights of such stock and the
qualifications, limitations or restrictions of such preferences and/or rights,
if any; a statement or summary of liens, if any; a conspicuous notice of
restrictions upon transfer or registration of transfer, if any; a statement as
to any applicable voting trust agreement; if the shares be assessable, or, if
assessments are collectible by personal action, a plain statement of such facts.
Upon surrender to the secretary or transfer agent of the corporation of
a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate and record the transaction upon its books.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, or upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.5 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock
or more than one series of any class, then the powers, the designations, the
preferences and the relative, participating, optional or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the
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certificate that the corporation shall issue to represent such class or series
of stock; provided, however, that, except as otherwise provided in Section 202
of the General Corporation Law of Delaware, in lieu of the foregoing
requirements there may be set forth on the face or back of the certificate that
the corporation shall issue to represent such class or series of stock a
statement that the corporation will furnish without charge to each stockholder
who so requests the powers, the designations, the preferences and the relative,
participating, optional or other special rights of each class of stock or series
thereof and the qualifications, limitations or restrictions of such preferences
and/or rights.
8.6 LOST CERTIFICATES
Except as provided in this Section 8.6, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and cancelled at the same time. The board of
directors may, in case any share certificate or certificate for any other
security is lost, stolen or destroyed, authorize the issuance of replacement
certificates on such terms and conditions as the board may require; the board
may require indemnification of the corporation secured by a bond or other
adequate security sufficient to protect the corporation against any claim that
may be made against it, including any expense or liability, on account of the
alleged loss, theft or destruction of the certificate or the issuance of the
replacement certificate.
8.7 TRANSFER AGENTS AND REGISTRARS
The board of directors may appoint one or more transfer agents or
transfer clerks, and one or more registrars, each of which shall be an
incorporated bank or trust company -- either domestic or foreign, who shall be
appointed at such times and places as the requirements of the corporation may
necessitate and the board of directors may designate.
8.8 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of this
provision, as used in these bylaws, the singular number includes the plural, the
plural number includes the singular, and the term "person" includes both an
entity and a natural person.
ARTICLE IX
AMENDMENTS
The original or other bylaws of the corporation may be adopted, amended
or repealed by the stockholders entitled to vote or by the board of directors of
the corporation. The fact that such power has been so conferred upon the
directors shall not divest the stockholders of the power, nor limit their power
to adopt, amend or repeal bylaws.
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Whenever an amendment or new bylaw is adopted, it shall be copied in
the book of bylaws with the original bylaws, in the appropriate place. If any
bylaw is repealed, the fact of repeal with the date of the meeting at which the
repeal was enacted or the filing of the operative written consent(s) shall be
stated in said book.
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EXHIBIT 10.1
JENNER TECHNOLOGIES, INC.
INDEMNIFICATION AGREEMENT
This Indemnification Agreement ("Agreement") is effective as of
_____________, 1997 by and between Jenner Technologies, Inc., Delaware
corporation (the "Company"), and ________________, ("Indemnitee").
WHEREAS, the Company desires to attract and retain the services of
highly qualified individuals, such as Indemnitee, to serve the Company and its
related entities;
WHEREAS, in order to induce Indemnitee to continue to provide services
to the Company, the Company wishes to provide for the indemnification of, and
the advancement of expenses to, Indemnitee to the maximum extent permitted by
law;
WHEREAS, the Company and Indemnitee recognize the continued difficulty
in obtaining liability insurance for the Company's directors, officers,
employees, agents and fiduciaries, the significant increases in the cost of such
insurance and the general reductions in the coverage of such insurance;
WHEREAS, the Company and Indemnitee further recognize the substantial
increase in corporate litigation in general, subjecting directors, officers,
employees, agents and fiduciaries to expensive litigation risks at the same time
as the availability and coverage of liability insurance has been severely
limited; and
WHEREAS, in view of the considerations set forth above, the Company
desires that Indemnitee shall be indemnified and advanced expenses by the
Company as set forth herein;
NOW, THEREFORE, the Company and Indemnitee hereby agree as set forth
below.
1. Certain Definitions.
(a) "Change in Control" shall mean, and shall be deemed to
have occurred if, on or after the date of this Agreement, (i) any "person" (as
such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended) or group acting in concert, other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
acting in such capacity or a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company, becomes the "beneficial owner" (as defined in
Rule 13d-3 under said Act), directly or indirectly, of securities of the Company
representing more than 50% of the total voting power represented by the
Company's then outstanding Voting Securities (as defined below), (ii) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board of Directors of the Company and any new director whose
election by the Board of Directors or nomination for election by the Company's
stockholders was approved by a vote of at least two thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof, (iii) the stockholders of
the Company approve a merger or consolidation
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of the Company with any other corporation other than a merger or consolidation
which would result in the Voting Securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity) at least 80% of the total voting power represented by the Voting
Securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (iv) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of (in one transaction or a series of related
transactions) all or substantially all of the Company's assets.
(b) "Claim" shall mean with respect to a Covered Event (as
defined below): any threatened, pending or completed action, suit, proceeding or
alternative dispute resolution mechanism, or any hearing, inquiry or
investigation that Indemnitee in good faith believes might lead to the
institution of any such action, suit, proceeding or alternative dispute
resolution mechanism, whether civil, criminal, administrative, investigative or
other.
(c) References to the "Company" shall include, in addition to
Jenner Technologies, Inc., any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or merger to which
Jenner Technologies, Inc. (or any of its wholly owned subsidiaries) is a party
which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, employees, agents or
fiduciaries, so that if Indemnitee is or was a director, officer, employee,
agent or fiduciary of such constituent corporation, or is or was serving at the
request of such constituent corporation as a director, officer, employee, agent
or fiduciary of another corporation, partnership, joint venture, employee
benefit plan, trust or other enterprise, Indemnitee shall stand in the same
position under the provisions of this Agreement with respect to the resulting or
surviving corporation as Indemnitee would have with respect to such constituent
corporation if its separate existence had continued.
(d) "Covered Event" shall mean any event or occurrence related
to the fact that Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or any subsidiary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, agent or
fiduciary of another corporation, partnership, joint venture, trust or other
enterprise, or by reason of any action or inaction on the part of Indemnitee
while serving in such capacity.
(e) "Expenses" shall mean any and all expenses (including
attorneys' fees and all other costs, expenses and obligations incurred in
connection with investigating, defending, being a witness in or participating in
(including on appeal), or preparing to defend, to be a witness in or to
participate in, any action, suit, proceeding, alternative dispute resolution
mechanism, hearing, inquiry or investigation), judgments, fines, penalties and
amounts paid in settlement (if such settlement is approved in advance by the
Company, which approval shall not be unreasonably withheld), actually and
reasonably incurred, of any Claim and any federal, state, local or foreign taxes
imposed on the Indemnitee as a result of the actual or deemed receipt of any
payments under this Agreement.
(f) "Expense Advance" shall mean a payment to Indemnitee
pursuant to Section 3 of Expenses in advance of the settlement of or final
judgement in any action, suit, proceeding or alternative dispute resolution
mechanism, hearing, inquiry or investigation which constitutes a Claim.
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(g) "Independent Legal Counsel" shall mean an attorney or firm
of attorneys, selected in accordance with the provisions of Section 2(d) hereof,
who shall not have otherwise performed services for the Company or Indemnitee
within the last three years (other than with respect to matters concerning the
rights of Indemnitee under this Agreement, or of other indemnitees under similar
indemnity agreements).
(h) References to "other enterprises" shall include employee
benefit plans; references to "fines" shall include any excise taxes assessed on
Indemnitee with respect to an employee benefit plan; and references to "serving
at the request of the Company" shall include any service as a director, officer,
employee, agent or fiduciary of the Company which imposes duties on, or involves
services by, such director, officer, employee, agent or fiduciary with respect
to an employee benefit plan, its participants or its beneficiaries; and if
Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to
be in the interest of the participants and beneficiaries of an employee benefit
plan, Indemnitee shall be deemed to have acted in a manner "not opposed to the
best interests of the Company" as referred to in this Agreement.
(i) "Reviewing Party" shall mean, subject to the provisions of
Section 2(d), any person or body appointed by the Board of Directors in
accordance with applicable law to review the Company's obligations hereunder and
under applicable law, which may include a member or members of the Company's
Board of Directors, Independent Legal Counsel or any other person or body not a
party to the particular Claim for which Indemnitee is seeking indemnification.
(j) "Section" refers to a section of this Agreement unless
otherwise indicated.
(k) "Voting Securities" shall mean any securities of the
Company that vote generally in the election of directors.
2. Indemnification.
(a) Indemnification of Expenses. Subject to the provisions of
Section 2(b) below, the Company shall indemnify Indemnitee for Expenses to the
fullest extent permitted by law if Indemnitee was or is or becomes a party to or
witness or other participant in, or is threatened to be made a party to or
witness or other participant in, any Claim (whether by reason of or arising in
part out of a Covered Event), including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses.
(b) Review of Indemnification Obligations. Notwithstanding the
foregoing, in the event any Reviewing Party shall have determined (in a written
opinion, in any case in which Independent Legal Counsel is the Reviewing Party)
that Indemnitee is not entitled to be indemnified hereunder under applicable
law, (i) the Company shall have no further obligation under Section 2(a) to make
any payments to Indemnitee not made prior to such determination by such
Reviewing Party, and (ii) the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all Expenses
theretofore paid to Indemnitee to which Indemnitee is not entitled hereunder
under applicable law; provided, however, that if Indemnitee has commenced or
thereafter commences legal proceedings in a court of competent jurisdiction to
secure a determination that Indemnitee is entitled to be indemnified
-3-
hereunder under applicable law, any determination made by any Reviewing Party
that Indemnitee is not entitled to be indemnified hereunder under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any Expenses theretofore paid in indemnifying Indemnitee until a
final judicial determination is made with respect thereto (as to which all
rights of appeal therefrom have been exhausted or lapsed). Indemnitee's
obligation to reimburse the Company for any Expenses shall be unsecured and no
interest shall be charged thereon.
(c) Indemnitee Rights on Unfavorable Determination; Binding
Effect. If any Reviewing Party determines that Indemnitee substantively is not
entitled to be indemnified hereunder in whole or in part under applicable law,
Indemnitee shall have the right to commence litigation seeking an initial
determination by the court or challenging any such determination by such
Reviewing Party or any aspect thereof, including the legal or factual bases
therefor, and, subject to the provisions of Section 15, the Company hereby
consents to service of process and to appear in any such proceeding. Absent such
litigation, any determination by any Reviewing Party shall be conclusive and
binding on the Company and Indemnitee.
(d) Selection of Reviewing Party; Change in Control. If there
has not been a Change in Control, any Reviewing Party shall be selected by the
Board of Directors, and if there has been such a Change in Control (other than a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to such Change in Control),
any Reviewing Party with respect to all matters thereafter arising concerning
the rights of Indemnitee to indemnification of Expenses under this Agreement or
any other agreement or under the Company's Certificate of Incorporation or
Bylaws as now or hereafter in effect, or under any other applicable law, if
desired by Indemnitee, shall be Independent Legal Counsel selected by Indemnitee
and approved by the Company (which approval shall not be unreasonably withheld).
Such counsel, among other things, shall render its written opinion to the
Company and Indemnitee as to whether and to what extent Indemnitee would be
entitled to be indemnified hereunder under applicable law and the Company agrees
to abide by such opinion. The Company agrees to pay the reasonable fees of the
Independent Legal Counsel referred to above and to indemnify fully such counsel
against any and all expenses (including attorneys' fees), claims, liabilities
and damages arising out of or relating to this Agreement or its engagement
pursuant hereto. Notwithstanding any other provision of this Agreement, the
Company shall not be required to pay Expenses of more than one Independent Legal
Counsel in connection with all matters concerning a single Indemnitee, and such
Independent Legal Counsel shall be the Independent Legal Counsel for any or all
other Indemnitees unless (i) the Company otherwise determines or (ii) any
Indemnity shall provide a written statement setting forth in detail a reasonable
objection to such Independent Legal Counsel representing other Indemnitees.
(e) Mandatory Payment of Expenses. Notwithstanding any other
provision of this Agreement other than Section 10 hereof, to the extent that
Indemnitee has been successful on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, in defense of any
Claim, Indemnitee shall be indemnified against all Expenses incurred by
Indemnitee in connection therewith.
-4-
3. Expense Advances.
(a) Obligation to Make Expense Advances. The Company shall
make Expense Advances to Indemnitee upon receipt of a written undertaking by or
on behalf of the Indemnitee to repay such amounts if it shall ultimately be
determined that the Indemnitee is not entitled to be indemnified therefore by
the Company.
(b) Form of Undertaking. Any written undertaking by the
Indemnitee to repay any Expense Advances hereunder shall be unsecured and no
interest shall be charged thereon.
(c) Determination of Reasonable Expense Advances. The parties
agree that for the purposes of any Expense Advance for which Indemnitee has made
written demand to the Company in accordance with this Agreement, all Expenses
included in such Expense Advance that are certified by affidavit of Indemnitee's
counsel as being reasonable shall be presumed conclusively to be reasonable.
4. Procedures for Indemnification and Expense Advances.
(a) Timing of Payments. All payments of Expenses (including
without limitation Expense Advances) by the Company to the Indemnitee pursuant
to this Agreement shall be made to the fullest extent permitted by law as soon
as practicable after written demand by Indemnitee therefor is presented to the
Company, but in no event later than forty-five (45) business days after such
written demand by Indemnitee is presented to the Company, except in the case of
Expense Advances, which shall be made no later than twenty (20) business days
after such written demand by Indemnitee is presented to the Company.
(b) Notice/Cooperation by Indemnitee. Indemnitee shall, as a
condition precedent to Indemnitee's right to be indemnified or Indemnitee's
right to receive Expense Advances under this Agreement, give the Company notice
in writing as soon as practicable of any Claim made against Indemnitee for which
indemnification will or could be sought under this Agreement. Notice to the
Company shall be directed to the Chief Executive Officer of the Company at the
address shown on the signature page of this Agreement (or such other address as
the Company shall designate in writing to Indemnitee). In addition, Indemnitee
shall give the Company such information and cooperation as it may reasonably
require and as shall be within Indemnitee's power.
(c) No Presumptions; Burden of Proof. For purposes of this
Agreement, the termination of any Claim by judgment, order, settlement (whether
with or without court approval) or conviction, or upon a plea of nolo
contendere, or its equivalent, shall not create a presumption that Indemnitee
did not meet any particular standard of conduct or have any particular belief or
that a court has determined that indemnification is not permitted by this
Agreement or applicable law. In addition, neither the failure of any Reviewing
Party to have made a determination as to whether Indemnitee has met any
particular standard of conduct or had any particular belief, nor an actual
determination by any Reviewing Party that Indemnitee has not met such standard
of conduct or did not have such belief, prior to the commencement of legal
proceedings by Indemnitee to secure a judicial determination that Indemnitee
should be indemnified under this Agreement or applicable law, shall be a defense
to Indemnitee's claim or create a presumption that Indemnitee has not met any
particular standard of conduct or did not have any
-5-
particular belief. In connection with any determination by any Reviewing Party
or otherwise as to whether the Indemnitee is entitled to be indemnified
hereunder, the burden of proof shall be on the Company to establish that
Indemnitee is not so entitled.
(d) Notice to Insurers. If, at the time of the receipt by the
Company of a notice of a Claim pursuant to Section 4(b) hereof, the Company has
liability insurance in effect which may cover such Claim, the Company shall give
prompt notice of the commencement of such Claim to the insurers in accordance
with the procedures set forth in the respective policies. The Company shall
thereafter take all necessary or desirable action to cause such insurers to pay,
on behalf of the Indemnitee, all amounts payable as a result of such Claim in
accordance with the terms of such policies.
(e) Selection of Counsel. In the event the Company shall be
obligated hereunder to provide indemnification for or make any Expense Advances
with respect to the Expenses of any Claim, the Company, if appropriate, shall be
entitled to assume the defense of such Claim with counsel approved by Indemnitee
(which approval shall not be unreasonably withheld) upon the delivery to
Indemnitee of written notice of the Company's election to do so. After delivery
of such notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under this
Agreement for any fees or expenses of separate counsel subsequently employed by
or on behalf of Indemnitee with respect to the same Claim; provided, however,
that, (i) Indemnitee shall have the right to employ Indemnitee's separate
counsel in any such Claim at Indemnitee's expense and (ii) if (A) the employment
of separate counsel by Indemnitee has been previously authorized by the Company,
(B) Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense,
or (C) the Company shall not continue to retain such counsel to defend such
Claim, then the fees and expenses of Indemnitee's separate counsel shall be
Expenses for which Indemnitee may receive indemnification or Expense Advances
hereunder.
5. Additional Indemnification Rights; Nonexclusivity.
(a) Scope. The Company hereby agrees to indemnify the
Indemnitee to the fullest extent permitted by law, notwithstanding that such
indemnification is not specifically authorized by the other provisions of this
Agreement, the Company's Certificate of Incorporation, the Company's Bylaws or
by statute. In the event of any change after the date of this Agreement in any
applicable law, statute or rule which expands the right of a Delaware
corporation to indemnify a member of its board of directors or an officer,
employee, agent or fiduciary, it is the intent of the parties hereto that
Indemnitee shall enjoy by this Agreement the greater benefits afforded by such
change. In the event of any change in any applicable law, statute or rule which
narrows the right of a Delaware corporation to indemnify a member of its board
of directors or an officer, employee, agent or fiduciary, such change, to the
extent not otherwise required by such law, statute or rule to be applied to this
Agreement, shall have no effect on this Agreement or the parties' rights and
obligations hereunder except as set forth in Section 10(a) hereof.
(b) Nonexclusivity. The indemnification and the payment of
Expense Advances provided by this Agreement shall be in addition to any rights
to which Indemnitee may be entitled under the Company's Certificate of
Incorporation, its Bylaws, any other agreement, any vote of stockholders or
disinterested directors, the General Corporation Law of the State of Delaware,
or otherwise. The indemnification and the payment of Expense Advances provided
under this Agreement shall continue as
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to Indemnitee for any action taken or not taken while serving in an indemnified
capacity even though subsequent thereto Indemnitee may have ceased to serve in
such capacity.
6. No Duplication of Payments. The Company shall not be liable under
this Agreement to make any payment in connection with any Claim made against
Indemnitee to the extent Indemnitee has otherwise actually received payment
(under any insurance policy, provision of the Company's Certificate of
Incorporation, Bylaws or otherwise) of the amounts otherwise payable hereunder.
7. Partial Indemnification. If Indemnitee is entitled under any
provision of this Agreement to indemnification by the Company for some or a
portion of Expenses incurred in connection with any Claim, but not, however, for
all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion of such Expenses to which Indemnitee is entitled.
8. Mutual Acknowledgment. Both the Company and Indemnitee acknowledge
that in certain instances, federal law or applicable public policy may prohibit
the Company from indemnifying its directors, officers, employees, agents or
fiduciaries under this Agreement or otherwise. Indemnitee understands and
acknowledges that the Company has undertaken or may be required in the future to
undertake with the Securities and Exchange Commission to submit the question of
indemnification to a court in certain circumstances for a determination of the
Company's right under public policy to indemnify Indemnitee.
9. Liability Insurance. To the extent the Company maintains liability
insurance applicable to directors, officers, employees, agents or fiduciaries,
Indemnitee shall be covered by such policies in such a manner as to provide
Indemnitee the same rights and benefits as are provided to the most favorably
insured of the Company's directors, if Indemnitee is a director; or of the
Company's officers, if Indemnitee is not a director of the Company but is an
officer; or of the Company's key employees, agents or fiduciaries, if Indemnitee
is not an officer or director but is a key employee, agent or fiduciary.
10. Exceptions. Notwithstanding any other provision of this Agreement,
the Company shall not be obligated pursuant to the terms of this Agreement:
(a) Excluded Action or Omissions. To indemnify Indemnitee for
Expenses resulting from acts, omissions or transactions for which Indemnitee is
prohibited from receiving indemnification under this Agreement or applicable
law; provided, however, that notwithstanding any limitation set forth in this
Section 10(a) regarding the Company's obligation to provide indemnification,
Indemnitee shall be entitled under Section 3 to receive Expense Advances
hereunder with respect to any such Claim unless and until a court having
jurisdiction over the Claim shall have made a final judicial determination (as
to which all rights of appeal therefrom have been exhausted or lapsed) that
Indemnitee has engaged in acts, omissions or transactions for which Indemnitee
is prohibited from receiving indemnification under this Agreement or applicable
law.
(b) Claims Initiated by Indemnitee. To indemnify or make
Expense Advances to Indemnitee with respect to Claims initiated or brought
voluntarily by Indemnitee and not by way of defense, counterclaim or
cross-claim, except (i) with respect to actions or proceedings brought to
establish or enforce a right to indemnification under this Agreement or any
other agreement or insurance policy or
-7-
under the Company's Certificate of Incorporation or Bylaws now or hereafter in
effect relating to Claims for Covered Events, (ii) in specific cases if the
Board of Directors has approved the initiation or bringing of such Claim, or
(iii) as otherwise required under Section 145 of the Delaware General
Corporation Law (relating to indemnification of officers, directors, employees
and agents, and insurance), regardless of whether Indemnitee ultimately is
determined to be entitled to such indemnification, Expense Advances, or
insurance recovery, as the case may be.
(c) Lack of Good Faith. To indemnify Indemnitee for any
Expenses incurred by the Indemnitee with respect to any action instituted (i) by
Indemnitee to enforce or interpret this Agreement, if a court having
jurisdiction over such action determines as provided in Section 13 that each of
the material assertions made by the Indemnitee as a basis for such action was
not made in good faith or was frivolous, or (ii) by or in the name of the
Company to enforce or interpret this Agreement, if a court having jurisdiction
over such action determines as provided in Section 13 that each of the material
defenses asserted by Indemnitee in such action was made in bad faith or was
frivolous.
(d) Claims Under Section 16(b). To indemnify Indemnitee for
expenses and the payment of profits arising from the purchase and sale by
Indemnitee of securities in violation of Section 16(b) of the Securities
Exchange Act of 1934, as amended, or any similar successor statute; provided,
however, that notwitstanding any limitation set forth in this Section 10(d)
regarding the Company's obligations to provide indemnification, Indemnitee shall
be entitled under Section 3 to receive Expense Advances hereunder with respect
to any such Claim unless and until a court having jurisdiction over the Claim
shall have made a final determination (as to which all rights of appeal have
been exhausted or lapsed) that Indemnitee has violated said statute.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original.
12. Binding Effect; Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors, assigns (including any direct or
indirect successor by purchase, merger, consolidation or otherwise to all or
substantially all of the business or assets of the Company), spouses, heirs and
personal and legal representatives. The Company shall require and cause any
successor (whether direct or indirect, and whether by purchase, merger,
consolidation or otherwise) to all, substantially all, or a substantial part, of
the business or assets of the Company, by written agreement in form and
substance satisfactory to Indemnitee, expressly to assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform if no such succession had taken place. This Agreement
shall continue in effect regardless of whether Indemnitee continues to serve as
a director, officer, employee, agent or fiduciary (as applicable) of the Company
or of any other enterprise at the Company's request.
13. Expenses Incurred in Action Relating to Enforcement or
Interpretation. In the event that any action is instituted by Indemnitee under
this Agreement or under any liability insurance policies maintained by the
Company to enforce or interpret any of the terms hereof or thereof, Indemnitee
shall be entitled to be indemnified for all Expenses incurred by Indemnitee with
respect to such action (including without limitation attorneys' fees),
regardless of whether Indemnitee is ultimately successful
-8-
in such action, unless as a part of such action a court having jurisdiction over
such action makes a final judicial determination (as to which all rights of
appeal therefrom have been exhausted or lapsed) that each of the material
assertions made by Indemnitee as a basis for such action was not made in good
faith or was frivolous; provided, however, that until such final judicial
determination is made, Indemnitee shall be entitled under Section 3 to receive
payment of Expense Advances hereunder with respect to such action. In the event
of an action instituted by or in the name of the Company under this Agreement to
enforce or interpret any of the terms of this Agreement, Indemnitee shall be
entitled to be indemnified for all Expenses incurred by Indemnitee in defense of
such action (including without limitation costs and expenses incurred with
respect to Indemnitee's counterclaims and cross-claims made in such action),
unless as a part of such action a court having jurisdiction over such action
makes a final judicial determination (as to which all rights of appeal therefrom
have been exhausted or lapsed) that each of the material defenses asserted by
Indemnitee in such action was made in bad faith or was frivolous; provided,
however, that until such final judicial determination is made, Indemnitee shall
be entitled under Section 3 to receive payment of Expense Advances hereunder
with respect to such action.
14. Period of Limitations. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company against
Indemnitee, Indemnitee's estate, spouse, heirs, executors or personal or legal
representatives after the expiration of two years from the date of accrual of
such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal
action within such two year period; provided, however, that if any shorter
period of limitations is otherwise applicable to any such cause of action, such
shorter period shall govern.
15. Notice. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed duly given (i) if
delivered by hand and signed for by the party addressed, on the date of such
delivery, or (ii) if mailed by domestic certified or registered mail with
postage prepaid, on the third business day after the date postmarked. Addresses
for notice to either party are as shown on the signature page of this Agreement,
or as subsequently modified by written notice.
16. Consent to Jurisdiction. The Company and Indemnitee each hereby
irrevocably consent to the jurisdiction of the courts of the State of Delaware
for all purposes in connection with any action or proceeding which arises out of
or relates to this Agreement and agree that any action instituted under this
Agreement shall be commenced, prosecuted and continued only in the Court of
Chancery of the State of Delaware in and for New Castle County, which shall be
the exclusive and only proper forum for adjudicating such a claim.
17. Severability. The provisions of this Agreement shall be severable
in the event that any of the provisions hereof (including any provision within a
single section, paragraph or sentence) are held by a court of competent
jurisdiction to be invalid, void or otherwise unenforceable, and the remaining
provisions shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this Agreement
(including without limitation each portion of this Agreement containing any
provision held to be invalid, void or otherwise unenforceable, that is not
itself invalid, void or unenforceable) shall be construed so as to give effect
to the intent manifested by the provision held invalid, illegal or
unenforceable.
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18. Choice of Law. This Agreement, and all rights, remedies,
liabilities, powers and duties of the parties to this Agreement, shall be
governed by and construed in accordance with the laws of the State of Delaware
as applied to contracts between Delaware residents entered into and to be
performed entirely in the State of Delaware without regard to principles of
conflicts of laws.
19. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts that may be necessary to secure such rights and to enable the Company
effectively to bring suit to enforce such rights.
20. Amendment and Termination. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless it is in writing
signed by both the parties hereto. No waiver of any of the provisions of this
Agreement shall be deemed to be or shall constitute a waiver of any other
provisions hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver.
21. Integration and Entire Agreement. This Agreement sets forth the
entire understanding between the parties hereto and supersedes and merges all
previous written and oral negotiations, commitments, understandings and
agreements relating to the subject matter hereof between the parties hereto.
22. No Construction as Employment Agreement. Nothing contained in this
Agreement shall be construed as giving Indemnitee any right to be retained in
the employ of the Company or any of its subsidiaries or affiliated entities.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first above written.
JENNER TECHNOLOGIES, INC. AGREED TO AND ACCEPTED
By: -------------------------
------------------------- Signature
Title: ------------------------
---------------------- Print Name
Address: 2010 Crow Canyon Place Address:
San Ramon, California 94583 -----------------
-----------------
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EXHIBIT 10.2
JENNER TECHNOLOGIES
1993 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are to attract
and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to Employees and Consultants of
the Company and its Subsidiaries and to promote the success of the Company's
business. Options granted under the Plan may be incentive stock options (as
defined under Section 422 of the Code) or non-statutory stock options, as
determined by the Administrator at the time of grant of an option and subject to
the applicable provisions of Section 422 of the Code, as amended, and the
regulations promulgated thereunder. Stock purchase rights may also be granted
under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Plan.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the Board of
Directors in accordance with Section 4 of the Plan.
(e) "Common Stock" means the Common Stock of the Company.
(f) "Company" means Jenner Technologies, a California
corporation.
(g) "Consultant" means any person, including an advisor, who
is engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company whether
compensated for such services or not provided that if and in the event the
Company registers any class of any equity security pursuant to the Exchange Act,
the term Consultant shall thereafter not include directors who are not
compensated for their services or are paid only a director's fee by the Company.
(h) "Continuous Status as an Employee or Consultant" means
that the employment or consulting relationship is not interrupted or terminated
by the Company, any Parent or Subsidiary. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, any such leave may not exceed ninety (90) days, unless reemployment
upon the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; or (ii) transfers between locations of the Company
or between the Company, its Parent, its Subsidiaries or its successor.
(i) "Employee" means any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director's fee by the Company shall not be sufficient to
constitute "employment" by the Company.
(j) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(k) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, its Fair Market Value shall be the closing sales
price for such stock (or the closing bid, if no sales were reported, as quoted
on such exchange or system for the last market trading day prior to the time of
determination) as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Administrator.
(l) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.
(m) "Nonstatutory Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.
(n) "Option" means a stock option granted pursuant to the
Plan.
(o) "Optioned Stock" means the Common Stock subject to an
Option or a Stock Purchase Right.
(p) "Optionee" means an Employee or Consultant who receives an
Option or Stock Purchase Right.
(q) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(r) "Plan" means this 1993 Stock Plan.
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(s) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.
(t) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 12 below.
(u) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 below.
(v) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 12
of the Plan, the maximum aggregate number of shares which may be optioned and
sold under the Plan is 1,250,000 shares of Common Stock. The shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any
reason without having been exercised in full, the unpurchased Shares which were
subject thereto shall, unless the Plan shall have been terminated, become
available for future grant under the Plan.
4. Administration of the Plan.
(a) Initial Plan Procedure. Prior to the date, if any, upon
which the Company becomes subject to the Exchange Act, the Plan shall be
administered by the Board or a committee appointed by the Board.
(b) Plan Procedure After the Date, if any, Upon Which the
Company Becomes Subject to the Exchange Act.
(i) Administration With Respect to Directors and
Officers. With respect to grants of Options or Stock Purchase Rights to
Employees who are also officers or directors of the Company, the Plan shall be
administered by (A) the Board if the Board may administer the Plan in compliance
with Rule 16b-3 promulgated under the Exchange Act or any successor thereto
("Rule 16b-3") with respect to a plan intended to qualify thereunder as a
discretionary plan, or (B) a committee designated by the Board to administer the
Plan, which committee shall be constituted in such a manner as to permit the
Plan to comply with Rule 16b-3 with respect to a plan intended to qualify
thereunder as a discretionary plan. Once appointed, such Committee shall
continue to serve in its designated capacity until otherwise directed by the
Board. From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Rule 16b-3 with respect to a plan intended
to qualify thereunder as a discretionary plan.
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(ii) Multiple Administrative Bodies. If permitted by
Rule 16b-3, the Plan may be administered by different bodies with respect to
directors, non-director officers and Employees who are neither directors nor
officers.
(iii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Options or Stock Purchase Rights to
Employees or Consultants who are neither directors nor officers of the Company,
the Plan shall be administered by (A) the Board or (B) a committee designated by
the Board, which committee shall be constituted in such a manner as to satisfy
the legal requirements relating to the administration of incentive stock option
plans, if any, of California corporate and securities laws, of the Code, and of
any applicable stock exchange (the "Applicable Laws"). Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies,
however caused, and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by the Applicable Laws.
(c) Powers of the Administrator. Subject to the provisions of
the Plan and in the case of a Committee, the specific duties delegated by the
Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(k) of the Plan;
(ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted hereunder;
(iii) to determine whether and to what extent Options
and Stock Purchase Rights or any combination thereof are granted hereunder;
(iv) to determine the number of shares of Common
Stock to be covered by each such award granted hereunder;
(v) to approve forms of agreement for use under the
Plan;
(vi) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any award granted hereunder;
(vii) to reduce the exercise price of any Option to
the then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted; and
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(viii) to determine the terms and restrictions
applicable to Stock Purchase Rights and the Restricted Stock purchased by
exercising such Stock Purchase Rights.
(d) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.
5. Eligibility.
(a) Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Employees and Consultants. Incentive Stock Options may be granted
only to Employees. An Employee or Consultant who has been granted an Option or
Stock Purchase Right may, if otherwise eligible, be granted additional Options
or Stock Purchase Rights.
(b) Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options.
(c) For purposes of Section 5(b), Incentive Stock Options
shall be taken into account in the order in which they were granted, and the
Fair Market Value of the Shares shall be determined as of the time the Option
with respect to such Shares is granted.
(d) The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.
6. Term of Plan. The Plan shall become effective upon the earlier to
occur of its adoption by the Board of Directors or its approval by the
shareholders of the Company as described in Section 18 of the Plan. It shall
continue in effect for a term of ten (10) years unless sooner terminated under
Section 14 of the Plan.
7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who, at the time the Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Option shall be five (5) years from the date of grant thereof or such shorter
term as may be provided in the Option Agreement.
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8. Option Exercise Price and Consideration.
(a) The per share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Board, but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time
of the grant of such Incentive Stock Option, owns stock representing more than
ten percent (10%) of the voting power of all classes of stock of the Company or
any Parent or Subsidiary, the per Share exercise price shall be no less than
110% of the Fair Market Value per Share on the date of grant.
(B) granted to any Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(ii) In the case of a Nonstatutory Stock Option
(A) granted to a person who, at the time of
the grant of such Option, owns stock representing more than ten percent (10%) of
the voting power of all classes, of stock of the Company or any Parent or
Subsidiary, the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant.
(B) granted to any person, the per Share
exercise price shall be no less than 85% of the Fair Market Value per Share on
the date of grant.
(b) The consideration to be paid for the Shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Administrator (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant) and may consist entirely of (1) cash, (2)
check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired, directly or
indirectly, from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (5) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price, or
(6) any combination of the foregoing methods of payment. In making its
determination as to the type of consideration to accept, the Board shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company.
9. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable at such times and under such
conditions as determined by the Board,
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including performance criteria with respect to the Company and/or the Optionee,
and as shall be permissible under the terms of the Plan.
An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 12 of the Plan.
Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.
(b) Termination of Employment. In the event of termination of
an Optionee's Continuous Status as an Employee or Consultant with the Company,
such Optionee may, but only within such period of time as is determined by the
Administrator, of at least thirty (30) days, with such determination in the case
of an Incentive Stock Option not exceeding three (3) months after the date of
such termination (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise his or her Option to
the extent that Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of such termination, or if Optionee does not exercise such Option to
the extent so entitled within the time specified herein, the Option shall
terminate.
(c) Disability of Optionee. Notwithstanding the provisions of
Section 9(b) above, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant as a result of his total and permanent
disability, Optionee may, but only within twelve (12) months from the date of
such termination (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement), exercise the Option to the
extent otherwise entitled to exercise it at the date of such termination. To the
extent that Optionee was not entitled to exercise the Option at the date of
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
(d) Death of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of the
death of an Optionee, the Option may be exercised, at any time within twelve
(12) months following the date of death (but in no event later
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than the expiration date of the term of such Option as set forth in the Option
Agreement), by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent the
Optionee was entitled to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the date of death, or
if Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate.
(e) Rule 16b-3.. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
10. Non-Transferability of Options and Stock Purchase Rights. Options
and Stock Purchase Rights may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing of the terms, conditions and restrictions related
to the offer, including the number of Shares that such person shall be entitled
to purchase, the price to be paid, and the time within which such person must
accept such offer, which shall in no event exceed thirty (30) days from the date
upon which the Administrator made the determination to grant the Stock Purchase
Right. The offer shall be accepted by execution of a Restricted Stock purchase
agreement in the form determined by the Administrator. Shares purchased pursuant
to the grant of a Stock Purchase Right shall be referred to herein as
"Restricted Stock."
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the Committee
may determine, but at a minimum rate of 20% per year.
(c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion. In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.
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(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 12
of the Plan.
12. Adjustments Upon Changes in Capitalization or Merger.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Board shall notify the Optionee
at least fifteen (15) days prior to such proposed action. To the extent it has
not been previously exercised, the Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger. In the event of a merger of the Company with or
into another corporation, the Option or Stock Purchase Right shall be assumed or
an equivalent option or right shall be substituted by such successor corporation
or a parent or subsidiary of such successor corporation. If, in such event, the
Option or Stock Purchase Right is not assumed or substituted, the Option or
Stock Purchase Right shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger, the option or right
confers the right to purchase, for each Share of Optioned Stock subject to the
Option or Stock Purchase Right immediately prior to the merger, the
consideration (whether stock, cash, or other securities or property) received in
the merger by holders of Common Stock for each Share held on the effective date
of the transaction (and if holders were offered a choice of consideration, the
type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the merger
was not solely common stock of the successor corporation or its Parent, the
Administrator may, with the
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consent of the successor corporation and the participant, provide for the
consideration to be received upon the exercise of the Option or Stock Purchase
Right, for each Share of Optioned Stock subject to the Option or Stock Purchase
Right, to be solely common stock of the successor corporation or its Parent
equal in fair market value to the per share consideration received by holders of
Common Stock in the merger.
13. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Board. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.
14. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of any
Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act or with Section 422 of the Code (or any other applicable law or
regulation, including the requirements of the NASD or an established stock
exchange), the Company shall obtain shareholder approval of any Plan amendment
in such a manner and to such a degree as required.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options or Stock Purchase Rights
already granted and such Options and Stock Purchase Rights shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
15. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option or Stock Purchase Right and the issuance and delivery of
such Shares pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
As a condition to the exercise of an Option or Stock Purchase
Right, the Company may require the person exercising such Option or Stock
Purchase Right to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.
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16. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.
17. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.
18. Shareholder Approval. Continuance of the Plan shall be subject to
approval by the shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted. Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law and the
rules of any stock exchange upon which the Common Stock is listed.
19. Information to Optionees and Purchasers. The Company shall provide
to each Optionee and to each individual who acquired Shares pursuant to the
Plan, during the period such Optionee or purchaser has one or more Options or
Stock Purchase Rights outstanding, and, in the case of an individual who
acquired Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of all annual reports and other information. The Company
shall not be required to provide such information to key employees whose duties
in connection with the Company assure their access to equivalent information.
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JENNER TECHNOLOGIES
1997 STOCK PLAN
1. Purposes of the Plan. The purposes of this Plan are:
o to attract and retain the best available personnel for
positions of substantial responsibility,
o to provide additional incentive to Employees, Directors
and Consultants, and
o to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall apply:
(a) "Administrator" means the Board or any of its Committees as
shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means a committee of Directors appointed by the
Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the common stock of the Company.
(g) "Company" means Jenner Technologies, a Delaware corporation.
(h) "Consultant" means any person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render services to such entity.
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as defined
in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established
stock exchange or a national market system, including without limitation the
Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market,
its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Administrator deems reliable; or
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(n) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
-2-
(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(q) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(r) "Option" means a stock option granted pursuant to the Plan.
(s) "Option Agreement" means an agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
The Option Agreement is subject to the terms and conditions of the Plan.
(t) "Option Exchange Program" means a program whereby outstanding
Options are surrendered in exchange for Options with a lower exercise price.
(u) "Optioned Stock" means the Common Stock subject to an Option
or Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or Stock
Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this 1997 Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 of the Plan.
(z) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(aa) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or
Consultant.
-3-
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 350,00 (post-split) Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
-4-
(b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:
(i) to determine the Fair Market Value;
(ii) to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under thePlan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right of the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld.
-5-
The Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined. All elections by
an Optionee to have Shares withheld for this purpose shall be made in such form
and under such conditions as the Administrator may deem necessary or advisable;
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase Rights may
be granted to Service Providers. Incentive Stock Options may be granted only to
Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right shall
confer upon an Optionee any right with respect to continuing the Optionee's
relationship as a Service Provider with the Company, nor shall they interfere in
any way with the Optionee's right or the Company's right to terminate such
relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of Options:
(i) No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than [ ] Shares.
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional [ ]
Shares which shall not count against the limit set forth in subsection (i)
above.
-6-
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled Option will be counted against the
limits set forth in subsections (i) and (ii) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan shall
become effective upon its adoption by the Board. It shall continue in effect for
a term of ten (10) years unless terminated earlier under Section 15 of the Plan.
8. Term of Option. The term of each Option shall be stated in the Option
Agreement. In the case of an Incentive Stock Option, the term shall be ten (10)
years from the date of grant or such shorter term as may be provided in the
Option Agreement. Moreover, in the case of an Incentive Stock Option granted to
an Optionee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
-7-
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Option Agreement. Unless the Administrator provides otherwise,
vesting of Options granted hereunder shall be tolled during any unpaid leave of
absence. An Option may not be exercised for a fraction of a Share.
-8-
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on the date of termination (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a Service
Provider as a result of the Optionee's Disability, the Optionee may exercise his
or her Option within such period of time as is specified in the Option Agreement
to the extent the Option is vested on the date of termination (but in no event
later than the expiration of the term of such Option as set forth in the Option
Agreement). In the absence of a specified time in the Option Agreement, the
Option shall remain exercisable for twelve (12) months following the Optionee's
termination. If, on the date of termination, the Optionee is not vested as to
his or her entire Option, the Shares covered by the unvested portion of the
Option shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later
-9-
than the expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee's estate or by a person who acquires the right to
exercise the Option by bequest or inheritance, but only to the extent that the
Option is vested on the date of death. In the absence of a specified time in the
Option Agreement, the Option shall remain exercisable for twelve (12) months
following the Optionee's termination. If, at the time of death, the Optionee is
not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option shall immediately revert to the Plan. The Option may be
exercised by the executor or administrator of the Optionee's estate or, if none,
by the person(s) entitled to exercise the Option under the Optionee's will or
the laws of descent or distribution. If the Option is not so exercised within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares an Option previously granted based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock Purchase Agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
-10-
12. Non-Transferability of Options and Stock Purchase Rights. Unless
determined otherwise by the Administrator, an Option or Stock Purchase Right may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Optionee, only by the Optionee. If the
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.
(a) Changes in Capitalization. Subject to any required action by
the shareholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the Company
with or into another corporation, or the sale of substantially all of the assets
of the Company, each outstanding Option and Stock Purchase Right shall be
assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the
-11-
Optionee shall fully vest in and have the right to exercise the Option or Stock
Purchase Right as to all of the Optioned Stock, including Shares as to which it
would not otherwise be vested or exercisable. If an Option or Stock Purchase
Right becomes fully vested and exercisable in lieu of assumption or substitution
in the event of a merger or sale of assets, the Administrator shall notify the
Optionee in writing or electronically that the Option or Stock Purchase Right
shall be fully vested and exercisable for a period of fifteen (15) days from the
date of such notice, and the Option or Stock Purchase Right shall terminate upon
the expiration of such period. For the purposes of this paragraph, the Option or
Stock Purchase Right shall be considered assumed if, following the merger or
sale of assets, the option or right confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option or Stock Purchase Right
immediately prior to the merger or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the effective date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided, however, that if such consideration received in the merger or sale of
assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide
for the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock Purchase
Right shall be, for all purposes, the date on which the Administrator makes the
determination granting such Option or Stock Purchase Right, or such other later
date as is determined by the Administrator. Notice of the determination shall be
provided to each Optionee within a reasonable time after the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to exercise
the powers granted to it hereunder with respect to Options granted under the
Plan prior to the date of such termination.
-12-
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to the
exercise of an Option or Stock Purchase Right unless the exercise of such Option
or Stock Purchase Right and the issuance and delivery of such Shares shall
comply with Applicable Laws and shall be further subject to the approval of
counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise of
an Option or Stock Purchase Right, the Company may require the person exercising
such Option or Stock Purchase Right to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required.
17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. The Plan shall be subject to approval by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted. Such shareholder approval shall be obtained in the manner and to the
degree required under Applicable Laws.
-13-
JENNER TECHNOLOGIES
1997 STOCK PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
- --------------------------------
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number ___________________________
Date of Grant ___________________________
Vesting Commencement Date ___________________________
Exercise Price per Share $__________________________
Total Number of Shares Granted ___________________________
Total Exercise Price $__________________________
Type of Option: ____Incentive Stock Option
____Nonstatutory Stock Option
Term/Expiration Date: ___________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule subject to the Optionee continuing to be a Service
Provider on such dates:
One thirty-sixth (1/36) of the Shares subject to the Option shall
vest and be exercisable on , and an additional one thirty-sixth (1/36) of the
total number of Shares subject to the Option shall vest and be exercisable at
the end of each full month thereafter, until all such Shares are vested and
exercisable.
Termination Period:
This Option may be exercised for three months after Optionee ceases to
be a Service Provider. Upon the death or Disability of the Optionee, this Option
may be exercised for such longer period as provided in the Plan. In no event
shall this Option be exercised later than the Term/Expiration Date as provided
above.
II. AGREEMENT
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1. Grant of Option. The Plan Administrator of the Company hereby grants
to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its term
in accordance with the Vesting Schedule set out in the Notice of Grant and the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of
an exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be completed
by the Optionee and delivered to Secretary of the Company. The Exercise Notice
shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with Applicable Laws. Assuming such
compliance, for income tax purposes the Exercised Shares shall be considered
transferred to the Optionee on the date the Option is exercised with respect to
such Exercised Shares.
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3. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following, or a combination thereof, at the election of the
Optionee:
(a) cash;
(b) check;
(c) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, AND (ii) have a Fair Market Value
on the date of surrender equal to the aggregate Exercise Price of the Exercised
Shares; or
(d) delivery of a properly executed exercise notice together with
such other documentation as the administrator and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price.
4. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this Option Agreement shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
6. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a NSO. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
-3-
(ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
7. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws, but not
the choice of law rules, of California.
8. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND AGREES
THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT
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THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED
AN OPTION OR PURCHASING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE
VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED
PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT
ANY TIME, WITH OR WITHOUT CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
OPTIONEE: JENNER TECHNOLOGIES
- ----------------------------------- -------------------------------
Signature By
- ------------------------------------ -------------------------------
Print Name Title
- ------------------------------------
Residence Address
- ------------------------------------
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CONSENT OF SPOUSE
-----------------
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------------
Spouse of Optionee
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EXHIBIT A
1997 STOCK PLAN
EXERCISE NOTICE
Jenner Technologies
2010 Crow Canyon Place, Suite 100
San Ramon, CA 94583
Attention: Chief Financial Officer
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Jenner Technologies (the "Company") under
and pursuant to the 1997 Stock Plan (the "Plan") and the Stock Option Agreement
dated , 19___ (the "Option Agreement"). The purchase price for the Shares shall
be $ , as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing
signed by the Company and Purchaser. This agreement is governed by the internal
substantive laws, but not the choice of law rules, of California.
Submitted by: Accepted by:
PURCHASER: JENNER TECHNOLOGIES
- ---------------------------------- -----------------------------------
Signature By
- ---------------------------------- -----------------------------------
Print Name Its
Address: Address:
- --------------------------------- Jenner Technologies
2010 Crow Canyon Place, Suite 100
- --------------------------------- San Ramon, CA 94583
-----------------------------------
Date Received
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EXHIBIT B
---------
SECURITY AGREEMENT
This Security Agreement is made as of __________, 19___ between Jenner
Technologies, a Delaware corporation ("Pledgee"), and _________________________
("Pledgor").
Recitals
Pursuant to Pledgor's election to purchase Shares under the Option
Agreement dated ________ (the "Option"), between Pledgor and Pledgee under
Pledgee's 1997 Stock Plan, and Pledgor's election under the terms of the Option
to pay for such shares with his promissory note (the "Note"), Pledgor has
purchased _________ shares of Pledgee's Common Stock (the "Shares") at a price
of $________ per share, for a total purchase price of $__________. The Note and
the obligations thereunder are as set forth in Exhibit C to the Option.
NOW, THEREFORE, it is agreed as follows:
1. Creation and Description of Security Interest. In consideration of
the transfer of the Shares to Pledgor under the Option Agreement, Pledgor,
pursuant to the California Commercial Code, hereby pledges all of such Shares
(herein sometimes referred to as the "Collateral") represented by certificate
number ______, duly endorsed in blank or with executed stock powers, and
herewith delivers said certificate to the Secretary of Pledgee ("Pledgeholder"),
who shall hold said certificate subject to the terms and conditions of this
Security Agreement.
The pledged stock (together with an executed blank stock assignment for
use in transferring all or a portion of the Shares to Pledgee if, as and when
required pursuant to this Security Agreement) shall be held by the Pledgeholder
as security for the repayment of the Note, and any extensions or renewals
thereof, to be executed by Pledgor pursuant to the terms of the Option, and the
Pledge holder shall not encumber or dispose of such Shares except in accordance
with the provisions of this Security Agreement.
2. Pledgor's Representations and Covenants. To induce Pledgee to enter
into this Security Agreement, Pledgor represents and covenants to Pledgee, its
successors and assigns, as follows:
a. Payment of Indebtedness. Pledgor will pay the principal sum of
the Note secured hereby, together with interest thereon, at the time and in the
manner provided in the Note.
b. Encumbrances. The Shares are free of all other encumbrances,
defenses and liens, and Pledgor will not further encumber the Shares without the
prior written consent of Pledgee.
c. Margin Regulations. In the event that Pledgee's Common Stock
is now or later becomes margin-listed by the Federal Reserve Board and Pledgee
is classified as a "lender" within the
meaning of the regulations under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G"), Pledgor agrees to cooperate with Pledgee in making
any amendments to the Note or providing any additional collateral as may be
necessary to comply with such regulations.
3. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Pledgor shall have the right to vote all of the Shares pledged
hereunder.
4. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Pledgee, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Pledgee under the terms of this Security Agreement
in the same manner as the Shares originally pledged hereunder. In the event of
substitution of such securities, Pledgor, Pledgee and Pledgeholder shall
cooperate and execute such documents as are reasonable so as to provide for the
substitution of such Collateral and, upon such substitution, references to
"Shares" in this Security Agreement shall include the substituted shares of
capital stock of Pledgor as a result thereof.
5. Options and Rights. In the event that, during the term of this
pledge, subscription Options or other rights or options shall be issued in
connection with the pledged Shares, such rights, Options and options shall be
the property of Pledgor and, if exercised by Pledgor, all new stock or other
securities so acquired by Pledgor as it relates to the pledged Shares then held
by Pledgeholder shall be immediately delivered to Pledgeholder, to be held under
the terms of this Security Agreement in the same manner as the Shares pledged.
6. Default. Pledgor shall be deemed to be in default of the Note and of
this Security Agreement in the event:
a. Payment of principal or interest on the Note shall be
delinquent for a period of 10 days or more; or
b. Pledgor fails to perform any of the covenants set forth in the
Option or contained in this Security Agreement for a period of 10 days after
written notice thereof from Pledgee.
In the case of an event of Default, as set forth above, Pledgee shall
have the right to accelerate payment of the Note upon notice to Pledgor, and
Pledgee shall thereafter be entitled to pursue its remedies under the California
Commercial Code.
7. Release of Collateral. Subject to any applicable contrary rules under
Regulation G, there shall be released from this pledge a portion of the pledged
Shares held by Pledgeholder hereunder upon payments of the principal of the
Note. The number of the pledged Shares which shall be released shall be that
number of full Shares which bears the same proportion to the initial number of
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Shares pledged hereunder as the payment of principal bears to the initial full
principal amount of the Note.
8. Withdrawal or Substitution of Collateral. Pledgor shall not sell,
withdraw, pledge, substitute or otherwise dispose of all or any part of the
Collateral without the prior written consent of Pledgee.
9. Term. The within pledge of Shares shall continue until the payment of
all indebtedness secured hereby, at which time the remaining pledged stock shall
be promptly delivered to Pledgor, subject to the provisions for prior release of
a portion of the Collateral as provided in paragraph 7 above.
10. Insolvency. Pledgor agrees that if a bankruptcy or insolvency
proceeding is instituted by or against it, or if a receiver is appointed for the
property of Pledgor, or if Pledgor makes an assignment for the benefit of
creditors, the entire amount unpaid on the Note shall become immediately due and
payable, and Pledgee may proceed as provided in the case of default.
11. Pledgeholder Liability. In the absence of willful or gross
negligence, Pledgeholder shall not be liable to any party for any of his acts,
or omissions to act, as Pledgeholder.
12. Invalidity of Particular Provisions. Pledgor and Pledgee agree that
the enforceability or invalidity of any provision or provisions of this Security
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
13. Successors or Assigns. Pledgor and Pledgee agree that all of the
terms of this Security Agreement shall be binding on their respective successors
and assigns, and that the term "Pledgor" and the term "Pledgee" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.
14. Governing Law. This Security Agreement shall be interpreted and
governed under the internal substantive laws, but not the choice of law rules,
of California.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
"PLEDGOR" ---------------------------------
Signature
---------------------------------
Print Name
Address: ---------------------------------
---------------------------------
"PLEDGEE" Jenner Technologies,
a Delaware corporation
--------------------------------
Signature
--------------------------------
Print Name
--------------------------------
Title
"PLEDGEHOLDER" --------------------------------
Secretary of
Jenner Technologies
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EXHIBIT C
---------
NOTE
$_______________ [City, State]
______________, 19___
FOR VALUE RECEIVED, _______________ promises to pay to Jenner
Technologies, a Delaware corporation (the "Company"), or order, the principal
sum of _______________________ ($_____________), together with interest on the
unpaid principal hereof from the date hereof at the rate of _______________
percent (____%) per annum, compounded semiannually.
Principal and interest shall be due and payable on __________, 19___.
Payment of principal and interest shall be made in lawful money of the United
States of America.
The undersigned may at any time prepay all or any portion of the
principal or interest owing hereunder.
This Note is subject to the terms of the Option, dated as of
________________. This Note is secured in part by a pledge of the Company's
Common Stock under the terms of a Security Agreement of even date herewith and
is subject to all the provisions thereof.
The holder of this Note shall have full recourse against the
undersigned, and shall not be required to proceed against the collateral
securing this Note in the event of default.
In the event the undersigned shall cease to be an employee, director or
consultant of the Company for any reason, this Note shall, at the option of the
Company, be accelerated, and the whole unpaid balance on this Note of principal
and accrued interest shall be immediately due and payable.
Should any action be instituted for the collection of this Note, the
reasonable costs and attorneys' fees therein of the holder shall be paid by the
undersigned.
------------------------------------
------------------------------------
1997 STOCK PLAN
NOTICE OF GRANT OF STOCK PURCHASE RIGHT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Notice of Grant.
[Grantee's Name and Address]
You have been granted the right to purchase Common Stock of the Company,
subject to the Company's Repurchase Option and your ongoing status as a Service
Provider (as described in the Plan and the attached Restricted Stock Purchase
Agreement), as follows:
Grant Number _________________________
Date of Grant _________________________
Price Per Share $________________________
Total Number of Shares Subject _________________________
to This Stock Purchase Right
Expiration Date: _________________________
YOU MUST EXERCISE THIS STOCK PURCHASE RIGHT BEFORE THE EXPIRATION DATE
OR IT WILL TERMINATE AND YOU WILL HAVE NO FURTHER RIGHT TO PURCHASE THE SHARES.
By your signature and the signature of the Company's representative below, you
and the Company agree that this Stock Purchase Right is granted under and
governed by the terms and conditions of the 1997 Stock Plan and the Restricted
Stock Purchase Agreement, attached hereto as Exhibit A-1, both of which are made
a part of this document. You further agree to execute the attached Restricted
Stock Purchase Agreement as a condition to purchasing any shares under this
Stock Purchase Right.
GRANTEE: JENNER TECHNOLOGIES
- --------------------------- --------------------------------
Signature By
- --------------------------- --------------------------------
Print Name Title
EXHIBIT A-1
-----------
1997 STOCK PLAN
RESTRICTED STOCK PURCHASE AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Restricted Stock Purchase Agreement.
WHEREAS the Purchaser named in the Notice of Grant, (the "Purchaser") is
an Service Provider, and the Purchaser's continued participation is considered
by the Company to be important for the Company's continued growth; and
WHEREAS in order to give the Purchaser an opportunity to acquire an
equity interest in the Company as an incentive for the Purchaser to participate
in the affairs of the Company, the Admin istrator has granted to the Purchaser a
Stock Purchase Right subject to the terms and conditions of the Plan and the
Notice of Grant, which are incorporated herein by reference, and pursuant to
this Restricted Stock Purchase Agreement (the "Agreement").
NOW THEREFORE, the parties agree as follows:
1. Sale of Stock. The Company hereby agrees to sell to the Purchaser and
the Purchaser hereby agrees to purchase shares of the Company's Common Stock
(the "Shares"), at the per Share purchase price and as otherwise described in
the Notice of Grant.
2. Payment of Purchase Price. The purchase price for the Shares may be
paid by delivery to the Company at the time of execution of this Agreement of
cash, a check, or some combination thereof.
3. Repurchase Option.
(a) In the event the Purchaser ceases to be a Service Provider
for any or no reason (including death or disability) before all of the Shares
are released from the Company's Repurchase Option (see Section 4), the Company
shall, upon the date of such termination (as reasonably fixed and determined by
the Company) have an irrevocable, exclusive option (the "Repurchase Option") for
a period of sixty (60) days from such date to repurchase up to that number of
shares which constitute the Unreleased Shares (as defined in Section 4) at the
original purchase price per share (the "Repurchase Price"). The Repurchase
Option shall be exercised by the Company by delivering written notice to the
Purchaser or the Purchaser's executor (with a copy to the Escrow Holder) AND, at
the Company's option, (i) by delivering to the Purchaser or the Purchaser's
executor a check in the amount of the aggregate Repurchase Price, or (ii) by
cancelling an amount of the Purchaser's indebtedness to the Company equal to the
aggregate Repurchase Price, or (iii) by a combination of (i) and (ii) so that
the combined payment and cancellation of indebtedness equals the aggregate
Repurchase Price. Upon delivery of such notice and the payment of the aggregate
Repurchase Price, the Company shall become the legal and beneficial owner of the
Shares being repurchased and all
rights and interests therein or relating thereto, and the Company shall have the
right to retain and transfer to its own name the number of Shares being
repurchased by the Company.
(b) Whenever the Company shall have the right to repurchase
Shares hereunder, the Company may designate and assign one or more employees,
officers, directors or shareholders of the Company or other persons or
organizations to exercise all or a part of the Company's purchase rights under
this Agreement and purchase all or a part of such Shares. If the Fair Market
Value of the Shares to be repurchased on the date of such designation or
assignment (the "Repurchase FMV") exceeds the aggregate Repurchase Price of such
Shares, then each such designee or assignee shall pay the Company cash equal to
the difference between the Repurchase FMV and the aggregate Repurchase Price of
such Shares.
4. Release of Shares From Repurchase Option.
(a) _______________________ percent (______%) of the Shares shall
be released from the Company's Repurchase Option [one year] after the Date of
Grant and __________________ percent (______%) of the Shares [at the end of each
month thereafter], provided that the Purchaser does not cease to be a Service
Provider prior to the date of any such release.
(b) Any of the Shares that have not yet been released from the
Repurchase Option are referred to herein as "Unreleased Shares."
(c) The Shares that have been released from the Repurchase Option
shall be delivered to the Purchaser at the Purchaser's request (see Section 6).
5. Restriction on Transfer. Except for the escrow described in Section 6
or the transfer of the Shares to the Company or its assignees contemplated by
this Agreement, none of the Shares or any beneficial interest therein shall be
transferred, encumbered or otherwise disposed of in any way until such Shares
are released from the Company's Repurchase Option in accordance with the provi
sions of this Agreement, other than by will or the laws of descent and
distribution.
6. Escrow of Shares.
(a) To ensure the availability for delivery of the Purchaser's
Unreleased Shares upon repurchase by the Company pursuant to the Repurchase
Option, the Purchaser shall, upon execution of this Agreement, deliver and
deposit with an escrow holder designated by the Company (the "Escrow Holder")
the share certificates representing the Unreleased Shares, together with the
stock assignment duly endorsed in blank, attached hereto as Exhibit A-2. The
Unreleased Shares and stock assignment shall be held by the Escrow Holder,
pursuant to the Joint Escrow Instructions of the Company and Purchaser attached
hereto as Exhibit A-3, until such time as the Company's Repurchase Option
expires. As a further condition to the Company's obligations under this
Agreement, the
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Company may require the spouse of Purchaser, if any, to execute and deliver to
the Company the Consent of Spouse attached hereto as Exhibit A-4.
(b) The Escrow Holder shall not be liable for any act it may do
or omit to do with respect to holding the Unreleased Shares in escrow while
acting in good faith and in the exercise of its judgment.
(c) If the Company or any assignee exercises the Repurchase
Option hereunder, the Escrow Holder, upon receipt of written notice of such
exercise from the proposed transferee, shall take all steps necessary to
accomplish such transfer.
(d) When the Repurchase Option has been exercised or expires
unexercised or a portion of the Shares has been released from the Repurchase
Option, upon request the Escrow Holder shall promptly cause a new certificate to
be issued for the released Shares and shall deliver the certificate to the
Company or the Purchaser, as the case may be.
(e) Subject to the terms hereof, the Purchaser shall have all the
rights of a shareholder with respect to the Shares while they are held in
escrow, including without limitation, the right to vote the Shares and to
receive any cash dividends declared thereon. If, from time to time during the
term of the Repurchase Option, there is (i) any stock dividend, stock split or
other change in the Shares, or (ii) any merger or sale of all or substantially
all of the assets or other acquisition of the Company, any and all new,
substituted or additional securities to which the Purchaser is entitled by
reason of the Purchaser's ownership of the Shares shall be immediately subject
to this escrow, deposited with the Escrow Holder and included thereafter as
"Shares" for purposes of this Agreement and the Repurchase Option.
7. Legends. The share certificate evidencing the Shares, if any, issued
hereunder shall be endorsed with the following legend (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS UPON TRANSFER AND RIGHTS OF REPURCHASE AS SET FORTH IN AN AGREEMENT
BETWEEN THE COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
8. Adjustment for Stock Split. All references to the number of Shares
and the purchase price of the Shares in this Agreement shall be appropriately
adjusted to reflect any stock split, stock dividend or other change in the
Shares which may be made by the Company after the date of this Agreement.
9. Tax Consequences. The Purchaser has reviewed with the Purchaser's own
tax advisors the federal, state, local and foreign tax consequences of this
investment and the transactions contem plated by this Agreement. The Purchaser
is relying solely on such advisors and not on any statements
-3-
or representations of the Company or any of its agents. The Purchaser
understands that the Purchaser (and not the Company) shall be responsible for
the Purchaser's own tax liability that may arise as a result of the transactions
contemplated by this Agreement. The Purchaser understands that Section 83 of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
the difference between the purchase price for the Shares and the Fair Market
Value of the Shares as of the date any restrictions on the Shares lapse. In this
context, "restriction" includes the right of the Company to buy back the Shares
pursuant to the Repurchase Option. The Purchaser understands that the Purchaser
may elect to be taxed at the time the Shares are purchased rather than when and
as the Repurchase Option expires by filing an election under Section 83(b) of
the Code with the IRS within 30 days from the date of purchase. The form for
making this election is attached as Exhibit A-5 hereto.
THE PURCHASER ACKNOWLEDGES THAT IT IS THE PURCHASER'S SOLE
RESPONSIBILITY AND NOT THE COMPANY'S TO FILE TIMELY THE ELECTION UNDER SECTION
83(b), EVEN IF THE PURCHASER REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON THE PURCHASER'S BEHALF.
10. General Provisions.
(a) This Agreement shall be governed by the internal substantive
laws, but not the choice of law rules of California. This Agreement, subject to
the terms and conditions of the Plan and the Notice of Grant, represents the
entire agreement between the parties with respect to the purchase of the Shares
by the Purchaser. Subject to Section 15(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and the terms and
conditions of this Agreement, the terms and conditions of the Plan shall
prevail. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Agreement.
(b) Any notice, demand or request required or permitted to be
given by either the Company or the Purchaser pursuant to the terms of this
Agreement shall be in writing and shall be deemed given when delivered
personally or deposited in the U.S. mail, First Class with postage prepaid, and
addressed to the parties at the addresses of the parties set forth at the end of
this Agreement or such other address as a party may request by notifying the
other in writing.
Any notice to the Escrow Holder shall be sent to the Company's
address with a copy to the other party hereto.
(c) The rights of the Company under this Agreement shall be
transferable to any one or more persons or entities, and all covenants and
agreements hereunder shall inure to the benefit of, and be enforceable by the
Company's successors and assigns. The rights and obligations of the Purchaser
under this Agreement may only be assigned with the prior written consent of the
Company.
(d) Either party's failure to enforce any provision of this
Agreement shall not in any way be construed as a waiver of any such provision,
nor prevent that party from thereafter enforcing
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any other provision of this Agreement. The rights granted both parties hereunder
are cumulative and shall not constitute a waiver of either party's right to
assert any other legal remedy available to it.
(e) The Purchaser agrees upon request to execute any further
documents or instruments necessary or desirable to carry out the purposes or
intent of this Agreement.
(f) PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES
PURSUANT TO SECTION 4 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (AND NOT THROUGH THE ACT OF BEING HIRED OR
PURCHASING SHARES HEREUNDER). PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT
THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE
SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED
ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT
ALL, AND SHALL NOT INTERFERE WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.
By Purchaser's signature below, Purchaser represents that he or she is
familiar with the terms and provisions of the Plan, and hereby accepts this
Agreement subject to all of the terms and provisions thereof. Purchaser has
reviewed the Plan and this Agreement in their entirety, has had an opportunity
to obtain the advice of counsel prior to executing this Agreement and fully
understands all provisions of this Agreement. Purchaser agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Agreement.
Purchaser further agrees to notify the Company upon any change in the residence
indicated in the Notice of Grant.
DATED: ----------------------
PURCHASER: JENNER TECHNOLOGIES
- ------------------------------ -------------------------------
Signature By
- ------------------------------ -------------------------------
Print Name Title
-5-
EXHIBIT A-2
-----------
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED I, __________________________, hereby sell, assign
and transfer unto __________________(__________) shares of the Common Stock of
Jenner Technologies standing in my name of the books of said corporation
represented by Certificate No. _____ herewith and do hereby irrevocably
constitute and appoint ___________________to transfer the said stock on the
books of the within named corporation with full power of substitution in the
premises.
This Stock Assignment may be used only in accordance with the Restricted
Stock Purchase Agreement (the "Agreement") between________________________ and
the undersigned dated ______________, 19__.
Dated: _______________, 19
Signature:__________________________
INSTRUCTIONS: Please do not fill in any blanks other than the signature line.
The purpose of this assignment is to enable the Company to exercise the
Repurchase Option, as set forth in the Agreement, without requiring additional
signatures on the part of the Purchaser.
EXHIBIT A-3
-----------
JOINT ESCROW INSTRUCTIONS
__________ , 19___
Corporate Secretary
Jenner Technologies
2010 Crow Canyon Place, Suite 100
San Ramon, CA 94583
Dear ____________________:
As Escrow Agent for both Jenner Technologies, a Delaware corporation
(the "Company"), and the undersigned purchaser of stock of the Company (the
"Purchaser"), you are hereby authorized and directed to hold the documents
delivered to you pursuant to the terms of that certain Restricted Stock Purchase
Agreement ("Agreement") between the Company and the undersigned, in accordance
with the following instructions:
1. In the event the Company and/or any assignee of the Company (referred
to collectively as the "Company") exercises the Company's Repurchase Option set
forth in the Agreement, the Company shall give to Purchaser and you a written
notice specifying the number of shares of stock to be purchased, the purchase
price, and the time for a closing hereunder at the principal office of the
Company. Purchaser and the Company hereby irrevocably authorize and direct you
to close the transaction contemplated by such notice in accordance with the
terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver same, together with the certificate
evidencing the shares of stock to be transferred, to the Company or its
assignee, against the simultaneous delivery to you of the purchase price (by
cash, a check, or some combination thereof) for the number of shares of stock
being purchased pursuant to the exercise of the Company's Repurchase Option.
3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as defined in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as Purchaser's
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and to complete any transaction herein contemplated,
including but not limited to the filing with any applicable state blue sky
authority of any required applications for consent to, or notice of transfer of,
the securities. Subject to the provisions of this paragraph 3, Purchaser shall
exercise all rights and privileges of a shareholder of the Company while the
stock is held by you.
4. Upon written request of the Purchaser, but no more than once per
calendar year, unless the Company's Repurchase Option has been exercised, you
shall deliver to Purchaser a certificate or certificates representing so many
shares of stock as are not then subject to the Company's Repurchase Option.
Within 90 days after Purchaser ceases to be a Service Provider, you shall
deliver to Purchaser a certificate or certificates representing the aggregate
number of shares held or issued pursuant to the Agreement and not purchased by
the Company or its assignees pursuant to exercise of the Company's Repurchase
Option.
5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder.
6. Your duties hereunder may be altered, amended, modified or revoked
only by a writing signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith,
and any act done or omitted by you pursuant to the advice of your own attorneys
shall be conclusive evidence of such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree, you shall not
be liable to any of the parties hereto or to any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being subsequently reversed, modified, annulled, set aside,
vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under the
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. You shall be entitled to employ such legal counsel and other experts
as you may deem necessary properly to advise you in connection with your
obligations hereunder, may rely upon the advice of such counsel, and may pay
such counsel reasonable compensation therefor.
-2-
12. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be an officer or agent of the Company or if you shall resign
by written notice to each party. In the event of any such termination, the
Company shall appoint a successor Escrow Agent.
13. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
14. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are authorized and directed to retain in
your possession without liability to anyone all or any part of said securities
until such disputes shall have been settled either by mutual written agreement
of the parties concerned or by a final order, decree or judgment of a court of
competent jurisdiction after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.
15. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States Post Office, by registered or certified mail with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses or at such other addresses as a party may designate by ten
days' advance written notice to each of the other parties hereto.
COMPANY: Jenner Technologies
2010 Crow Canyon Place, Suite 100
San Ramon, CA 94583
PURCHASER:
----------------------------------
----------------------------------
----------------------------------
ESCROW AGENT: Corporate Secretary
2010 Crow Canyon Place, Suite 100
San Ramon, CA 94583
16. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto, and their respective successors and permitted assigns.
-3-
18. These Joint Escrow Instructions shall be governed by, and construed
and enforced in accordance with, the internal substantive laws, but not the
choice of law rules, of California.
Very truly yours,
JENNER TECHNOLOGIES
-------------------------------------
By
-------------------------------------
Title
PURCHASER:
-------------------------------------
Signature
-------------------------------------
Print Name
ESCROW AGENT:
- -------------------------------------
Corporate Secretary
-4-
EXHIBIT A-4
-----------
CONSENT OF SPOUSE
I, ____________________, spouse of ___________________, have read and
approve the foregoing Restricted Stock Purchase Agreement (the "Agreement"). In
consideration of the Company's grant to my spouse of the right to purchase
shares of Jenner Technologies, as set forth in the Agreement, I hereby appoint
my spouse as my attorney-in-fact in respect to the exercise of any rights under
the Agreement and agree to be bound by the provisions of the Agreement insofar
as I may have any rights in said Agreement or any shares issued pursuant thereto
under the community property laws or similar laws relating to marital property
in effect in the state of our residence as of the date of the signing of the
foregoing Agreement.
Dated: _______________, 19__
--------------------------------------
Signature of Spouse
EXHIBIT A-5
-----------
ELECTION UNDER SECTION 83(b)
OF THE INTERNAL REVENUE CODE OF 1986
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the
Internal Revenue Code of 1986, as amended, to include in taxpayer's gross income
for the current taxable year the amount of any compensation taxable to taxpayer
in connection with his or her receipt of the property described below:
1. The name, address, taxpayer identification number and taxable year of
the undersigned are as follows:
NAME: TAXPAYER: SPOUSE:
ADDRESS:
IDENTIFICATION NO.: TAXPAYER: SPOUSE:
TAXABLE YEAR:
2. The property with respect to which the election is made is described as
follows:______ shares (the "Shares") of the Common Stock of Jenner
Technologies (the "Company").
3. The date on which the property was transferred is: __________, 19__.
4. The property is subject to the following restrictions:
The Shares may be repurchased by the Company, or its assignee, upon
certain events. This right lapses with regard to a portion of the Shares
based on the continued performance of services by the taxpayer over
time.
5. The fair market value at the time of transfer, determined without regard
to any restriction other than a restriction which by its terms will
never lapse, of such property is: $___________________.
6. The amount (if any) paid for such property is: $____________________.
The undersigned has submitted a copy of this statement to the person for whom
the services were performed in connection with the undersigned's receipt of the
above-described property. The transferee of such property is the person
performing the services in connection with the transfer of said property.
The undersigned understands that the foregoing election may not be revoked
except with the consent of the Commissioner.
Dated: _______________, 19____ ________________________________________
Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: _______________, 19____ ________________________________________
Spouse of Taxpayer
EXHIBIT 10.4
JENNER TECHNOLOGIES
NOTE PURCHASE AGREEMENT
This Agreement is made as of May 6, 1996 between Jenner Technologies, a
California corporation (the "Company") and Hayden Leason (the "Investor").
1. The Note.
1.1 The Notes. The Investor agrees, on the terms and
conditions specified in this Agreement, to lend to the Company $3,000,0000 at
the Closing (as defined below). The Investor's loan shall be evidenced by a
secured promissory note ("Note") dated as of the date of the Closing in the form
of Exhibit A. The Note shall not be convertible into any shares of the Company's
capital stock.
1.2 Place and Date of Closing. The closing of the purchase and
sale of the Note (the "Closing") will be held at the offices of Wilson, Sonsini,
Goodrich & Rosati, 650 Page Mill Road, Palo Alto, California at 10:00 a.m. on
May 6, 1996, or at such other time and place as the Company and the Investor
shall mutually agree (the "Closing Date").
1.3 Delivery. At the Closing, the Company shall deliver the
Note to the Investor, and the Investor shall deliver to the Company the
principal amount thereof by check or wire transfer.
2. Representations and Warranties of the Company.
2.1 Organization and Standing. The Company is a corporation
duly organized and validly existing under, and by virtue of, the laws of
California and is in good standing under such laws. The Company has all
requisite corporate power and authority to own its properties and assets and to
carry on its business as presently conducted. The Company is qualified to do
business as a foreign corporation in each jurisdiction in which the failure to
be so qualified would have materially adverse impact on the business or
financial condition of the Company taken as a whole.
2.2 Corporate Power and Authorization. The Company has all
requisite legal and corporate power to execute and deliver this Agreement and
the Note, and to sell and issue the Note to the Investor pursuant to this
Agreement. All corporate action on the part of the Company, its directors and
shareholders necessary for the sale and issuance of the Note has been taken or
will be taken prior to the Closing. Each of the Agreement and the Note, when
executed and delivered by the Company, shall constitute a valid, binding and
enforceable obligation of the Company, except as the enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization or similar laws
relating to or affecting the enforcement of creditor's rights and to the
availability of the remedy of specific performance. The execution and delivery
of this Agreement and the Note will not violate, conflict with or result in a
material breach of (i) the Company's Articles of Incorporation, as amended
through the Closing Date; (ii) the Company's Bylaws; (iii) any judgment, order
or decree of any court or arbitrator to which the Company is a party; or (iv)
any contract, undertaking, indenture or other agreement or instrument by which
the Company is now bound or to which it is now a party. The Company is not
subject to any judgment, order or decree of any court or arbitrator. Except for
notices required or permitted to be filed with certain state and federal
securities commissions, which
notices the Company agrees to file on a timely basis, the execution and delivery
of the Note by the Company to the Investor will not require any governmental
consent or approval.
3. Representations, Warranties of the Investors and Restrictions
on Transfer Imposed by the Securities Act of 1933.
3.1 Representations and Warranties of the Investor. The
Investor represents and warrants to the Company as follows:
(a) All action on the part of the Investor for the
authorization, execution, delivery and performance by the Investor of this
Agreement has been taken, and this Agreement constitutes a valid and binding
obligation of the Investor, enforceable in accordance with its terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditor's rights and the
availability of the remedy of specific performance.
(b) The Investor is experienced in evaluating and
investing in new companies and companies with limited operating histories such
as the Company.
(c) The Investor is acquiring the Note for investment for
its own account and not with a view to, or for resale in connection with, any
distribution. The Investor understands that the Note has not been registered
under the Securities Act of 1933, as amended (the "Act") by reason of a specific
exemption from the registration provisions of the Act which depends upon, among
other things, the bona fide nature of the investment intent as expressed herein.
(d) The Investor acknowledges that the Note must be held
indefinitely unless subsequently registered under the Act or an exemption from
such registration is available. The Investor is aware of the provisions of Rule
144 promulgated under the Act which permits limited resale of securities
purchased in a private placement subject to the satisfaction of certain
conditions, including, in case the Investor has held the securities for less
than three years or is an affiliate of the Company, among other things: the
availability of certain current public information about the Company, the resale
occurring not less than two years after a party has purchased and paid for the
securities to be sold, the sale being through a "broker's transaction" or in
transactions directly with a "market maker," and the number of shares being sold
during any three-month period not exceeding specified limitations.
(e) The Investor understands that no public market now
exists for any of the securities issued by the Company and that it is unlikely
that a public market will ever exist for the Note.
(f) The Investor is a sophisticated investor with such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of a prospective investment in the Note and
who is capable of bearing the economic risks of such
-2-
investment. The Investor is an accredited investor within the meaning of
Regulation D promulgated by the Securities and Exchange Commission pursuant to
the Act.
(g) In taking any action or performing any role relative
to arranging the proposed investment, the Investor has acted solely in the
Investor's own interest. Neither the Investor nor any of his agents or employees
has acted as an agent of the Company, or as an issuer, underwriter, broker,
dealer or investment advisor relative to the Note.
3.2 Legends. The instrument representing the Note shall be
endorsed with the following legend (in addition to any legend required under
applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
The Company need not record a transfer of the Note unless the
conditions specified in the foregoing legends are satisfied. The Company may
also instruct its transfer agent not to record the transfer of the Note unless
the conditions specified in the foregoing legends are satisfied.
3.3 Removal of Legends and Transfer Restrictions. The legend
relating to the Act endorsed on a certificate pursuant to paragraph 3.2 of this
Agreement and the stop transfer instructions with respect thereto shall be
removed and the Company shall issue a certificate without such legend to the
holder thereof if the securities represented by such certificate are registered
under the Act and a prospectus meeting the requirements of Section 10 of the Act
is available or if such holder provides to the Company an opinion of counsel for
such holder reasonably satisfactory to the Company, or a no-action letter or
interpretive opinion of the staff of the Securities and Exchange Commission (the
"Commission") to the effect that a public sale, transfer or assignment of the
Note may be made without registration and without compliance with any
restriction such as Rule 144.
4. Miscellaneous.
4.1 General. This Agreement shall be governed in all respects
by the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed entirely within
California. This Agreement and all attached exhibits represent the entire
agreement between the Company and the Investor with respect to the subject
matter herein and therein and supersedes any and all prior oral and written
discussions and agreements. This Agreement and the Note may only be waived,
modified or amended in writing signed by both the Company and the Investor.
-3-
4.2 Notices. Any notice, demand or request required or permitted under
this Agreement or the Note shall be given in writing and shall be deemed given
upon (i) personal delivery to the party to be notified, (ii) transmittal by
facsimile, telecopy or electronic mail, or (iii) deposit with an overnight
delivery service or with the United States Post Office, by first-class,
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address of such party set forth at the end of this Agreement, or
such other address as a party may request by notifying the other in writing.
4.3 Tax Matters. The Investor understands that the Investor (and not
the Company) shall be responsible for the Investor's own federal, state, local
or foreign tax liability and any of the Investor's other tax consequences that
may arise as a result of the transactions contemplated by this Agreement. The
Investor shall rely solely on the determinations of the Investor's own tax
advisors or his own determinations, and not on any statements or representations
by the Company or any of its agents, with regard to all such tax matters.
4.4 California Corporate Securities Law. THE SALE OF THE
SECURITIES WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH
THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF
THE SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION
THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES
IS EXEMPT FROM THE QUALIFICATION BY SECTION 25100, 25102, OR 25105 OF THE
CALIFORNIA CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE
EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS
SO EXEMPT.
4.5 Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
JENNER TECHNOLOGIES
By:/s/ ANTHONY E. MAIDA /s/ HAYDEN LEASON
----------------------------- ------------------------------
Hayden Leason
Title:CEO
-----------------------------------
828 Eastbrook Avenue 10 Monte Sol
Danville, CA 94506 Palmas Del Mar
Humacao, Puerto Rico 00792
-4-
EXHIBIT A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM.
JENNER TECHNOLOGIES
SECURED PROMISSORY NOTE
$3,000,000.00 Danville, California
May 6, 1996
FOR VALUE RECEIVED, JENNER TECHNOLOGIES, a California corporation (the
"Company") hereby absolutely and unconditionally promises to pay to Hayden
Leason (the "Lender"), or order, the principal amount of Three Million and
No/100 Dollars ($3,000,000.00), together with simple interest on such principal
amount at the rate of 10% per annum.
This Note is issued pursuant to the terms of a Note Purchase Agreement
(the "Note Purchase Agreement") dated the date hereof between the Company and
the Lender.
1. Repayments and Prepayments.
(a) All principal and accrued interest under this Note shall
be due and payable on May 6, 1999.
(b) The Company may prepay this Note at any time, either in
whole or in part, without premium or penalty and without the prior consent of
the Lender.
(c) All payments received under this Note shall be applied
first to accrued interest on the date of payment and then to the outstanding
principal balance of this Note.
2. Security. The full and timely payment of the principal of and
interest on this Note is secured by the pledge by the Company to the Lender of
all shares of capital stock and rights to acquire capital stock of TherAtid,
Incorporated, a California corporation, now held or hereinafter acquired by the
Company, pursuant to the terms of the Stock Pledge Agreement dated as of the
date hereof (the "Stock Pledge Agreement") between the Company, as pledgor, and
the Lender, as pledgee. Reference is made to the Stock Pledge Agreement for a
more detailed description of the collateral which secures this Note and the
rights of the Lender in respect of such collateral.
3. Events of Default; Acceleration.
(a) The principal amount of this Note is subject to prepayment
in whole or in part upon the occurrence and during the continuance of any of the
following events (each, an "Event of Default"): (i) failure to pay any amount
owing by the Company hereunder when due and payable, or (ii) the initiation of
any bankruptcy, insolvency, moratorium, receivership or reorganization by or
against the Company, or a general assignment of assets by the Company for the
benefit of creditors. Upon the occurrence of any Event of Default, the entire
unpaid principal balance of this Note and all of the unpaid interest accrued
thereon shall be immediately due and payable.
(b) No remedy herein conferred upon the Lender is intended to
be exclusive of any other remedy and each and every remedy shall be cumulative
and in addition to every other remedy hereunder now or hereafter existing at law
or in equity or otherwise.
4. Notices.
(a) All notices or other communications required or permitted
to be given hereunder shall be delivered as provided in the Note Purchase
Agreement.
5. Miscellaneous.
(a) This Note may only be waived, modified or amended in
writing signed by both the Company and the Investor.
(b) No failure or delay by the Lender to exercise any right
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege preclude any other right, power or
privilege. The provisions of this Note are severable and if any one provision
hereof shall be held invalid or unenforceable in whole or in part in any
jurisdiction, such invalidity or unenforceability shall affect only such
provision in such jurisdiction. This Note expresses the entire understanding of
the parties with respect to the transactions contemplated hereby. The Company
and every endorser and guarantor of this Note regardless of the time, order or
place of signing hereby waives presentment, demand, protest and notice of every
kind, and assents to any extension or postponement of the time for payment or
any other indulgence, to any substitution, exchange or release of collateral,
and to the addition or release of any other party or person primarily or
secondarily liable.
(c) If Lender retains an attorney for collection of this Note,
or if any suit or proceeding is brought for the recovery of all, or any part of,
or for protection of the indebtedness respected by this Note Agreement, then the
Company agrees to pay on demand all costs and expenses of the suit or
proceeding, or any appeal thereof, incurred by the Lender, including without
limitation, reasonable attorneys' fees.
-2-
(d) This Note shall for all purposes be governed by, and
construed in accordance with the laws of the State of California (without
reference to conflict of laws).
(e) This Note shall be binding upon the Company's successors
and assigns, and shall inure to the benefit of the Lender's successors and
assigns.
IN WITNESS WHEREOF, the Company has caused this Note to be executed by
its duly authorized officer to take effect as of the date first hereinabove
written.
JENNER TECHNOLOGIES
By:
-----------------------------
Title:
-------------------------
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EXHIBIT 10.5
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (the "Agreement") effective as of April 4, 1996
(the "Effective Date"), is entered by and between CIBA-GEIGY Limited, a Swiss
corporation, with principal offices at Klybeckstrasse 141, Basel, Switzerland
("Ciba"), and TherAtid, Incorporated, a California corporation, having a
principal place of business at 828 Eastbrook Court, Danville, California
94506-1206 ("TherAtid"). All references to TherAtid shall include its
Affiliates.
RECITALS
A. Ciba is the sole and exclusive owner of certain Patent Fights and
Know-How (as such terms are defined below) relating to [*] and analogs of such
compounds, and the use thereof, and related subject matter; and
B. TherAtid desires to obtain an exclusive license to the Patent Rights
and Know-How and Ciba is willing to grant such a license to TherAtid, on the
terms and conditions herein.
NOW, THEREFORE, Ciba and TherAtid agree as follows:
1. Definitions.
1.1 "Affiliate" means, with respect to each party, any legal
entity that directly or indirectly controls, is controlled by, or is under
common control with, such party, but only for so long as such control shall
continue. One entity shall be deemed to control another entity if such entity
has the power to direct or cause the direction of the management or policies of
the other entity.
1.2 "Confidential Information" shall mean (i) any proprietary
or confidential information or material in tangible form disclosed hereunder
that is marked as "confidential" at the time it is delivered to the receiving
party, or (ii) proprietary or confidential information disclosed orally
hereunder which is identified as confidential or proprietary when disclosed and
such disclosure of confidential information is confirmed in writing within
thirty (30) days by the disclosing party.
1.3 "Dominating Patent" shall mean an unexpired patent owned
or controlled by a third party that has not been invalidated in a final
unappealed or unappealable judgment by a court or competent jurisdiction, which
patent covers the manufacture, use or sale of Licensed Products under
circumstances such that TherAtid or its sublicensees have no commercially
reasonable alternative to obtaining a royalty-bearing license under such patent
in order to commercialize Licensed Products under this Agreement.
1.4 "Field" shall mean all human and veterinary therapeutic
and prophylactic uses, excluding use as a vaccine adjuvant and, with respect to
[*], excluding use for the treatment of asthma and other allergic diseases which
materially affect lung function. As used herein, "vaccine
-1-
adjuvant" shall mean a substance administered with an antigen to enhance the
immune response to that antigen.
1.5 "Gross Profit" shall mean Net Sales amounts received by
TherAtid for the commercial sale of Licensed Products, less (i) any taxes or
other government levies due with regard to such amounts, (ii) any expenses
incurred or accrued in connection with the manufacture, use, marketing, sale or
other disposition of the Licensed Products, and (iii) general and administrative
expenses, reasonably allocated according to GAAP.
1.6 "Know-How" shall mean all ideas, inventions, data, trade
secrets, instructions, processes, formulas, chemical, pharmacological,
toxicological, pharmaceutical, physical and analytical, manufacturing (including
but not limited to processes, yields, reagents and conditions relating to
compound manufacture) data and information, owned or controlled by Ciba existing
as of the Effective Date, which are not generally known during the term of this
Agreement, and which are sufficient to allow a chemist skilled in the art to
synthesize and manufacture Licensed Products, in liposome form or otherwise.
1.7 "Licensed Product" will mean any product which (i) but for
the license granted herein would infringe a Valid Claim in the country such
product is made or sold, or (ii) incorporates in material part or is made using
Know How.
1.8 "Net Sales" means the gross revenues actually received
from sales of Licensed Products by TherAtid and its sublicensees, less (i)
normal and customary rebates, and cash and trade discounts, actually taken, (ii)
sales, use and/or other excise taxes or duties actually paid, (iii) the cost of
any packages and packing, if billed separately, (iv) insurance costs and
outbound transportation charges prepaid or allowed, (v) import and/or export
duties actually paid, and (vi) amounts allowed or credited due to returns.
1.9 "Patent Rights" means the patents listed on Exhibit A
hereto, and all divisions, continuations, continuations-in-part, and
substitutions thereof. Patent Rights shall also include any U.S. and foreign
patent applications or patents owned by or licensed to Ciba which claim
inventions relating to the patent rights listed on Exhibit A, conceived or
reduced to practice in connection with research sponsored by Ciba including,
without limitation, in the laboratory of Dr. Isaiah J. Fidler at the M.D.
Anderson Cancer Center at the University of Texas.
1.10 "Territory" means all countries of the world.
1.11 "Valid Claim" means (i) a claim of an issued and
unexpired patent included within the Patent Rights which has not been held
unenforceable or invalid by a court or other governmental agency of competent
jurisdiction, and which has not been disclaimed or admitted to be invalid or
unenforceable through reissue or otherwise, or (ii) a claim of a pending
application within the Patent Rights.
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2. Grant.
Ciba hereby grants to TherAtid an exclusive, worldwide,
royalty bearing license under the Patent Rights, with the fight to grant and
authorize sub-licenses, to make, have made, import, have imported, use, sell,
offer for sale and otherwise exploit the Licensed Products in the Field in the
Territory.
3. Technical Assistance.
3.1 Delivery of Know-How. Within ninety (90) days after the
Effective Date, Ciba shall deliver to TherAtid the Know-How in electronic or
hard copy formats.
3.2 Technical Assistance. Until six (6) months following
delivery of the Know- How pursuant to Section 3.1, at TherAtid's request, Ciba
shall promptly provide TherAtid or its designee, instruction, advice and
assistance regarding the practice of the Patent Rights and use of the KnowHow,
including without limitation, relating to the manufacture of compounds within
the scope of the Patent Rights. Such assistance shall be provided at a site
agreed by the parties, at agreed times.
[*]
3.3 Regulatory Data and Filings. On the Effective Date,
without additional cost, Ciba shall promptly provide TherAtid with access to and
the fight to use all regulatory filings made by Ciba or its Affiliates with
respect to compounds within the scope of the Patent Rights, together with the
underlying pre-clinical and clinical data. TherAtid and its sublicensees may use
and incorporate such filings and data in support of efforts to obtain regulatory
approval of Licensed Products worldwide.
3.4 Clinical Trial Data. So far as it has the right to do so,
Ciba shall provide TherAtid with all data from any clinical trials performed by
Ciba or its Affiliates with respect to any compound within the scope of the
Patent Rights including but not limited to copies of any clinical trial
agreement(s), protocols, case report forms and supporting documentation relating
to Phase II trials of such compounds. For those data yet to become available
from the ongoing Phase III clinical trial with respect to the evaluation of [*]
for the treatment of osteogenic sarcoma in progress at the National Cancer
Institute of the U.S. National Institutes of Health ("NCI") on the Effective
Date, Ciba will use all reasonable endeavors to help TherAtid obtain access to
such data directly from the NCI, including making a written request to the NCI
to give TherAtid access to the data.
TherAtid and its sublicensees may use and incorporate such
data in support of filings for regulatory approval of Licensed Products
worldwide.
3.5 Other Intellectual Property. In the event that Ciba has
any option or other rights with respect to intellectual property relating to the
Field developed in connection with research sponsored by Ciba including, without
limitation, in the laboratory of Dr. Isaiah J. Fidler at the M.D. Anderson
Cancer Center at the University of Texas, and the owner of such intellectual
property
-3-
refuses to acknowledge or contests such rights, Ciba shall use reasonable
endeavors to perfect and enforce its interest in such intellectual property.
4. Consideration.
4.1 License Fee. Within thirty (30) days of the Effective
Date, TherAtid shall pay to Ciba a license fee of [*].
4.2 Annual Maintenance Fee. TherAtid shall pay to Ciba an
annual maintenance fee of [*] during the period commencing on the first
anniversary of the Effective Date and continuing until the initiation of any
Phase III clinical trial sponsored by TherAtid or a TherAtid sublicensee for any
Licensed Product; provided, however, that in the event that any additional
patients are added to the Phase III clinical trial of [*] in progress on the
Effective Date at the National Cancer Institute of the U.S. National Institutes
of Health, TherAtid's obligations to pay the annual maintenance fee shall
terminate on the date that the first such patient is enrolled in such clinical
trial.
4.3 Milestone Payments. Unless the Agreement is terminated
earlier, following the first achievement by TherAtid of the following milestones
with respect to such first Licensed Product for humans incorporating [*], and
the first Licensed Product for humans incorporating [*], TherAtid shall pay Ciba
one-time milestone payments, as follows:
Event Payment
----- -------
[*]
The payments set forth above shall be made with respect to each of [*],
provided, however, if TherAtid ceases all development of [*] after having made
payments with respect to the applicable compound under this Section 4.3
following the accomplishment of any milestone specified herein, there shall be
no payment due upon the accomplishment of that same milestone with respect to
any subsequent back-up compound after the first backup compound pursued by
TherAtid. When milestones are achieved with respect to such first back-up
compound which were not previously paid with respect to an earlier compound,
such milestone payments shall be paid pursuant to this Section 4.3.
4.4 Royalties. In consideration of the license granted herein,
TherAtid shall pay to Ciba royalties on Net Sales of Licensed Products sold by
TherAtid on a Licensed Product-by- Licensed Product basis as set forth below:
4.4.1 Licensed Products Sold by TherAtid. TherAtid shall
pay to Ciba the following royalties with respect to Net Sales of Licensed
Products sold by TherAtid, as follows:
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(a) [*]
(b) [*]
4.4.2 Licensed Products Sold by Sublicensees. TherAtid
shall pay to Ciba the following royalties with respect to Net Sales of Licensed
Products sold by sublicensees of TherAtid, as follows:
(a) [*]
(b) [*]
Notwithstanding the above, in the event that TherAtid has an
ownership interest, direct or indirect, [*] in any sublicensee, royalties shall
be due with respect to sales of Licensed Products at the rates set forth in
Section 4.2.1, rather than the rates set forth in this Section 4.2.2.
4.4.3 Royalty Reduction. The royalty rates set forth in
Sections 4.4.1 and 4.4.2 above shall be reduced by [*] if the applicable
Licensed Products are not within the scope of an issued Valid Claim within the
Patent Rights in the country such Licensed Products are either made or sold.
4.5 Commercial Impracticability. Notwithstanding the above, in
the event that TherAtid believes that the foregoing royalty rates would make the
sale of Licensed Products commercially impracticable it may notify Ciba, and in
such event the parties shall negotiate in good faith a reduction in such
royalties; provided, the foregoing terms shall remain in effect until such other
terms are agreed in writing.
4.6 One Royalty. No more than one royalty payment shall be due
with respect to a sale of a particular Licensed Product. No multiple royalties
shall be payable because any Licensed Product, or its manufacture, sale or use
is covered by more than one Valid Claim. No royalty shall be payable under
Section 4.4 above with respect to sales of Licensed Products among TherAtid and
its sublicensees, but shall be payable on sales of Licensed Products by TherAtid
or its sublicensees to third parties, nor shall a royalty be payable under this
Article 4 with respect to Licensed Products distributed for use in research
and/or development, in clinical trials or as promotional samples if such
promotional samples are provided without charge.
5. Payments.
5.1 Payment Method. All payments due hereunder shall be made
in U.S. dollars, and shall be made by bank wire transfer in immediately
available funds to an account designated by Ciba. Any payments that are not paid
on the date such payments are due under this Agreement shall bear interest to
the extent permitted by applicable law at the prime rate as reported by the
Chase Manhattan Bank, New York, New York, on the date such payment is due
calculated on the number
-5-
of days such payment is delinquent. This Section 5.1 shall in no way limit any
other remedies available to Ciba.
5.2 Currency Conversion. If any currency conversion shall be
required in connection with the calculation of royalties hereunder, such
conversion shall be made using the selling exchange rate for conversion of the
foreign currency into U.S. dollars, quoted for current "sell" transactions
reported in The Wall Street Journal for the last business day of the calendar
quarter to which such payment pertains.
5.3 Restrictions on Payment. To the extent and as long as the
laws and/or regulations in force in any country prohibit the payment, conversion
or remittance of the royalties as hereby contemplated, TherAtid's obligations
under Article 5 may be discharged by the deposit thereof to the account of
TherAtid, or its designee, in any commercial bank or trust company selected by
Ciba located in such country; provided, that no infraction of law or regulation
occurs in making such deposit. If due to restrictions or prohibitions imposed by
national or international authority, payments cannot be made as aforesaid, the
parties shall consult with a view to finding a prompt and acceptable solution,
and TherAtid will, from time to time, deposit such monies as Ciba may lawfully
direct, at no additional out-of-pocket expense to TherAtid.
5.4 Withholding Taxes. All royalty amounts required to be paid
to Ciba pursuant to this Agreement may be paid with deduction for withholding
for or on account of any taxes (other than taxes imposed on or measured by net
income) or similar governmental charge imposed by a juris diction other than the
United States ("Withholding Taxes") to the extent Ciba or its successor has the
lawful right to utilize the Withholding Taxes paid by TherAtid as a credit
against Ciba's regular tax liability. TherAtid shall provide Ciba a certificate
evidencing payment of any Withholding Taxes hereunder.
6. Reports and Records.
6.1 Royalty Reports. TherAtid shall deliver to Ciba [*] in
which Licensed Products are sold a written report setting forth in reasonable
detail, on a country-by-country and Licensed Product-by-Licensed Product basis,
the calculation of the royalties payable to Ciba for such [*], including the
Licensed Products sold in each country, the Net Sales thereof, and all amounts
received from sublicensees for sales of Licensed Products. Such reports shall be
Confidential Information of TherAtid subject to Article 8 herein.
6.2 Inspection of Books and Records. TherAtid and its
sublicensees shall maintain accurate books and records which enable the
calculation of royalties payable hereunder to be verified. TherAtid shall retain
the books and records for each [*] period for three (3) years after the
submission of the corresponding report under Section 6.1 hereof. Upon thirty
(30) days prior notice to TherAtid and the pertinent sublicensee, independent
accountants selected by Ciba, reasonably acceptable to TherAtid, after entering
into a confidentiality agreement with TherAtid, may have access to the books and
records of TherAtid and its sublicensees to conduct a review or audit once per
calendar year, for the sole purpose of verifying the accuracy of TherAtid's
payments and
-6-
compliance with this Agreement. The accounting firm shall report to Ciba only
whether there has been a royalty underpayment and, if so, the amount thereof.
Such access shall be permitted during TherAtid's normal business hours during
the term of this Agreement and for two (2) years after the expiration or
termination of this Agreement. Any such inspection or audit shall be at Ciba's
expense, however, in the event an inspection reveals underpayment of [*] in any
audit period, TherAtid shall pay the costs of the inspection and promptly pay to
Ciba any underpayment with interest from the date such amount(s) were due, at
the prime rate reported by the Chase Manhattan Bank, New York, New York.
7. Diligence.
7.1 Reasonable Efforts. TherAtid agrees to use reasonable
efforts consistent with its prudent business judgment to diligently develop and
commercialize the Patent Rights and obtain such approvals as may be necessary
for the sale of the Licensed Products in the United States and such other
worldwide markets as TherAtid elects to commercialize the Licensed Products.
TherAtid shall notify Ciba within thirty (30) days after the first commercial
sale of each Licensed Product.
7.2 Sublicense to Ciba. In the event that TherAtid elects not
to commercialize Licensed Products in a particular country itself or through a
sublicensee or a distributor, it shall notify Ciba. In such event, TherAtid
shall negotiate a sublicense with Ciba under the Patent Rights and KnowHow in
such country on reasonable terms customary in the industry to be negotiated in
good faith by the parties.
8. Confidentiality; Publications.
8.1 Confidential Information. Unless otherwise expressly
provided for in this Agreement, both parties shall treat as confidential any
Know-How and any and all other information and data received or derived under
this Agreement from the other party and designated as proprietary or
confidential at the time of disclosure ("Confidential Information"), and shall
not disclose any Confidential Information received from the other party to any
third party during the Agreement Period and for five (5) years thereafter,
except for information which:
(a) was known to the receiving party prior to the
disclosure by the other party as evidenced by written record or other proof;
(b) has become public knowledge through no fault of
the receiving party;
(c) has been received from a third party who did not
acquire it directly or indirectly from the disclosing party;
(d) was independently developed by the receiving
party prior to receipt from the disclosing party, as shown by contemporaneous
written documentation;
-7-
(e) needs to be disclosed to government officials for
purposes of obtaining registration of the Products; or
(f) is compelled to be disclosed in the course of
litigation by a third party, provided that the party compelled to make such
disclosure provides the other party to this Agreement with notice of such
compulsion sufficiently in advance of disclosure so as to provide such other
party a reasonable time period to seek a protective order.
8.2 Use and Disclosures. Notwithstanding the above, TherAtid
may disclose Confidential Information of the other (i) to their legal
representatives and employees, to Affiliates, to legal representatives and
employees of Affiliates, and to consultants, to the extent such disclosure is
reasonably necessary to achieve the purposes of this Agreement, and provided
such representatives, employees and consultants are covered by obligations of
confidentiality with respect to such information no less stringent than those
set forth herein; (ii) in connection with the filing and support of patent
applications; (iii) as required by law or to comply with applicable governmental
regulations or court order or otherwise submit information to tax or other
governmental authorities, including the FDA and its foreign counterparts, or
(iv) to a sublicensee, in confidence, in connection with a sublicense permitted
under this Agreement; provided that if a party is required to make any such
disclosure of another party's Confidential Information, other than pursuant to a
confidentiality agreement, it will give reasonable advance notice to the other
party of such disclosure and, save to the extent inappropriate in the case of
patent applications, will use its reasonable best efforts to secure confidential
treatment of such information in consultation with the other party prior to its
disclosure (whether through protective orders or otherwise) and disclose only
the minimum necessary to comply with such requirements.
8.3 Non-Disclosure. The existence and the terms of this
Agreement shall not be disclosed by TherAtid or Ciba to any third party or be
published unless both parties expressly agree otherwise in writing. The text of
any press release to be issued by TherAtid and/or Ciba concerning this Agreement
as well as the precise date and timing of the press release shall be agreed
between the Parties in writing in advance, such agreement not to be unreasonably
withheld or delayed. However, this restriction shall not apply to disclosure of
information set forth in the form of an agreed press release, which will be
prepared in mutually agreeable format and substance following the closing of
this Agreement, and to announcements required by law or regulation except that
in such event the parties shall coordinate to the extent possible with respect
to the working of any such announcement. This restriction shall not apply to
disclosure of this Agreement to certain private third parties such as the
shareholders of TherAtid, investment bankers, attorneys and other professional
consultants, and prospective investors in TherAtid.
-8-
9. [*]
In the event [*] elects to [*] any Licensed Product [*] shall
notify [*] and [*] shall [*] such Licensed Product [*] on agreed terms
reasonable and customary in the industry. In such case, [*] shall have [*] from
the date it receives such written notice from [*] in which to notify [*] whether
[*] wishes [*]. After the expiration of such [*] period, or any mutually agreed
upon extension thereof, if, [*], the parties have [*] with respect to [*] shall
[*] with regard to such Licensed Product [*].
10. [*]
10.1 [*]. Within [*] from the Effective Date, [*] agrees to
deliver to [*] at no additional cost, [*] of such [*].
10.2 [*]. In the event that [*] wishes to develop or
commercialize a Licensed Product [*] and is unable [*] on commercially
reasonable terms [*] request, [*] agrees during the term of this Agreement at
its discretion either (i) subject to Section [*] all Know-How necessary [*]; or
(ii) to provide [*] with their requirements of [*] at a transfer price equal to
[*] as determined in accordance with GAAP plus a reasonable profit margin
customary in the trade. In the event [*] pursuant to option (ii) hereof, the
parties shall promptly enter into a [*] consistent with the preceding terms.
10.3 [*]. In the event that [*] wishes to develop or
commercialize a Licensed Product [*] and is unable [*] on commercially
reasonable terms [*] request, [*] agrees during the term of this Agreement at
its discretion either (i) subject to Section [*] all Know-How necessary [*]; or
(ii) to provide [*] with their requirements of [*] at a transfer price equal to
[*], as determined in accordance with GAAP plus a reasonable profit margin
customary in the trade. In the event [*] pursuant to option (ii) hereof, the
parties shall promptly enter into a [*] consistent with the preceding terms.
10.4 [*]. In the event that [*] elects to [*] pursuant to
either Section [*] shall provide [*] with at least [*], and shall deliver to [*]
all Know-How relating to the [*] at least [*] prior to the date that [*] shall
cease to provide the applicable [*]. In such event, the parties shall assist and
cooperate with each other in order that [*] may initiate [*] as soon as
practicable, and shall take such actions as are appropriate to achieve such
goal.
11. Representations and Warranties.
11.1 Ciba represents and warrants that: (i) it is a
corporation duly organized validly existing and in good standing under the laws
of Switzerland; (ii) the execution, delivery and performance of this Agreement
have been duly authorized by all necessary corporate action on the part of Ciba;
(iii) Ciba and Ciba-Geigy Corporation are the sole and exclusive owners of all
right, title and interest in the Patent Rights and the Know-How; (iv) Ciba has
the fight to grant the rights and licenses granted herein; (v) the Patent Rights
and Know-How are free and clear of any lien,
-9-
encumbrance, security interest or restriction on license; (vi) it has not
previously granted, and will not grant during the term of this Agreement, any
right, license or interest in or to the Patent Rights or Know-How, or any
portion thereof, inconsistent with the license granted to TherAtid herein; (vii)
there are no threatened or pending actions, suits, investigations, claims or
proceedings in any way relating to the Patent Rights or Know-How; and (viii) the
practice by TherAtid or its sublicensees of the Patent Rights or Know-How
licensed herein does not and shall not require a license, additional to the
license hereby granted, under any other intellectual property owned or
controlled by Ciba or its Affiliates.
11.2 TherAtid. TherAtid represents and warrants that: (i) it
is a corporation duly organized validly existing and in good standing under the
laws of the State of California; and (ii) the execution, delivery and
performance of this Agreement have been duly authorized by all necessary
corporate action on the part of TherAtid.
12. Patent Prosecution and Enforcement.
12.1 Ciba's Responsibilities. Ciba shall, at its sole expense,
have the initial right and obligation to control the preparation, filing,
prosecution and maintenance of the Patent Rights, and any interferences,
re-examinations, reissues and oppositions proceeding relating thereto, using
patent counsel of its choice. Ciba shall consult with TherAtid regarding the
conduct of all such activities, by providing TherAtid a reasonable opportunity
to review and comment on all proposed submissions to any patent office before
submittal, and provided further that Ciba shall keep TherAtid reasonably
informed as to the status of such patent applications by promptly providing
TherAtid copies of all communications relating to such patent applications that
are received from any patent office.
12.2 Ciba Failure to Prosecute. Ciba may elect on ninety (90)
days prior notice to TherAtid to discontinue prosecution of any patent
applications within the Patent Rights or the conduct of any activities with
respect to the patent applications or patents subject to Section 12. 1. In the
event Ciba declines to file or having filed fails to further prosecute or
maintain any patent applications or patents, or conduct any interferences,
re-examinations, reissues or oppositions, then TherAtid shall have the right to
prepare, file, prosecute and maintain such patent applications and patents in
such countries worldwide it deems appropriate, and conduct any interferences, re
examinations, reissues or oppositions, at its sole expense using patent counsel
of its choice. TherAtid may credit any expenses incurred in connection with such
activities set forth in this Section 12.2 against any royalties due Ciba
pursuant to Article 4.
12.3 Copies. Upon request by TherAtid, Ciba shall promptly
provide to TherAtid a copy of any patent applications within the Patent Rights
filed by Ciba or its Affiliates during the term of this Agreement and all
material documents received from or sent to any patent office relating thereto
which relate to the scope, term, maintenance, validity or enforceability of any
of the Patent Rights, or any challenge to or change to any of the preceding.
12.4 Enforcement. If either party becomes aware that any
Patent Rights are being or have been infringed by any third party, such party
shall promptly notify the other party hereto in
-10-
writing describing the facts relating thereto in reasonable detail. Ciba shall
have the initial right, but not the obligation, to institute, prosecute and
control any action, suit or proceeding (an "Action") with respect to such
infringement, including any declaratory judgment action, at its expense, using
counsel of its choice. In the event Ciba fails to initiate or defend any Action
involving the Patent Rights within one hundred eighty (180) days of receiving
notice of any alleged infringement, TherAtid shall have the fight, but not the
obligation, to initiate and control such an Action, and Ciba shall cooperate
with TherAtid in connection with any such Action. Any amounts recovered in such
Action shall be used first to reimburse TherAtid and Ciba for any costs and
expenses incurred in connection with such Action (including attorneys' and
experts' reasonable fees), and any remainder shall be divided between the
parties with Ciba receiving [*] and TherAtid [*].
12.5 Third Party Royalty Offset. In the event that TherAtid
enters into a license agreement with any third party with respect to a
Dominating Patent or to avoid or settle a claim of infringement or
misappropriation of any intellectual property fight made by such third party due
to TherAtid's practice of the Patent Rights, TherAtid may offset any payments
made in accordance with such license agreements against any amounts owed Ciba
pursuant to Article 4 hereof, up to a [*] of the amounts due thereunder.
12.6 Patent Term Extensions. With respect to any patent within
the Patent Rights, Ciba will designate TherAtid or its designee as its agent for
obtaining an extension of such patent or governmental equivalent which extends
the exclusivity of any of the patent subject matter where available in any
country in the world or if not feasible, at TherAtid's option, permit TherAtid
to file in Ciba's name or diligently obtain such extension for TherAtid or its
sublicensee(s), at TherAtid's expense. Furthermore, Ciba and its Affiliates
agree to provide reasonable assistance to facilitate TherAtid's or its
sublicensees' efforts to obtain any extension.
13. Arbitration.
Ciba and TherAtid agree that any dispute or controversy
arising out of, in relation to, or in connection with this Agreement, or the
validity, enforceability, construction, performance or breach thereof, shall be
settled by binding arbitration in New York, New York, United States of America,
under the then-current Licensing Agreement Rules of the American Arbitration
Association by one (1) arbitrator appointed in accordance with such Rules. The
arbitrators shall determine what discovery will be permitted, based on the
principle of limiting the cost and time which the parties must expend on
discovery; provided, the arbitrators shall permit such discovery as they deem
necessary to achieve an equitable resolution of the dispute. Such proceedings
shall be conducted in English, and any written evidence originally in a language
other than English shall be submitted in an English translation accompanied by
the original or a true copy thereof. The decision and/or award rendered by the
arbitrator shall be written, final and non-appealable and may be entered in any
court of competent jurisdiction. In the event that in any arbitration instituted
pursuant to Section 15.2, the arbitrator determines that there has been a
material breach of the Agreement, at the option of the non breaching party, the
arbitrator shall direct that the Agreement be terminated effective immediately.
The parties agree that, any provision of applicable law notwithstanding, they
will not request, and the arbitrator shall have no authority to award, punitive
or exemplary damages against any party. The
-11-
costs of any arbitration, including administrative fees and fees of the
arbitrator, shall be shared equally by the parties. Each party shall bear the
cost of its own attorneys' fees and expert fees.
14. Indemnification.
14.1 TherAtid. TherAtid shall indemnify, defend and hold
harmless Ciba and its directors, officers, employees and agents (each a "Ciba
Indemnitee") from and against any and all liabilities, damages, losses, costs or
expenses (including reasonable attorneys and professional fees and other
expenses of litigation and/or arbitration) (a "Liability") resulting from any
claim, suit or proceeding brought by a third party against a Ciba Indemnitee,
arising out of or in connection with (i) any misrepresentation with regard to,
or breach of any of the representations and warranties of TherAtid set forth in
Section 11.2, or (ii) the development, manufacture, use, sale or consumption of
any Licensed Product by TherAtid or its sublicensees, except to the extent
caused by the negligence or willful misconduct of Ciba.
14.2 Ciba. Ciba shall indemnify, defend and hold harmless
TherAtid and its directors, officers, employees and agents (each a "TherAtid
Indemnitee") from and against any and all liabilities, damages, losses, costs or
expenses (including reasonable attorneys' and professional fees and other
expenses of litigation and/or arbitration) (a "Liability") resulting from any
claim, suit or proceeding brought by a third party against a TherAtid
Indemnitee, arising out of or in connection with any misrepresentation with
regard to, or breach of any of, the representations and warranties of Ciba set
forth in Section 1.1.
14.3 Procedure. In the event that any Indemnitee intends to
claim indemnification under this Article 14 it shall promptly notify the other
party in writing of such alleged Liability. The indemnifying party shall have
the right to control the defense thereof. The affected Indemnitees shall
cooperate fully with the indemnifying party and its legal representatives in the
investigation and conduct of any Liability covered by this Article 14. The
Indemnitee shall not, except at its own cost, voluntarily make any payment or
incur any expense with respect to any claim, suit or Liability, or make any
admission of liability or attempt to settle any claim without the prior written
consent of the indemnifying party, which such party shall not be required to
give.
15. Term and Termination.
15.1 The term of this Agreement shall commence on the
Effective Date, and unless earlier terminated as provided in Article 15, shall
continue in full force and effect on a country-by- country and Licensed
Product-by-Licensed Product basis until there are no remaining royalty payment
obligations in a country, at which time the Agreement shall expire in its
entirety in such country. Notwithstanding the above, upon the expiration of this
Agreement in any country, TherAtid shall have a non-exclusive, irrevocable,
fully paid-up right and license to use and exploit the Know-How.
15.2 If either party materially breaches this Agreement, the
other party may elect to give the breaching party written notice describing the
alleged breach. If the breaching party has not cured such breach within sixty
(60) days after receipt of such notice, the notifying party will be
-12-
entitled, in addition to any other rights it may have under this Agreement, to
terminate this Agreement effective immediately; provided, however, if either
party receives notification from the other of a material breach and if the party
alleged to be in default notifies the other party in writing within thirty (30)
days of receipt of such default notice that it disputes the asserted default,
the matter will be submitted to non-binding mediation and no termination shall
become effective prior to the completion of such mediation.
15.3 Termination for Insolvency. Either party may terminate
this Agreement if the other becomes the subject of a voluntary or involuntary
petition in bankruptcy or any proceeding relating to insolvency, receivership,
liquidation, or composition or the benefit of creditors, if that petition or
proceeding is not dismissed with prejudice within sixty (60) days after filing.
15.4 Permissive Termination. TherAtid may terminate this
Agreement with respect to any country or any patent application or patent within
the Patent rights with sixty (60) days written notice to Ciba.
15.5 Effect of Termination.
(a) Accrued Rights and Obligations. Termination of
this Agreement for any reason shall not release any party hereto from any
liability which, at the time of such termination, has already accrued to the
other party or which is attributable to a period prior to such termination, nor
preclude either party from pursuing any rights and remedies it may have
hereunder or at law or in equity which accrued or are based upon any event
occurring prior to such termination.
(b) Return of Materials. Upon any termination of this
Agreement, each party shall promptly return to the other party all Confidential
Information received from the other party (except one copy of which may be
retained for archival purposes).
(c) Stock on Hand. In the event this Agreement is
terminated for any reason, TherAtid and its Affiliates and sublicensees shall
have the right to sell or otherwise dispose of the stock of any Licensed Product
subject to this Agreement then on hand, subject to Articles 4 and 5.
(d) Sublicensees. In the event of any termination of
this Agreement any sublicensees granted by TherAtid shall remain in force and
effect and shall be assigned by TherAtid to Ciba, provided, however, that the
financial terms of such sublicenses shall be no less favorable to Ciba than the
terms of this Agreement.
15.6 Survival. Sections 15.5 and 15.6, and Articles 5, 6, 8,
9, 11, 13, 14 and 16 of this Agreement shall survive termination of this
Agreement for any reason.
-13-
16. Miscellaneous.
16.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
reference to principles of conflicts of laws.
16.2 Independent Contractors. The relationship of the parties
hereto is that of independent contractors. The parties hereto are not deemed to
be agents, partners or joint venturers of the others for any purpose as a result
of this Agreement or the transactions contemplated thereby.
16.3 Assignment. Neither party may assign this Agreement or
the supply agreement without the prior written consent of the other, which
consent shall not be unreasonably withheld; provided, however, TherAtid may
assign this Agreement in connection with a transfer of all or substantially all
of its assets relating to the agreements, whether by sale, merger, operation of
law or otherwise. This Agreement shall be binding upon and inure to the benefit
of the parties and their successors and assigns.
16.4 Right to Develop Independently. Nothing in this Agreement
will impair TherAtid's right to independently acquire, license, develop for
itself, or have others develop for it, intellectual property and technology
performing similar functions as the Patent Rights and Know- How or to market and
distribute Licensed Products based on such other intellectual property and
technology.
16.5 Notices. Any required notices hereunder shall be given in
writing by certified mail or overnight express delivery service at the address
of each party below, or to such other address as either party may indicate on
its behalf by written notice. Notice shall be deemed served when delivered or,
if delivery is not accomplished by reason or some fault of the addressee, when
tendered.
If to Ciba: Ciba-Geigy Limited
Pharma Licensing
Klybeckstrasse 141
4002 Basel
Switzerland
Attention:
If to TherAtid: TherAtid, Incorporated
828 Eastbrook Court
Danville, California 94506-1206
Attention: Chief Executive Officer
16.6 Force Majeure. Neither party shall lose any rights
hereunder or be liable to the other party for damages or losses (except for
payment obligations) on account of failure of performance by the defaulting
party if the failure is occasioned by war, strike, fire, Act of God, earthquake,
flood, lockout, embargo, governmental acts or orders or restrictions, failure of
suppliers,
-14-
or any other reason where failure to perform is beyond the reasonable control
and not caused by the negligence, intentional conduct or misconduct of the
nonperforming party and the nonperforming party has exerted all reasonable
efforts to avoid or remedy such force majeure; provided, however, that in no
event shall a party be required to settle any labor dispute or disturbance.
16.7 Compliance with Laws. Each party shall furnish to the
other party any information related to the subject matter of this Agreement
requested or required by that party during the term of this Agreement or any
extensions hereof to enable that party to comply with the requirements of any
U.S. or foreign federal state and/or government agency.
16.8 LIMITATION OF LIABILITY. NEITHER PARTY SHALL BE LIABLE TO
THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES ARISING
OUT OF THE PERFORMANCE OF THIS AGREEMENT, HOWEVER CAUSED, UNDER ANY THEORY OF
LIABILITY.
16.9 Further Assurances. At any time or from time to time on
and after the date of this Agreement, Ciba shall at the request of TherAtid (i)
deliver to TherAtid such records, data or other documents consistent with the
provisions of this Agreement, (ii) execute, and deliver or cause to be
delivered, all such consents, documents or further instruments of transfer or
license, and (iii) take or cause to be taken all such actions, as TherAtid may
reasonably deem necessary or desirable in order for TherAtid to obtain the full
benefits of this Agreement and the transactions contemplated hereby.
16.10 Severability. In the event that any provisions of this
Agreement are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision. The parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the parties in entering this
Agreement; provided, if the parties are unable to agree on such a substitute
clause and the deletion of the provision held invalid or unenforceable would
produce material adverse financial consequences for one party, such party shall
have the fight to terminate the Agreement with one hundred eighty (180) days
notice.
16.11 Waiver. The failure of a party to enforce any provision
of the Agreement shall not be construed to be a waiver of the right of such
party to thereafter enforce that provision or any other provision or right.
16.12 Entire Agreement; Amendment. This Agreement including,
its Exhibits, sets forth the entire agreement and understanding of the parties
with respect to the subject matter hereof, and supersedes all prior discussions,
agreements and writings in relating thereto. This Agreement may not be altered,
amended or modified in any way except by a writing signed by both parties.
16.13 Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original and which together shall
constitute one instrument.
-15-
IN WITNESS WHEREOF, Ciba and TherAtid have executed this Agreement by
their respective duty authorized representatives.
CIBA-GEIGY LIMITED THERATID, INCORPORATED
By: /s/ DR. E. SCHWEIZER By: /s/ ANTHONY E. MAIDA III
----------------------------------- ------------------------------
Print Name: Dr. E. Schweizer Print Name: Anthony E. Maida III
--------------------------- ----------------------
Title: Chief Scientific and Technical Title: Chief Executive Officer
-------------------------------- ---------------------------
Adviser
By: /s/ R.E. WALKER
-------------------------
Print Name: R.E. Walker
-----------------
Title: Division Counsel
----------------------
EXHIBIT A: PATENT RIGHTS
-16-
EXHIBIT A
Part I
Patents relating to [*]
Appendix A: Patent rights by Case 4-12450
-----------------------------------------
Country Patent No. Patent Expiry
- ------- ---------- -------------
[*] [*] [*]
Austria 25495 July 25, 2000
Australia 541147 July 25, 2000
Belgium 25495 July 25, 2000
Bermuda 28 July 25, 2000
Canada 1183129 Feb. 26, 2002
Cyprus 1381 July 25, 2000
Czech Republic 276965 July 25, 2000
Denmark 161025 July 25, 2000
Germany 25495 July 25, 2000
Finland 75578 July 21, 2000
France 25495 July 25, 2000
Great Britain 25495 July 25, 2000
Hong Kong 857/87 July 25, 2000
Hungary 188861 July 24, 2000
Ireland 50145 July 24, 2000
Israel 60676 July 24, 2000
Italy 25495 July 25, 2000
Japan 1507734 July 25, 2000
Kenya P3723 July 25, 2000
Luxembourg 25495 July 25, 2000
Malaya 554/87 July 25, 2000
[*] [*] [*]
Netherlands 25495 July 25, 2000
New Zealand 194432 July 24, 2000
Norway 157177 July 22, 2000
Portugal 71607 June 4, 1996
Russia 1277905 July 24, 2000
Russia 1277906 July 24, 2000
Sabah 405/87 July 25, 2000
Sarawak 3237 July 25, 2000
Singapore 381/87 July 25, 2000
South Africa 4487/80 July 24, 2000
Spain 493633 Oct. 27, 2000
Sweden 25495 July 25, 2000
Switzerland 25495 July 25, 2000
USA 4406890 Sept. 27, 2000
Venezuela 49953 April 29, 2002
Appendix B: Patent rights by Case 4-14026
-----------------------------------------
Country Patent No. Patent Expiry
- ------- ---------- -------------
Australia 566879 July 22, 2003
Belgium 897359 July 25, 2003
France 102319 July 18, 2003
Great Britain 102319 July 18, 2003
Hong Kong 798/90 July 18, 2003
Ireland 55793 July 22, 2003
Israel 69294 July 21, 2003
Italy 1168778 July 22, 2003
Luxembourg 102319 July 18, 2003
Netherlands 102319 July 18, 2003
New Zealand 205000 July 22, 2003
[*] [*] [*]
Singapore 779/89 July 18, 2003
South Africa 5360/83 July 22, 2003
Sweden 102319 July 18, 2003
Switzerland 102319 July 18, 2003
USA 5189017 Feb. 23, 2010
USA 5334583 Feb. 23, 2010
Appendix C: Patent rights by Case 4-15115
-----------------------------------------
Country Patent No. Patent Expiry
- ------- ---------- -------------
Austria 178624 Oct. 14, 2005
Australia 590221 Oct. 15, 2005
Belgium 178624 Oct. 14, 2005
[*] [*] [*]
Canada 1260393 Sept. 26, 2006
Denmark 165220 Oct. 15, 2005
Germany 178624 Oct. 14, 2005
Finland 86371 Oct. 14, 2005
France 178624 Oct. 14, 2005
Gibraltar 389 Oct. 14, 2005
Great Britain 178624 Oct. 14, 2005
Greece 852492 Oct. 15, 2000
Hong Kong 1357/94 Oct. 14, 2005
Hungary 198128 Oct. 15, 2005
Ireland 58143 Oct. 14, 2005
Israel 76700 Oct. 14, 2005
Italy 178624 Oct. 14, 2005
[*] [*] [*]
Japan 1897352 Oct. 16, 2005
[*] [*] [*]
Korea (South) 28375 Oct. 16, 2000
Luxembourg 178624 Oct. 14, 2005
Netherlands 178624 Oct. 14, 2005
New Zealand 213828 Oct. 15, 2005
Norway 171443 Oct. 15, 2005
Pakistan 129986 Oct. 10, 2001
Philippines 22978 Feb. 24, 2006
Portugal 81298 Aug. 31, 2002
Singapore 898/93 Oct. 14, 2005
South Africa 7888/85 Oct. 15, 2005
Spain 547889 Aug. 26, 2006
Sweden 178624 Oct. 14, 2005
Switzerland 178624 Oct. 14, 2005
Taiwan 25805 Oct. 15, 2001
USA 4971802 Nov. 20, 2007
Appendix D: Patent rights by Case 4-16897
-----------------------------------------
Country Patent No. Patent Expiry
- ------- ---------- -------------
Australia 623876 Jan. 31, 2009
Austria 329609 Feb. 6, 2009
Belgium 329609 Feb. 6, 2009
Canada 1336578 Aug. 8, 2012
[*] [*] [*]
France 329609 Feb. 6, 2009
Germany 329609 Feb. 6, 2009
Great Britain 329609 Feb. 10, 2009
Ireland 63493 Feb. 10, 2009
Israel 89248 Feb. 10, 2009
Italy 329609 Feb. 6, 2009
[*] [*] [*]
[*] [*] [*]
Luxembourg 329609 Feb. 6, 2009
Netherlands 329609 Feb. 6, 2009
New Zealand 227944 Feb. 10, 2009
Philippines 26919 Dec. 3, 2009
South Africa 1053/89 Feb. 10, 2009
Sweden 329609 Feb. 6, 2009
Switzerland 329609 Feb. 6, 2009
USA 5137720 Aug. 11, 2009
Appendix E: Patent Rights by Case 4-17454
-----------------------------------------
Country Patent No. Patent Expiry
USA 4,994,440 Feb. 13, 2009
Note: Ciba-Geigy Corporation had a Research Collaboration Agreement with the
Roswell Park Memorial Institute which it has not been possible to track down,
and consequently although the above-mentioned patent is in the name of Ciba, it
may be that, in line with other Agreements between Ciba, the Roswell Park
Memorial Institute and Health Research, Inc. concluded at about the same time,
some royalty payment of the order of 1% to 5% (taking into account either
party's contribution to the development) would have to be made to Roswell Park
for exploitation of this patent for the indication of renal cell carcinoma, the
precise amount to be negotiated prior to commercialization.
EXHIBIT A
Part II
Patents relating to [*]
Appendix A: Patent rights by Case 4-18903
(based on Swiss priority patent application no. 3776/91-2, filed Dec. 19, 1991)
Country Patent No. Patent Expiry
- ------- ---------- -------------
[*] [*] [*]
New Zealand 245507 Dec. 17, 2012
Portugal 548024 Dec. 11, 2012
[*] [*] [*]
South Africa 9831/92 Dec. 18, 2012
[*] [*] [*]
USA 5342977 Dec. 17, 2012
EXHIBIT 10.6
LICENSE AGREEMENT
-----------------
THIS Agreement is effective as of this 15th day of June 1994 (the
"Effective Date"), between ELI LILLY AND COMPANY, an Indiana corporation having
its principal offices at Lilly Corporate Center, Indianapolis, Indiana 46285
(Lilly)
AND
JENNER TECHNOLOGIES, a California corporation having its principal
offices at 1895 Mountain View Drive, Tiburon, CA 94920 (Jenner).
RECITALS
--------
1. Jenner desires to obtain a co-exclusive license under Lilly owned
Patent Rights covering genes encoding the human KS1/4 antigen (KSA).
2. Jenner also desires to obtain a non-exclusive license to Lilly owned
Biological Materials useful in conducting research and development of products
based on KSA.
3. Lilly is willing to grant such a license to Jenner, under the terms
and conditions set forth below.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein, Lilly and Jenner agree as follows:
Article I
Definitions
-----------
1.1 General. When used in this Agreement, each of the following terms
shall have the meanings set out in this Article I.
1.2 "Affiliate" means any person or entity which, directly or
indirectly, owns or controls Jenner, or which is controlled by or under common
control with Jenner. For purposes of this definition "control" means the
ownership, directly or indirectly, of fifty percent (50%) or more of the
outstanding equity securities of a corporation entitled to vote in the election
of directors or a fifty percent (50%) or greater interest in the net assets or
profits of an entity which is not a corporation.
1.3 "Biological Material(s)" means [*].
1.4 "Co-exclusive" means restricted to Jenner and Lilly.
1.5 "Know-How" means any information or technical data that relates to
subject matter of the Patent Rights.
-1-
1.6 "Net Sales" means the amount received for sales of Products by
Jenner, or its licensees or affiliates, to an unrelated third party, less all
allowances for discounts, rebates, credits, retroactive price reductions,
returns, distribution expenses or allowances, and the value attributable to
other than normal delivery systems and any tax imposed on the production, sale,
delivery or use of the Product(s).
1.7 "Patent Rights" means the invention that forms the subject matter
of U.S. Patent Application Serial No. [*], including all divisions,
substitutions, continuations, continuations-in-part (CIP) applications thereof
(excluding any new matter in CIP applications filed after the Effective Date of
this Agreement), any and all U.S. patents, reissues, re-examinations, and
extensions issuing on any of the preceding, and any and all corresponding
foreign patent applications and patents of any of the preceding.
1.8 "Product(s)" means any formulation or composition that contains a
protein encoded or produced by, or produced using the DNA compounds, vectors, or
methods claimed under the Patent Rights.
1.9 "Valid Claim" means a claim of an unexpired issued patent within
the Patent Rights which has not been held invalid or unenforceable in an
unappealed or unappealable decision rendered by a court of competent
jurisdiction.
Article II
Rights and Obligations
----------------------
2.1 Grant. Lilly hereby grants to Jenner a worldwide license under the
Patent Rights and Biological Materials, with the right to grant and authorize
sublicenses, to make, have made, use and sell Products.
2.2 Exclusivity. Jenner's license under this Agreement shall be
co-exclusive with Lilly's rights with respect to the Patent Rights; provided,
however, Lilly shall not have the right to authorize or grant sublicenses to the
Patent Rights while Jenner shall have the right to authorize and grant
sublicenses to any and all rights herein granted to Jenner. Jenner's license
under this Agreement with respect to the Biological Materials shall be
non-exclusive.
2.3 Territory. Jenner's license under this Agreement shall apply
world-wide.
2.4 Transfer of Biological Material and Know-How. Lilly shall promptly
transfer the Biological Materials specified by Jenner upon execution of this
Agreement, or at such later time as may be agreed by the parties. Lilly shall,
at Jenner's request, provide Jenner with copies of all patent applications and
patents within the Patent Rights and information regarding the status of any
patent application and/or patent within the Patent Rights. Except as expressly
provided above, Lilly shall have no obligation to provide Jenner any Know-How.
This Agreement shall not obligate Lilly to transfer, provide or supply any
Biological Material or Know-How to any of Jenner's sublicensees or Affiliates.
-2-
2.5 Jenner's Diligence. Jenner agrees to use reasonable efforts,
consistent with its prudent business judgment, to develop, gain regulatory
approval, and market at least one Product. The efforts required in furtherance
of this Section 2.5 include an obligation to use reasonable efforts to seek
regulatory approval from the U.S. FDA to perform clinical trials with at least
one Product.
Article III
Payments
-----------
3.1 Royalties. Jenner agrees to pay Lilly a running royalty of [*] on
[*] by Jenner, its sublicensees and Affiliates of Product(s) covered by a Valid
Claim in the country which such Product is made or sold.
3.2 Royalty Term. Payments due under this Article 3 shall be payable on
a country-by- country basis until the expiration of the last to expire Valid
Claim covering the Products in such country.
3.3 One Royalty. No more than one royalty payment shall be due with
respect to a sale of a particular Product. No multiple royalties shall be
payable because any Product, or its manufacture, use or sale is covered by more
than one claim within the Patent Rights. No royalty shall be payable under this
Article 3 with respect to Products distributed for use in research and/or
development, in clinical trials or as promotional samples.
3.4 Sales to Affiliates and Sublicenses. No royalty shall be payable
under this Section 3 with respect to sales of Products among Jenner, its
Affiliates and/or sublicensees, unless such parties are the end users of such
Products. In the event any Product is sold to an Affiliate or sublicensee for
re-sale, the royalties to be paid hereunder for such Products shall be based
upon the Net Sales of such Products to a third party end-user.
3.5 [*]. In the event that [*] is sold [*] which is not covered by the
[*] from such sales for purposes of calculating the amounts due under Section
3.1 above shall be calculated [*]. In the event that no such [*] are made by [*]
for royalty determination shall be as reasonably allocated by [*] between such
[*], based upon their relative importance and proprietary protection.
3.6 Milestone Payments. Jenner agrees to pay Lilly [*] of the following
events:
[*]
3.7 Notice. Jenner shall promptly notify Lilly upon the [*] with
respect to the first Product and upon [*] of the first Product. Jenner's
obligation to pay milestone (i) [*] shall arise upon the [*].
3.8 Credits. [*] due upon [*] of the first Product shall be creditable
against royalties payable to Lilly on Net Sales by Jenner or its Affiliates or
sublicensees pursuant to Section 3.1 herein.
-3-
3.9 [*] Fee. Jenner agrees to pay Lilly [*] of receipt by Jenner of
notification by Lilly of the issuance of the [*].
3.10 Royalty Payments. Royalty payments shall be calculated as
specified in Section 3.1 once per calendar year and shall be paid within the
yearly quarter following such calculation.
3.11 Non-Refundable. All payments made under any Section of this
Agreement shall be non-refundable.
Article IV
Warranties, Product Liability and Indemnification
-------------------------------------------------
4.1 Lilly Warranties. Lilly warrants that (i) it has the right, and is
authorized, to grant Jenner the rights specified under Article II, (ii) it has
the right to enter into this Agreement, (iii) it is the sole owner of all right,
title and interest in the Patent Rights; (iv) it has not previously granted and
during the term of this Agreement will not grant, any right, license or interest
in the Patent Rights to any third party in conflict with the rights and license
granted to Jenner herein; and (v) there are no actions, suits, investigations,
claims or proceedings, pending or threatened, relating to the Patent Rights.
4.2 Patents. Nothing in this Agreement shall be construed as a warranty
or representation by Lilly as to the validity or scope of the Patent Rights, or
a warranty or representation by Lilly that anything made, used, or sold under
this Agreement is or will be free from infringement of patents of third parties,
or a warranty or representation that the Patent Rights or Product are useful or
safe for any purpose.
4.3 Jenner Liability. Jenner shall be responsible (liable) for all
claims, including the cost of defending against such claims, fines, penalties,
and product recalls arising out of the sale or use of any Product manufactured
by Jenner or its sublicensees and Affiliates. Jenner shall have Lilly designated
as a named insured in all insurance policies issued to Jenner covering the sale
or use of Product. Further, Jenner shall defend, indemnify and hold Lilly
harmless against all claims including, but not limited to, product liability and
related expenses for property damage or personal injury, including death, which
arise out of the manufacture, sale or use of Products manufactured by Jenner,
its sublicensees or Affiliates pursuant to this Agreement, regardless of whether
the claim is based in contract, strict liability, warranty or any other legal
theory. Jenner's obligations under this Section 4.3 shall only apply if Lilly
provides Jenner prompt notice of any claim subject to this Section 4.3 and
cooperates fully with Jenner, at Jenner's request, in connection with the
defense thereof. Jenner shall solely control the defense and settlement of any
such claim.
Article V
Patent Prosecution and Defense
------------------------------
5.1 Patents. Lilly shall diligently prosecute and maintain all patent
applications and patents within the Patent Rights and keep Jenner informed of
the status of such applications and patents. In
-4-
the event that Lilly fails to diligently prosecute or maintain any patent
application or patent within the Patent Rights, or determines that it will not
prosecute or maintain any such patent application or patent, Lilly shall
promptly notify Jenner, and Jenner shall have the right to prosecute such
applications or maintain such patent(s) at its own expense, using counsel of its
choice; provided, however, any amounts expended by Jenner in connection
therewith shall be fully creditable against any amounts due Lilly under Article
3 hereunder.
5.2 Infringement. Lilly shall not be obligated to enforce or defend any
patent within the Patent Rights unless specifically requested in writing by
Jenner, however, Lilly shall promptly notify Jenner of any legal actions that
could compromise the validity or enforceability of any patent with the Patent
Rights. The parties hereto shall give the other prompt notice of any incident of
infringement of Patent Rights coming to its attention. The parties shall
thereupon confer together as to what steps are to be taken to stop or prevent
such infringement. If Lilly commences such proceedings, Lilly shall be
responsible for any legal costs incurred and will be entitled to retain any
amounts recovered. In the event Lilly fails to commence proceedings to cease
such infringement or defend any declaratory judgment action filed with respect
to the Patent Rights within ninety (90) days of receiving notice thereof, Jenner
shall be entitled to do so in its own name in which event Jenner shall be
responsible for all legal costs incurred; provided, however, Jenner shall be
entitled to offset any costs and expenses (including professionals' fees)
incurred by it in connection with any such suit against any amounts it would
otherwise owe to Lilly up to a maximum of fifty percent (50%) of such amounts.
Lilly shall cooperate fully with Jenner in connection with any such legal
action, at Jenner's request and expense, including by joining as a
party-plaintiff. Any judgment, damages, settlement, or award which results from
any such action shall be used first to reimburse Jenner for its expenses
incurred in connection with the action and then to reimburse Lilly for any
royalty offsets taken by Jenner. Jenner shall have the right to retain any
remainder.
5.3 Interferences; Oppositions. In the event that the Lilly Patent
Rights become involved in any interference or opposition proceeding, the parties
shall give each other prompt notice thereof and thereupon confer together as to
what steps are to be taken to pursue or defend against such proceeding. Lilly
shall have the first right to participate in such proceedings, at its expense.
Should Lilly elect not to participate in such proceedings within ninety (90)
days of receiving notice thereof it shall inform Jenner and Jenner shall be
entitled to pursue or defend against such proceeding in its own name in which
event Jenner shall be responsible for all legal costs incurred; provided,
however, Jenner shall be entitled to offset any costs and expenses (including
professionals' fees) incurred by it in connection with any such proceeding
against any amounts it would otherwise owe to Lilly up to a maximum of fifty
percent (50%) of such amounts. Lilly shall cooperate fully with Jenner in
connection with any such proceeding, at Jenner's request and expense.
5.4 [*]. In the event that [*] enters into a [*] to [*] made by such
[*] may [*] made in accordance with such [*] against the [*] owed [*] pursuant
to Section [*] herein, [*].
-5-
Article VI
Term and Termination
--------------------
6.1 Term. This Agreement shall be effective as of the date first
written above, and unless earlier terminated pursuant to this Article 5 shall
continue in full force until the latest expiry of any patent within the Patent
Rights.
6.2 Termination for Breach. Either party may terminate this Agreement
on sixty (60) days written notice to the other if the other is in default or
breach of any material provision, provided, however, that if the party receiving
such notice cures or diligently commences to cure the breach or default within
such sixty (60) day period, this Agreement shall continue in full force and
effect. Failure to terminate this Agreement for any default or breach shall not
constitute a waiver by the aggrieved party of its right to terminate the
Agreement for any other default or breach.
6.3 Permissive Termination. Jenner shall have the right to terminate
this Agreement with respect to any country and/or any Patent Right with thirty
(30) days written notice to Lilly.
6.4 Surviving Rights. Termination of this Agreement shall not deprive
Lilly of its right to collect payments due or interest owed prior to
termination. Articles 7 and 8 shall survive expiration or termination of this
Agreement for any reason.
Article VII
Confidentiality
---------------
7.1 Confidential Information. Each party shall treat as confidential
all information received from the other which is marked "CONFIDENTIAL" and each
shall exercise reasonable care to maintain the confidentiality of all such
information, and shall employ it solely to accomplish the purpose of this
Agreement.
The obligations of confidentiality and non-use imposed under this
Agreement shall not extend to any information that:
(a) was known to the receiving party or the public prior
to its disclosure under this Agreement;
(b) becomes known to the recovering party or the public
other than by breach of this Agreement;
(c) is disclosed to the receiving party by a third party
having a lawful right to make such disclosure;
(d) is independently developed by the receiving party
without use of the disclosure; or
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(e) is required to be disclosed in order to perform the
Agreement.
The restrictions imposed under this Agreement shall not apply to the
disclosure of any information necessary to obtain patents on inventions of the
parties relating to the subject matter of this Agreement, or to comply with U.S.
or foreign laws or regulations, including laws or regulations relating to
approvals or registrations required for the manufacture or sale of Products.
7.2 Survival. Section 7.1 shall remain in effect for three (3) years
following any termination of this Agreement.
Article VIII
Miscellaneous
-------------
8.1 Governing Law. This Agreement shall be construed and the rights of
the parties determined in accordance with the laws of the State of Indiana
excluding any choice of law provisions which would direct the application of the
laws of any other jurisdiction.
8.2 No Agency. Nothing in this Agreement shall be construed or
interpreted as creating an agency or partnership relationship between Jenner and
Lilly.
8.3 Captions. Captions of Articles and Sections of this Agreement are
for convenience only, and the construction of this Agreement shall not be
affected by reference to such captions.
8.4 Severability of Provisions. If any term or provision of this
Agreement or the application thereof to any person or circumstance shall to any
extent be invalid or unenforceable, the remainder of this Agreement or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable shall not be affected, and
each term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
8.5 Complete Contract. This Agreement contains the entire understanding
between the parties relating to the subject matter hereof and supersedes all
written and oral prior agreements and understandings with respect hereto.
Execution of this agreement shall terminate the Option Agreement made on March
31, 1994, between Jenner and Lilly.
8.6 Amendment. This Agreement may not be amended, supplemented or
otherwise modified except by an instrument in writing signed by both parties.
8.7 Assignment. Without the prior written approval of the other party,
this Agreement may not be assigned by either party except Jenner may assign this
Agreement without Lilly's prior consent to an Affiliate or a party acquiring
substantially all of the business to which this Agreement relates, whether by
sale, merger, operation of law or otherwise.
8.8 No Use of Name. Except as provided below, neither party shall
release any information to any third party regarding the existence or terms of
this Agreement without the prior
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written consent of the other. This prohibition applies to press releases,
educational and scientific conferences, promotional materials and governmental
filings. Notwithstanding the above, either party may disclose the existence
and/or terms of this Agreement in discussions with lenders, investment bankers,
and other sources of financing and in connection with its development of
corporate partnerships. Notwithstanding the above, if Jenner is required by law,
court order or governmental regulation to release information to any third party
regarding the terms of this Agreement, it shall notify Lilly of this fact prior
to releasing the information. Lilly shall have the right to confer with Jenner
regarding the necessity for the disclosure and the text of the information
proposed for release. Any information that is released regarding the terms of
this Agreement shall contain only that information required by law. Jenner shall
be free to distribute promotional literature concerning any Product but shall
not use the name of Lilly without Lilly's prior approval or as required by law.
8.9 Force Majeure. Each party shall be relieved of its obligations
under this Agreement to the extent that fulfillment of such obligations shall be
prevented by events or circumstances beyond the reasonable control of the party
affected.
8.10 Consents Not Unreasonably Withheld. Whenever provision is made in
this Agreement for either party to secure the consent or approval of the other,
such consent or approval shall not unreasonably be withheld, and whenever in
this Agreement provisions made for one party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.
8.11 No Strict Construction. This Agreement has been prepared jointly
and shall not be strictly construed against either party.
8.12 Notice. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been sufficiently
given for all purposes hereof if mailed by first class certified or registered
mail, postage prepaid, addressed to the party to be notified at its address
shown below or such other address as may have been furnished in writing to the
notifying party.
To Lilly: Eli Lilly and Company
Attention: Patent Division; Drop 1117
Lilly Corporate Center
Indianapolis, Indiana 46285
To Jenner: Jenner Technologies
1895 Mountain View Drive
Tiburon, California 94920
Attn: Anthony E. Maida, III
8.13 Improvements or Development. Lilly shall have no obligation to
perform any development work or make any improvements concerning a Product. Any
development performed or
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improvements made by Jenner concerning a Product shall be made at Jenner's
expense, and owned by Jenner and Lilly shall have no rights, obligations, or
liabilities concerning such developments or improvements.
8.14 Arbitration; Venue. Lilly and the Company agree that any dispute
or controversy arising out of, in relation to, or in connection with this
Agreement, or the validity, enforceability, construction, performance or breach
thereof, which cannot be resolved by the parties may be submitted to non-binding
arbitration in San Francisco, California, under the then-current Licensing
Agreement Rules of the American Arbitration Association with one (1) arbitrator
appointed in accordance with such Rules. Lilly and the Company agree that any
claim or suit arising out of, in relation to, or in connection with this
Agreement, or the validity, enforceability, construction, performance or breach
thereof, shall be brought in the state or federal courts for Marin County,
California, if initiated by Lilly, and in the state or federal courts for Marion
County, Indiana if brought by Jenner. The parties hereby consent to the personal
jurisdiction of and exclusive venue in such courts.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have hereunto affixed their signatures
as of the day and year first written above.
JENNER TECHNOLOGIES ELI LILLY AND COMPANY
By: /s/ ANTHONY E. MAIDA, III By: /s/ AUGUST M. WATANABE
-------------------------------- ------------------------------
Anthony E. Maida, III August M. Watanabe, M.D.
Chief Executive Officer Vice President
Date: June 15, 1994 Date: June 13, 1994
------------------------------ ---------------------------
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EXHIBIT 10.7
LICENSE AGREEMENT
Effective June 1, 1994 ("EFFECTIVE DATE"), RESEARCH CORPORATION
TECHNOLOGIES, INC., a Delaware corporation at 101 North Wilmot, Suite 600,
Tucson, Arizona 85711-3335 ("RCT"), and JENNER TECHNOLOGIES, a California
corporation at 1895 Mountain View Drive, Tiburon, California 94920 ("JENNER")
agree as follows:
ARTICLE I
LICENSE and OPTION
SECTION 1.1 Grant of License. RCT hereby grants to JENNER a license
under the LICENSED PATENTS to do the following in the LICENSED TERRITORIES in
the LICENSED FIELD: to develop, make, have made, promote and SELL LICENSED
PRODUCTS; and to use LICENSED PRODUCTS for research and development purposes,
specifically including the performance of clinical trials, and for quality
control and promotional purposes. Except as set forth in the preceding sentence,
JENNER shall have no license to use LICENSED PRODUCTS. Further, JENNER shall
have no license to practice any process claimed in the LICENSED PATENTS. No
other license or right is granted or implied by this SECTION.
SECTION 1.2 Term of License. The license granted in this ARTICLE shall
expire on the EXPIRATION DATE, unless it is sooner terminated as provided in
ARTICLE V ("Termination").
SECTION 1.3 Extensions to AFFILIATES.
Subsection 1.3.1 Grant of Right. RCT hereby grants to JENNER,
on the terms and conditions of this Agreement, the right to extend to AFFILIATES
of JENNER the license granted under SECTION 1.1. JENNER shall notify RCT in
writing before any extension to an AFFILIATE is made. In the event this
Agreement is terminated for any reason, all extension to JENNER's AFFILIATES
pursuant to this SECTION shall simultaneously be terminated.
Subsection 1.3.2 JENNER Responsible for Performance. JENNER
agrees to be responsible for the performance under this Agreement by the
AFFILIATES to which such license is extended. For purposes of assessing,
reporting and paying earned royalties the manufacture or SALE of LICENSED
PRODUCTS by JENNER'S AFFILIATES shall be considered the manufacture or SALE of
such LICENSED PRODUCTS by JENNER.
Subsection 1.3.3 Reports and Payments. Each AFFILIATE may make
the pertinent reports and royalty payments specified in ARTICLE III ("Fees and
Royalties") directly to RCT on behalf of JENNER, provided JENNER notifies RCT in
writing in advance. Otherwise such reports and payments shall be made by JENNER.
In any event, the SALE of LICENSED PRODUCTS by JENNER'S AFFILIATES shall be
separately shown in JENNER'S reports to RCT.
SECTION 1.4 OPTION FOR A LICENSE IN JAPAN.
Subsection 1.4.1 Grant of Option. RCT hereby grants to JENNER
an option to add the Japanese patent applications listed in EXHIBIT A-2 and
patents issuing therefrom to the definition of LICENSED PATENTS under this
License Agreement, and to add Japan to the definition of LICENSED TERRITORIES
under this Agreement.
Subsection 1.4.2 Exercise of Option. Within thirty (30) days
after RCT's receipt of written notice that the Japanese Patent Office will issue
claims in either or both of the applications of EXHIBIT A-2, RCT shall notify
JENNER of such notice of issuance. Within thirty (30) days after JENNER's
receipt of such notice from RCT, JENNER may exercise its option by giving RCT
written notice of its election to exercise. Unless JENNER exercises its option
as permitted under this Subsection, the option shall expire and have no further
effect as of the date of expiration of such thirty (30) day period.
Subsection 1.4.3 Effect of Exercise. Upon RCT's receipt of
JENNER's written notice of its election to exercise, the applications listed in
EXHIBIT A-2 and any and all issued patents, reissue, reexamination, renewal or
extension patents that may be based on such applications shall be immediately
included in the definition of LICENSED PATENTS under this License Agreement.
Similarly, upon RCT's receipt of JENNER's written notice, Japan shall be
immediately added to the definition of LICENSED TERRITORIES under this License
Agreement. JENNER's obligations under this Agreement with respect to such
Japanese applications and patents (specifically including the obligation to pay
royalties for LICENSED PRODUCTS made, or SOLD in Japan) shall begin on the date
of such inclusion in this License Agreement.
SECTION 1.5 SUBLICENSE.
Subsection 1.5.1 Right to Grant SUBLICENSES. RCT hereby grants
to JENNER the right to grant to each of three third parties, upon reasonable
terms and conditions, a nonassignable, royalty-bearing SUBLICENSE under the
LICENSED PATENTS in the LICENSED TERRITORIES in the LICENSED FIELD commensurate
in scope with the rights granted in SECTION 1.1. In addition to such three
SUBLICENSES, JENNER may grant one or more additional SUBLICENSES under the
LICENSED PATENTS in the LICENSED TERRITORIES in the LICENSED FIELD, with RCT's
prior written consent.
Subsection 1.5.2 SUBLICENSE Fees. JENNER shall pay to RCT [*]
of any license issue fee and [*] of each maintenance fee received from the
SUBLICENSEE for such SUBLICENSE, excluding any amounts that JENNER represents
and warrants it has received for research and/or development or equity
investment in JENNER. Each such amount shall be payable no later than sixty (60)
days after receipt by JENNER of such fee from the SUBLICENSEE.
Subsection 1.5.3 SUBLICENSE Requirements. The SUBLICENSE
agreement shall be in writing and shall contain provisions similar in all
material respects to those of [*] of this Agreement. Further, the SUBLICENSE
agreement must comply with all applicable laws and
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governmental regulations. In particular, JENNER shall not have the right or
power to grant a SUBLICENSE under any circumstance amounting to a misuse of any
LICENSED PATENT.
Subsection 1.5.4 JENNER's Obligations Continue. The grant of a
SUBLICENSE under Subsection 1.5.1, shall not relieve JENNER of any of its
obligations under this Agreement; in particular, JENNER shall continue to be
obligated, under SECTION 3.2, to pay an earned royalty to RCT for each LICENSED
PRODUCT SOLD, whether such SALE is by JENNER or by the SUBLICENSEE.
Subsection 1.5.5 Notification Requirement. JENNER shall
promptly notify RCT in writing of the issuance of such SUBLICENSE. On or before
the date thirty (30) days after the execution of such SUBLICENSE, JENNER shall
provide RCT with a true copy of the SUBLICENSE and an English language
translation if it is in another language.
SECTION 1.6 No Further Rights. Except as provided in this ARTICLE, no
other license or rights is granted or implied under this Agreement.
ARTICLE II
NON-EXCLUSIVITY
The license granted in ARTICLE I shall be non-exclusive and RCT, in its
sole discretion, may grant concurrently effective nonexclusive licenses under
the LICENSED PATENTS in the LICENSED TERRITORIES in the LICENSED FIELD to third
parties for commercial purposes, and to INSTITUTION for educational and research
purposes.
ARTICLE III
FEES AND ROYALTIES
SECTION 3.1 License Issue Fee. JENNER shall pay to RCT a license issue
fee of [*], payable as follows: [*] No portion of the license issue fee shall be
refundable, nor may it be used as a credit against any other amount payable by
JENNER under this Agreement. If this Agreement is terminated for any reason
under ARTICLE V before JENNER has made full payment of the license issue fee
[*], JENNER shall have no obligation to pay the remaining unpaid amount.
SECTION 3.2 Earned Royalties.
Subsection 3.2.1 Payability. JENNER shall pay to RCT an earned
royalty for:
(a) all LICENSED PRODUCTS SOLD by or for JENNER and
its AFFILIATES and SUBLICENSEES during the term of this Agreement; and
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(b) all LICENSED PRODUCTS made before expiration or
termination of this Agreement but SOLD by or for JENNER and its AFFILIATES and
SUBLICENSEES after expiration or termination of this Agreement.
Subsection 3.2.2 One Royalty. JENNER's obligation to pay an
earned royalty to RCT shall arise upon the first to occur of the making or
SELLING of a LICENSED PRODUCT in a place that, but for this License Agreement,
would infringe a LICENSED PATENT. Notwithstanding the foregoing, JENNER shall
have no obligation to pay an earned royalty for any LICENSED PRODUCT unless and
until such LICENSED PRODUCT is SOLD. The amount of such royalty shall be
calculated based on the NET SALES VALUE of the SALE of such LICENSED PRODUCT.
None of JENNER, its AFFILIATES and SUBLICENSEES (if any) shall be obligated to
pay a royalty for the use of LICENSED PRODUCTS for research, development,
clinical trials, quality control or promotional purposes. Only one earned
royalty shall be payable with respect to any LICENSED PRODUCT, regardless of how
many claims or patents within the LICENSED PATENTS cover such LICENSED PRODUCT.
If a LICENSED PRODUCT is made in the U.S. or Canada, and is SOLD outside the
U.S. or Canada, JENNER's obligation to pay royalties shall arise when such
LICENSED PRODUCT is made, but the royalties shall not be payable until such time
as the LICENSED PRODUCT is SOLD; furthermore, if the SALE of such LICENSED
PRODUCT does not infringe a LICENSED PATENT in such country, JENNER shall still
be obligated to pay RCT a royalty for the making of LICENSED PATENTS in the U.S.
or Canada, and the amount of such royalty shall be calculated based on revenue
generated by the SALE in such country outside the U.S. or Canada.
Subsection 3.2.3 Royalty Amount. The amount of earned
royalties JENNER shall pay to RCT shall be [*].
Subsection 3.2.4 More Favorable Royalty Rates.
(a) Generally. If, under substantially identical
provisions and conditions, RCT grants a license under the LICENSED PATENTS to
any third party (other than to JENNER's AFFILIATE) SELLING products covered by
the LICENSED PATENTS in a given country(ies) covered by the LICENSED PATENTS at
an earned royalty rate that is lower than that provided in Subsection 3.2.3 of
this Agreement, then RCT shall promptly notify JENNER as provided in Subsection
3.2.4(b) below and, upon JENNER's timely request, modify the terms of this
Agreement by changing the earned royalty rate in Subsection 3.2.3 as it applies
to such country(ies) only, to such lower earned royalty rate. [*].
(b) [*]. If RCT grants to one or more third parties a
license under the LICENSED PATENTS having a lower earned royalty rate, RCT shall
notify JENNER in writing of any such license and a brief description of the
terms of such third party license, [*].
(c) Limitations. This Subsection shall not entitle
JENNER to any refund for amounts previously paid to RCT. Further, JENNER shall
not be entitled to a lower earned royalty rate if the third-party licensee has
obtained such lower earned royalty rate in return for substantial and unique
consideration that JENNER is unable or unwilling to provide to RCT. The
provisions of this Subsection
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shall not be called into operation because of the existence or operation of any
license granted or to be granted to or on behalf of any government or any
increase in the royalty rate because of taxes imposed by any government.
Subsection 3.2.5 No Royalty Charged under U.S. Government
License. Notwithstanding Subsection 3.2.1, earned royalties shall not be payable
on any LICENSED PRODUCT made or SOLD under any license under the LICENSED
PATENTS granted to or on behalf of the U.S. Government as further described in
ARTICLE VIII of this Agreement.
Subsection 3.2.6 Withholding of Taxes. If the taxing authority
of any government of any country covered by the LICENSED PATENTS imposes a tax
on the royalties to be paid under this Agreement or requires JENNER to withhold
amounts from royalties payable to RCT to ensure payment of such taxes, JENNER
shall cooperate with RCT in RCT's efforts to obtain exemption from payment of
such taxes or a refund of taxes withheld.
SECTION 3.3 Annual Minimum Royalties.
Subsection 3.3.1 Amount and Payment Date. JENNER shall pay to
RCT a prepaid, annual minimum royalty of [*].
Subsection 3.3.2 [*] until expiration or termination of this
Agreement.
Subsection 3.3.3 Credits. JENNER shall be entitled to credit
the annual minimum royalty payment paid against the amount of the earned
royalties payable in the same calendar year for manufacture or SALES of LICENSED
PRODUCTS. No amount of earned royalties paid for any calendar year shall be
creditable against any annual minimum royalty payment due in any other calendar
year.
SECTION 3.4 Books and Records. JENNER shall keep full, true and
accurate books of account containing all particulars and reasonable supporting
documentation that may be necessary for the purpose of determining the NET SALES
VALUE of all LICENSED PRODUCTS SOLD. The books of account and reasonable
supporting documentation shall be kept at JENNER's principal place of business
and shall be open at all reasonable times, for three (3) years following the end
of the calendar year to which they pertain (and access shall not be denied
thereafter if reasonably available), to the inspection of an independent
certified public accountant retained by RCT for the purpose of verifying
JENNER's royalty statements; however, RCT shall not be entitled to more than one
(1) such inspection each calendar year. RCT agrees to keep in confidence all
information it learns about JENNER's business pursuant to this SECTION and
SECTION 3.6. If any such inspection discloses an underpayment of royalties [*]
of the amount of royalties actually due for any quarterly period, then JENNER
shall promptly pay the reasonable cost of such inspection after JENNER's receipt
of the bill/invoice for such inspection. RCT shall instruct its certified public
accountant to disclose to RCT only if such inspection discloses an underpayment
of royalties [*], and if so, the amount thereof.
-5-
SECTION 3.5 Periodic Reports. Beginning with the first SALE of LICENSED
PRODUCTS under this Agreement, and continuing throughout the term of this
Agreement, on or before February 1, May 1, August 1, and November 1 of each
year, JENNER shall deliver to RCT a true and accurate written report, showing
the following as they apply to the preceding calendar quarter just ended:
(a) the quantities of LICENSED PRODUCTS invoiced by
JENNER, its AFFILIATES and SUBLICENSEES on a country-by-country basis;
(b) the U.S. dollar value of the invoiced amount on
such quantities in (a);
(c) the computation of the NET SALES VALUE based on
the dollar value of the invoiced amount on in (b); and
(d) the computation of royalties based on the NET
SALES VALUE computed under (c).
JENNER's payment of the royalties due for the calendar quarter covered by the
written report shall accompany the report. If no royalties are due, it shall be
so reported. Royalties shall be paid to RCT in U.S. currency at RCT's address
specified in SECTION 7.2. The correctness and completeness of each such report
shall be certified in writing by a responsible financial officer (or his or her
designee) of JENNER, by the independent public accounting firm acting as
JENNER's auditor, or by the chair or other head of JENNER's internal audit
committee. Within thirty (30) days after expiration or termination of this
Agreement, JENNER shall provide to RCT a written report that complies in all
respects with this SECTION.
SECTION 3.6 Foreign Sales.
Subsection 3.6.1 Exchange Rate. If JENNER, its AFFILIATE(S) or
SUBLICENSEE(S) SELL any LICENSED PRODUCTS for currency other than U.S. currency,
the earned royalty payable as to such LICENSED PRODUCT shall first be determined
in such currency for which the LICENSED PRODUCT was SOLD and then converted into
its equivalent in U.S. currency as follows:
(a) at the selling rate, for such currency, for the
last business day of the accounting period for which payment is made, published
by the Wall Street Journal; or
(b) if such rate is not so published, at the selling
rate for such currency for the last business day of the accounting period for
which payment is made, as published by a leading New York, New York bank chosen
by JENNER and reasonably acceptable to RCT.
If JENNER is late in making any payment under this Agreement, the applicable
exchange rate obtained from the sources described above shall be the greater of
such rate on the date payment was actually made or the rate on the date on which
payment is due.
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SECTION 3.7 Late Payment.
Subsection 3.7.1 Late Payment Fee. JENNER hereby acknowledges
that late payment by JENNER to RCT of sums due under this Agreement will cause
RCT to incur certain costs, including costs for legal, accounting and other
professional services to manage and administer this Agreement, the exact amount
of which will be extremely difficult to ascertain. Accordingly, if JENNER fails
to make any payment required under this Agreement on or before the date thirty
(30) days after JENNER's receipt of RCT's written notice of such failure, in
addition to any other remedy available under this Agreement and any remedy
available at law or equity, JENNER shall pay to RCT a late payment fee equal to
the lesser of [*] (in addition to any interest charges required or permitted
below). The parties hereby agree that such late charge represents a fair,
reasonable and administratively simple estimate, at the time of execution of
this Agreement, of the costs RCT will incur by reason of JENNER's late payment.
Subsection 3.7.2 Interest. If JENNER fails to make any payment
required under this Agreement on or before the date ten (10) days after JENNER's
receipt of RCT's written notice of such failure, JENNER shall pay interest on
such amount at an annual rate of [*] which shall accrue from the date the
payment not timely made became due until the date such payment is paid in full;
provided, however, that if such [*] rate exceeds the rate allowed by applicable
law, then the highest rate allowed by law shall apply.
Subsection 3.7.3 No Waiver. RCT's acceptance of late charges
or interest shall in no event constitute a waiver of JENNER's default with
respect to such overdue amount, nor prevent RCT from exercising any of the other
rights and remedies granted under this Agreement. Any payments received shall be
applied first to any late charges, second to the satisfaction of any unpaid,
accrued interest and finally to the satisfaction of any unpaid principal.
ARTICLE IV
OBLIGATIONS OF JENNER; DILIGENCE
SECTION 4.1 JENNER's Development. JENNER shall exercise diligence
consistent with its reasonable business judgment in developing, testing,
manufacturing and marketing LICENSED PRODUCTS under this License Agreement.
SECTION 4.2 Activities Limited to LICENSED FIELD and SALES of LICENSED
PRODUCTS. JENNER covenants that all of its activities under the LICENSED PATENTS
shall be limited to the LICENSED FIELD. JENNER promises and covenants that it
shall not SELL LICENSED PRODUCTS outside the LICENSED FIELD. JENNER promises and
covenants that it shall not use LICENSED PRODUCTS or LICENSED PROCESSES to
provide services on a fee-for-service basis.
ARTICLE V
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EXPIRATION AND TERMINATION
SECTION 5.1 Expiration on EXPIRATION DATE This Agreement shall expire
on the EXPIRATION DATE unless sooner terminated, as provided below.
SECTION 5.2 JENNER's Election. JENNER may terminate this Agreement at
any time by giving the RCT three (3) months' written notice of JENNER's election
to terminate this Agreement.
SECTION 5.3 JENNER's Default.
Subsection 5.3.1 Monetary Default. Upon any material monetary
default under this Agreement by JENNER (i.e., failure to timely pay amounts to
RCT required to be paid under this Agreement), RCT, in addition to any other
remedy available at law or equity, may elect to terminate this Agreement by
giving JENNER thirty (30) days' written notice of RCT's election to terminate
this Agreement. This Agreement shall terminate on the expiration of such thirty
(30) day period unless JENNER has cured such default on or before such date.
Subsection 5.3.2 Non-Monetary Default. Upon any material
non-monetary default under this Agreement by JENNER (i.e., one not involving the
payment to RCT of any amounts required to be paid under this Agreement), RCT
may, in addition to any other remedy available at law or equity, elect to
terminate this Agreement by giving JENNER thirty (30) days' written notice of
RCT's election to terminate this Agreement. This Agreement shall terminate upon
the expiration of such thirty (30) day period, unless JENNER has cured such
default on or before such date.
Subsection 5.3.3 Immediate Default. The following shall be
defaults under this Agreement that JENNER may not cure: any voluntary or
involuntary dissolution, bankruptcy, insolvency of JENNER or assignment of
JENNER's assets for the benefit of creditors (collectively, a "Financial
Default") and a lawsuit or reexamination or protest proceeding (or the
equivalent) filed by JENNER against RCT seeking a declaratory judgment or
determination, as the case may be, that any of the PATENT CLAIMS are invalid,
unenforceable, or otherwise not patentable ("Procedural Default"). Financial
Defaults and Procedural Defaults shall constitute immediate defaults under this
Agreement and, upon the occurrence of either a Financial Default or Procedural
Default, this Agreement shall immediately terminate. On or before the date
thirty (30) days before the occurrence of a Financial Default or the filing of a
bankruptcy petition concerning JENNER, JENNER shall notify RCT in writing of
JENNER'S intention to file the petition or of another's intention to file an
involuntary petition in bankruptcy, if JENNER knows or should know of such other
party's intention to file, or the impending Financial Default. Failure to
provide such written notice shall be deemed to be an immediate, pre-petition,
incurable default under this Agreement.
SECTION 5.4 Surviving Obligation to Pay Royalties. JENNER's obligations
to pay royalties under Subsection 3.2.1(b) shall survive expiration or
termination of this Agreement.
SECTION 5.5 Surviving Provisions. In addition to any provision of this
Agreement that expressly provides for acts or obligations to continue beyond the
expiration or termination of this
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Agreement, the provisions of SECTIONS 3.5 ("Books and Records"), the final
sentence of SECTION 3.6 ("Periodic Reports"), 3.8 ("Late Payment") and ARTICLE
VII ("General") shall survive expiration or termination of this Agreement.
ARTICLE VI
INFRINGEMENT
SECTION 6.1 RCT'S Right to Prosecute. RCT shall protect the LICENSED
PATENTS from infringement and prosecute infringers when in its sole judgment
such action may be necessary, proper and justified.
SECTION 6.2 Obligation to Cooperate. If RCT initiates or carries on
legal proceedings to enforce the LICENSED PATENTS against an alleged infringer,
JENNER shall cooperate with RCT, at no out-of-pocket expense to JENNER.
ARTICLE VII
GENERAL
SECTION 7.1 Integration. This Agreement and any Exhibits, and Riders
attached to this Agreement constitute the entire agreement between the parties
as to the subject matter of this Agreement and all prior negotiations,
representations, warranties, and promises are superseded and merged into, and
completely expressed by it. No party shall be bound by or charged with any
written or oral agreements, representations, warranties, or promises not
specifically set forth in this Agreement.
SECTION 7.2 Addresses and Notices. All notices, requests and other
communications provided in this Agreement shall be in writing and shall be
deemed to have been given: (a) when delivered, if delivered by hand, or sent by
facsimile, telegram or telecopier; (b) on the date following deposit with an
overnight courier, if sent via overnight courier; or (c) on the date five (5)
days following deposit with the U.S. mail, certified or registered:
If to RCT: If to JENNER
---------- ------------
President Anthony E. Maida
Research Corporation Technologies, Inc. Chief Executive Officer
101 North Wilmot Jenner Technologies
Suite 600 1895 Mountain View Drive
Tucson, Arizona 85711-3335 Tiburon, California 94920
TEL: (602) 748-4400 TEL: (510) 736-1863
FAX: (602) 748-0025 FAX: (510) 736-5910
-9-
Such addresses may be altered by notice. If no time limit is specified for a
notice required or permitted to be given by this Agreement, the time limit
therefor shall be three (3) full business days, not including the day of
mailing.
SECTION 7.3 Applicable Law; Venue. This Agreement is subject to and
shall be construed in accordance with the law of the State of Arizona, U.S.A.,
without regard to the law of Arizona regarding the conflicts of laws, except as
to any issue that depends upon the validity, scope or enforceability of any
LICENSED PATENTS, which issue shall be determined in accordance with the
applicable patent laws of the country of such patent. Except with respect to any
issue that involves the patent laws of the country of a patent, the parties
agree that any action, suit or proceeding brought under this Agreement or any of
the transactions contemplated in this Agreement shall be brought in the U.S.
District Court for the District of Arizona or any court in Pima County, Arizona
of competent jurisdiction in the case where JENNER brings such action, and in
the U.S. District Court for the Northern District of California or any court in
Marin County, California of competent jurisdiction in the case where RCT brings
such action. Each party further agrees that service of process of notice in any
such action, suit or proceeding shall be effective if in writing and sent in a
manner provided in SECTION 7.2.
SECTION 7.4 Non-Use Of Names. JENNER shall not use the name of
INVENTORS, INSTITUTION, RCT or any adaption of any of them, in any advertising,
promotional or sales literature, without prior written consent obtained from the
INVENTORS, INSTITUTION or RCT, as applicable.
SECTION 7.5 Assignment. This Agreement shall not be assigned by JENNER
except upon the merger, acquisition or sale of substantially all of JENNER's
business assets pertaining to this License Agreement, upon prior written notice
to RCT, and upon JENNER's assignee's agreement to abide by the terms of this
Agreement and assume all of JENNER's obligations under this Agreement. Upon such
assignment, the term "JENNER" as used in this Agreement shall thereafter mean
the assignee of JENNER.
SECTION 7.6 Arbitration.
Subsection 7.6.1 Dispute Resolution. The parties shall make
all reasonable efforts to resolve any dispute or controversy arising out of or
relating to this Agreement, its construction or its actual or alleged breach, by
face-to-face negotiations between senior executives. Should such negotiations
fail to resolve the matter, the matter shall be finally decided by binding
arbitration by one arbitrator in accordance with the Licensing Agreement Rules
then in effect of the American Arbitration Association, and judgment upon the
award rendered may be entered in the highest court of the forum, state or
federal, having jurisdiction. Any arbitration instituted by JENNER shall be
conducted in the Tucson, Arizona metropolitan area, and any arbitration
instituted by RCT shall be conducted in the San Francisco, California
metropolitan area. The costs of the arbitration shall be shared equally by RCT
and JENNER, except that each party shall pay its own attorneys' fees.
Subsection 7.6.2 Exceptions. The provisions of Subsection
7.6.1 relating to arbitration shall not apply to any issue of the patentability,
enforceability or infringement of any LICENSED PATENT or to any dispute or
controversy as to which any applicable law or treaty prohibits
-10-
such arbitration. If, in any arbitration proceeding, any issue shall arise
concerning validity, scope, enforceability or infringement of any LICENSED
PATENT, the arbitration shall assume the LICENSED PATENTS to be valid,
enforceable and infringed (but for this Agreement). In any event, the
arbitrators shall not delay the arbitration proceeding for the purpose of
obtaining or permitting either party to obtain judicial resolution of such
issue, unless an order staying such arbitration proceeding shall be entered by a
court of competent jurisdiction. Neither party shall raise any issue concerning
the validity, construction, enforceability or effect of any LICENSED PATENT in
any proceeding to enforce an arbitration award hereunder or in any proceeding
otherwise arising out of such arbitration award.
Subsection 7.6.3 No Waiver. Notwithstanding the foregoing,
nothing in Subsections 7.6.1 or 7.6.2 shall be construed to waive any rights or
timely performance of any obligations existing under this Agreement.
SECTION 7.7 Compliance with Law. Nothing in this Agreement shall be
construed so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision of this Agreement and any
statute, law, ordinance or treaty concerning the legal right of the parties to
contract, the latter shall prevail, but in such event the affected provisions of
this Agreement shall be curtailed and limited only to the extent necessary to
bring it within the applicable legal requirements.
SECTION 7.8 Severability. If any provision of this Agreement is held to
be or becomes invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
SECTION 7.9 Representations, Warranties, and Covenants.
Subsection 7.9.1 By RCT. RCT represents and warrants that: (i)
RCT has the full right and authority to grant rights, license and interest
granted herein and perform its obligations hereunder; (ii) RCT owns all right,
title and interest in the LICENSED PATENTS; (iii) RCT has not previously, and
will not grant during the term of this Agreement, any right, license or interest
in and to the LICENSED PATENTS, or any portion thereof, on an exclusive basis;
(iv) the LICENSED PATENTS are free and clear of all liens, encumbrances,
security interests and restrictions; and (v) to the best of RCT's knowledge,
there are no actions, suits, claims or proceedings pending or threatened in any
way relating to the LICENSED PATENTS.
Subsection 7.9.2 By JENNER. JENNER represents and warrants
that it has the full right and authority to enter into this License Agreement
and to perform its obligations hereunder.
Subsection 7.9.3 Limitations. Notwithstanding anything to the
contrary in this Agreement, nothing contained in this Agreement shall be
construed as a representation or warranty: (a) as to the scope or validity of
LICENSED PATENT; or (b) that any performance, practice under any LICENSED PATENT
is not an infringement of any patent of others.
-11-
SECTION 7.10 Independent Contractor. In its performance under this
Agreement, each party shall be an independent contractor and neither party (nor
any employee or agent thereof) shall be an agent or partner of the other party.
SECTION 7.11 Headings. The headings of the various ARTICLES, SECTIONS
and Subsections of this Agreement are used solely for the convenience of the
parties, do not form a part of this Agreement and are not intended to affect the
interpretation or meaning of this Agreement or to define, limit, extend or
describe its scope or intent.
SECTION 7.12 No Third-Party Beneficiaries. Except for SECTIONS 7.4
("Non-Use of Names") and 7.16 ("Indemnity"), which shall also be for the benefit
of, and enforceable by, INSTITUTION and INVENTOR, none of the provisions of this
Agreement shall be for the benefit of, or enforceable by, any third-party.
SECTION 7.13 Waiver. No consent or waiver, express or implied, by a
party of any breach or default by any other party in the performance by such
other party of its obligations hereunder shall be construed to be a consent to
or waiver or any other breach or default in the performance of such other party
of the same or any other obligations hereunder. Failure on the part of a party
to complain of any act or failure to act by the other party, to declare the
other party in default, irrespective of how long such failure continues, to
insist upon the strict performance of any covenant, duty, agreement or condition
of this Agreement or to exercise any right or remedy consequent upon a breach
thereof shall not constitute a waiver by such party of its rights hereunder, of
any such breach, or of any other commitment, duty, agreement or condition. The
giving of consent by a party in any one instance shall not limit or waive the
necessity to obtain such party's consent in any future instance and in any event
no consent or waiver shall be effective for any purpose hereunder unless such
consent or waiver is in writing and signed by the party sought to be charged.
SECTION 7.14 Computation of Time. In computing any period of time
pursuant to this Agreement, the day or date of the act, notice, event or default
from which the designated period of time begins to run will not be included. The
last day of the period so computed will be included, unless it is a Saturday,
Sunday or a federal holiday, in which event the period runs until the end of the
next day that is not a Saturday, Sunday or federal holiday. Only business days
shall be counted in any computation of time.
SECTION 7.15 Disclaimer. It shall be the full and sole responsibility
of JENNER to use appropriate care in the practice, manufacture and use of any
product pursuant to any license or immunity granted under this Agreement. RCT
shall have no right to control the manner in which any LICENSED PRODUCT is made
or practiced. RCT shall not be required to provide any know-how or operating
instructions or other information with respect to any such product and RCT makes
no representation or warranty whatsoever with respect to any such product. RCT
shall not be obligated to file any patent applications, secure any patent or
maintain any patent in force, although, if RCT intends and elects to discontinue
the prosecution of any such patent application or the maintenance of any such
patent, RCT shall so advise JENNER and, subject to RCT's obligations to previous
licensees under the LICENSED PATENTS, give JENNER an opportunity to continue
such prosecution or maintenance on RCT's behalf
-12-
and at JENNER's expense. Any out-of-pocket expenses thereafter incurred by
JENNER for such prosecution or maintenance of any patent or patent application
of any such country shall be creditable against earned royalties thereafter
payable under this Agreement solely in respect of LICENSED PRODUCTS, made, or
SOLD in the country of such patent or patent application. RCT shall keep JENNER
apprised of the status of the prosecution of the LICENSED PATENTS, upon
reasonable request of JENNER occurring not more frequently than monthly.
SECTION 7.16 Indemnity. JENNER agrees to indemnify, defend and hold
harmless RCT, INVENTORS, INSTITUTION, and all officers, directors, employees and
agents of RCT and INSTITUTION (collectively, the "INDEMNITIES") from and against
any and all claims, damages and liabilities, including legal costs and fees,
asserted by third parties arising from the manufacture, use or sale of any
LICENSED PRODUCTS by or for JENNER, or arising from the use of any such LICENSED
PRODUCT by any third party, including any customer of JENNER, except to the
extent such claims, damages or liabilities are due to RCT's willful misconduct
or negligence. JENNER hereby waives any rights of subrogation it may have
against the INDEMNITIES on account of any claim, damage or liability arising
from activities under or in connection with this Agreement. JENNER shall cause
its applicable product liability insurance policy to contain a provision whereby
the insurer waives any rights of subrogation against the INDEMNITIES.
SECTION 7.17 Insurance. On or before the date of the first SALE of a
LICENSED PRODUCT under this Agreement, JENNER shall obtain and, thereafter
throughout the term of this Agreement, maintain in force product liability
insurance and other insurance coverage typically carried by PERSONS engaged in
JENNER's business, but at least [*] for JENNER's SALE of LICENSED PRODUCTS as a
therapeutic vaccine for prostate cancer, and at least [*] for JENNER's SALE of
LICENSED PRODUCTS as a prophylactic vaccine for prostate cancer, or, in the
alternative, JENNER may self-insure against such risks if its net worth, as
measured by the most recent audited statement, exceeds [*]. Such insurance
policies shall name RCT as an additional named insured. JENNER hereby waives any
rights of subrogation it may have against RCT on account of any product
liability claim. The insurance policies required to be carried by JENNER under
this Agreement shall be with companies that have a Best's Financial Rating of A
or better. JENNER shall furnish RCT with a certificate of such policy upon
request, and whenever requested, shall satisfy RCT that such policy is in full
force and effect.
SECTION 7.18 Construction. The parties agree that each party has
reviewed this Agreement and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not apply to the
interpretation of this Agreement.
SECTION 7.19 Patent Marking. JENNER agrees that it shall mark all
LICENSED PRODUCTS with a legible notice indicating the patents to which the
LICENSED PRODUCTS are subject.
SECTION 7.20 Registration of Agreement. JENNER agrees to take all
reasonable and necessary steps to register this Agreement in any country of the
LICENSED TERRITORIES where such is required to permit the transfer of funds
and/or payment of royalties to RCT hereunder or is otherwise required by the
government or law of such country to effectuate or carry out this Agreement.
-13-
Notwithstanding anything contained herein, JENNER shall not be relived of any of
its obligations under this Agreement by any failure to register this Agreement
in any country of the LICENSED TERRITORIES, and specifically, JENNER shall not
be relieved of its obligation to make any payment to RCT hereunder, which such
payment is blocked due to any failure to register this Agreement.
SECTION 7.21 Authority and Binding Agreement. Each party represents and
warrants to the other that this Agreement constitutes a valid and binding
agreement of the representing party, that execution, delivery and performance of
this Agreement by the representing party are within the representing party's
corporate power, and have been duly authorized by all necessary corporate
action.
SECTION 7.22 No Publicity About this Agreement. The parties agree to
keep the existence and terms of this License Agreement in confidence and that
they shall refrain from publicly disclosing the existence and terms of this
Agreement, except to the extent that RCT is required to disclose such to the
INSTITUTION and the INVENTORS, and to previous licensees under the LICENSED
PATENTS; provided, however, the parties may disclose the existence and terms of
this Agreement to comply with court order, law or government regulation, or to
accountants, banks or another financing source (or their advisors) or in
connection with a merger, acquisition or securities offering.
ARTICLE VIII
GOVERNMENT RIGHTS
SECTION 8.1 Prior Rights. This Agreement is subject to the rights of
the U.S. Government in and to the LICENSED PATENTS, including those derived
through the National Cancer Institute ("NCI") of the Department of Health,
Education, and Welfare ("DHEW"), pursuant to a certain grant by the Government
to INSTITUTION identified as NCI Grant CA-15437, which rights are described in a
certain contract entitled "Institutional Patent Agreement", made the 7th day of
April, 1976, by and between the U.S. Government and INSTITUTION. A copy of the
"Institutional Patent Agreement" is attached as Exhibit B-1, and a transcript of
that copy (for clarity) is attached at Exhibit B-2. Such rights include a
nonexclusive, nontransferable, royalty-free, irrevocable license to the U.S.
Government for governmental purposes. Such license to the U.S. Government shall
remain unaffected by this Agreement.
SECTION 8.2 License to Conform. Any inconsistency between this
Agreement and the pertinent provisions of any law, regulation, or executive
order by the U.S. Government shall be resolved by conforming this Agreement to
such provisions of any such law, regulation, or executive order. This Agreement
shall be subject to applicable governmental laws relating to compulsory
licensing.
ARTICLE IX
DEFINITIONS
-14-
SECTION 9.1 "AFFILIATE" means any PERSON to which one or more of the
following apply:
(a) any PERSON directly or indirectly controlling,
controlled by or under common control with JENNER;
(b) any PERSON owning or controlling fifty percent
(50%) or more of the outstanding voting rights or securities of JENNER; or
(c) any PERSON whose outstanding voting rights or
securities are owned fifty percent (50%) or more by JENNER.
SECTION 9.2 "EXPIRATION DATE" means the expiration date of the
last-to-expire LICENSED PATENT.
SECTION 9.3 "INSTITUTION" means Health Research, Inc. of Buffalo, New
York.
SECTION 9.4 "INVENTION" means "Immunological Test for Prostate Cancer".
SECTION 9.5 "INVENTORS" means [*].
SECTION 9.6 "LICENSED FIELD" means the use of prostate specific antigen
("PSA") as a prophylactic vaccine for prostate cancer and/or a therapeutic
vaccine for prostate cancer.
SECTION 9.7 "LICENSED PATENTS" means:
(a) all issued, unexpired patents listed in EXHIBIT
A-1;
(b) all divisional or continuation, in whole or in
part, applications based on any of the patents or applications listed in EXHIBIT
A-1;
(c) all issued, unexpired patents resulting from any
of the applications described in (b); and
(d) all issued, unexpired reissue, reexamination,
renewal or extension patents that may be based on any of the patents described
in (a) or (c).
SECTION 9.8 "LICENSED PRODUCT" means a product, the manufacture, use,
or SALE of which infringes a PATENT CLAIM under 35 USC ss.271 and/or applicable
case law, but for this License Agreement.
SECTION 9.9 "LICENSED TERRITORIES" means Canada and the United States
of America, its territories and possessions.
-15-
SECTION 9.10 "NET SALES VALUE" of any LICENSED PRODUCT means the actual
billings for the SALE of such LICENSED PRODUCT, less allowable deductions,
listed below.
Subsection 9.10.1 [*] used for calculating [*] shall be the
amount [*]; provided, however, [*] shall only be included in [*], otherwise [*]
shall only include [*].
Subsection 9.10.2 [*]. When factually applicable, [*] as
determined above:
(a) [*], in amounts customary in the trade;
(b) [*], and with specific referent to, particular
[*];
(c) [*]; and
(d) [*], to the extent included in such [*].
No other [*] shall be made including without limitation [*] by whatever name
known or for any [*].
SECTION 9.11 "PATENT CLAIM" means a claim in a LICENSED PATENT. A
PATENT CLAIM shall be presumed to be valid unless and until it has been held to
be invalid or unenforceable by a final judgment of a court of competent
jurisdiction from which no appeal can be or is taken. For purposes of this
Agreement, and especially for purposes of royalty determination and payment, any
claim in a pending patent application shall be deemed to be the equivalent of a
valid claim of an issued, unexpired patent and in consideration of RCT's
agreement to grant a license under any patent issuing thereon earned royalties
shall be payable in respect thereto as though it were a valid patent claim.
SECTION 9.12 "PERSON" means an individual or a corporation,
partnership, trust, unincorporated organization, association or any other entity
or a government or any department or agency thereof.
SECTION 9.13 "SELL" (and any noun form, including "SALE", and
conjugated verb form thereof) shall mean to sell, or otherwise part with or
dispose of LICENSED PRODUCTS, for value.
SECTION 9.14 "SUBLICENSE" means mean a sublicense under the LICENSED
PATENTS granted in accordance with the terms of SECTION 1.5 of this Agreement.
Likewise, "SUBLICENSEE" shall mean the party to which rights are granted under a
SUBLICENSE.
RESEARCH CORPORATION JENNER TECHNOLOGIES
TECHNOLOGIES, INC.
/s/ GARY M. MUNSINGER /s/ ANTHONY E. MAIDA
- --------------------- -----------------------
Gary M. Munsinger Anthony E. Maida
President Chief Executive Officer
-16-
EXHIBIT A-1
Invention: "Immunological Test for Prostate Cancer"
INVENTORS: [*]
Issued Patents
Country Patent No. Issue Date
------- ---------- ----------
Canada 1,165,685 04/17/84
United States Re. 33,405* 10/23/90
* A Reissue Patent issued on United States Patent No. 4,446,122, issued
05/01/84, which was issued on the basis of PCT/US80/01708, filed December 23,
1980, as a continuation-in-part of U.S. Application Serial No. 108,217 filed
December 28, 1979.
EXHIBIT A-2
[*]
EXHIBIT B-1
September 20, 1979
EXHIBIT I
Dr. Roger Herdman
State Department of Health and Health Research, Inc.
Tower Building
Empire State Plaza
Albany, New Jersey 12237
Dear Dr. Herdman:
Re: Your Institutional Patent Agreement
This refers to the Institutional Patent Agreement governing grants and
awards from this Department to your institution.
By this letter, we are amending Section VII of the Agreement pertaining
to patent management organizations to delete its limitation to nonprofit patent
management organizations. Please note that this does not change any of the other
requirements contained in that Section, particularly the one requiring approval
by this Department of any patent administration agreement between your
institution and a patent management organization. Accordingly, in Section VII,
line 4, please cancel "nonprofit."
Section XI is also hereby amended to change September 30 in line 2 to
December 31 and June 20 in line 3 to September 30. This change will make the
annual reports coincide with the fiscal year.
It would be appreciated if you would have the responsible official of
your institution sign the enclosed copy of this letter to indicate your
concurrence and return it to this office at your convenience.
Sincerely yours,
/s/
---------------------------
Leroy B. Randall
Acting Chief, Patent Branch
/s/
- ---------------------------------------
David Axelrod, M.D.
Commissioner
New York State Department of Health
and President and Chairman of the Board
Health Research, Inc.
October 9, 1979
[Illegible Date]
Roger C. Herdman, M.D.
Deputy Commissioner for Preventive Services
Research and Development
New York State Department of Health
Tower Building, Empire State Plaza
Albany, New York 12237
Dear Dr. Herdman:
Reference is made to previous correspondence with this Department
regarding the desire of the New York State Department of Health to enter into an
Institutional Patent Agreement with the Department of Health, Education and
Welfare.
I have reviewed the policy and procedures of your institution and find
them acceptable. It appears, therefore, that the Now York State Department of
Health will be in a position to administer inventions under the enclosed
Institutional Patent Agreement in a manner fully protective of the public
interest.
It is important to understand that Article V of the Institutional
Patent Agreement provides that, notwithstanding the election by the New York
State Department of Health not to retain title to domestic rights to an
invention covered by the Agreement, it is still required to report the invention
so that disposition of such-rights can be made by the Department of Health,
Education and Welfare. Waiver of domestic rights to New York State Department of
Health employees is not provided for in the Agreement.
Further, it is believed that it would be to the mutual interest of the
New York State Department of Health and this Department if you, as the person
responsible for patent matters at the Health Department, would arrange to meet
with Mr. Norman J. Latker, Patent Counsel, to discuss problems that might arise
in the administration of the Agreement.
In accordance with the above, I have signed the Agreement submitted
with your letter of April 7, 1976, and am returning a copy for your files.
It is hoped that you will find this Agreement a useful instrument for
encouraging further development for ultimate use by the public of inventions
generated with HEW funds.
Sincerely yours,
/s/
------------------------------
Theodore Cooper, M.D.
Assistant Secretary for Health
Enclosure
cc: Dr. Robert P. Whalen
New York State Dept. of Health
-2-
INSTITUTIONAL PATENT AGREEMENT
GOVERNING GRANTS AND AWARDS FROM THE
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
This Agreement, made and entered into this 7th day of April , 1976, by
and between the United States of America, as represented by the Assistant
Secretary (Health and Scientific Affairs) of the Department of Health, Education
and Welfare, hereinafter sometimes referred to as the Grantor, and
NEW YORK STATE DEPARTMENT OF HEALTH
hereinafter referred to as the Grantee.
WITNESSETH:
WHEREAS, the Regulations of the Department of Health, Education, and
Welfare, covering inventions resulting from research grants, fellowship awards,
and contracts for research (45 CFR Parts 6 and 8), provide in Secs. 8.1 through
8.5 that upon approval by the Assistant Secretary (Health and Scientific
Affairs), the ownership and disposition of domestic and foreign rights to
inventions arising out of activities assisted by grants and awards may be left
to the Grantee pursuant to its approved established patent policy, with such
modifications as may be agreed upon; and
WHEREAS, the Grantee is desirous of entering into an agreement whereby
it has a first option to retain principal rights in and to administer inventions
made in the course of or under research supported by grants and awards from the
Department of Health, Education, and Welfare, pursuant to the aforesaid
Regulations; and
WHEREAS, the Assistant Secretary (Health and Scientific Affairs) has
reviewed the patent policy of the Grantee as set forth in ITS ADMINISTRATIVE
POLICIES & PROCEDURES MANUAL, ITEM 455 ENTITLED "IDENTIFICATION AND REPORTING
INVENTIONS" effective 12/5/74 and its practices thereunder and has found them to
be acceptable, subject to the provisions of this Agreement, and that said policy
provides for administration by the Grantee of patents in the public interest and
is consistent with the stated objectives of the President's Statement and
Memorandum of Government Patent Policy, issued October 10, 1963;
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
I. Scope of Agreement
This Agreement shall define the rights of the parties hereto regarding
disposition of title to inventions made in the course of or under research
supported by grants and awards from the Department
of Health, Education, and Welfare, which are subject to the Department Patent
Regulations and are issued after the date hereof.
II. Definitions
(a) The term "subject invention" as used in this Agreement means any
process, machine, manufacture, composition of matter or design, or any new or
useful improvement thereof, and any variety of plant which is or may be
patentable under the Patent Laws of the United States made in the course of or
under research supported by grants and awards from the Department of Health,
Education, and Welfare.
(b) The term "made" when used in relation to any invention or discovery
means its conception or first actual reduction to practice.
III. Disposition of Principal Rights to Subject Inventions
The Grantee shall have the right to elect to file patent application in
the United States and in foreign countries on any subject invention and to
administer such invention pursuant to the provisions of this Agreement. Grantee
shall notify Grantor at the time each subject invention is reported to Grantor
as required by paragraph V hereof, if it intends to file patent applications on
and to administer the invention. If Grantee does not elect to file a U.S. patent
application on and to administer a subject invention, it shall notify Grantor in
sufficient time to permit Grantor to file a U.S. patent application thereon. In
such event, all rights in and to such invention, except rights to any foreign
patent application filed by Grantee, shall be subject to disposition by the
Grantor in accordance with its Regulations then in effect.
IV. Supplementary Patent Agreements
(a) The Grantee shall obtain patent agreements from all persons who
perform any part of the work under a grant or award from the Department of
Health, Education, and Welfare, exclusive of clerical and manual labor
personnel, requiring that such persons promptly report and assign all subject
inventions to Grantee or its approved patent management organization.
(b) The Grantee shall include the following provision in any contract
it enters into involving research and/or development for which DHELI research
grant or award funds are utilized.
"The Contractor hereby agrees to report fully and promptly to NEW YORK,
STATE DEPARTMENT OF HEALTH OR HEALTH RESEARCH, INC.
(Grantee)
-2-
any invention conceived or first actually reduced to practice in
performance of this contract (hereinafter referred to as "such
inventions", and to assign all right, title and interest in and to such
invention to NEW YORK STATE DEPARTMENT OF HEALTH OR HEALTH RESEARCH,
INC.
(Grantee)
or its designee.
"In addition, the Contractor agrees to furnish the following materials,
disclosures and reports:
(i) Upon request, such duly executed instruments (Prepared by the NEW
YORK STATE DEPARTMENT OF HEALTH OR HEALTH RESEARCH, INC.
(Grantee)
or its designee) and such other papers as are deemed necessary to vest
in the NEW YORK STATE DEPARTMENT OF HEALTH OR HEALTH RESEARCH, INC. or
its designee the (Grantee)
rights granted under this clause and to enable the NEW YORK STATE
DEPARTMENT OF HEALTH OR HEALTH RESEARCH, INC. or its
(Grantee)
designee to apply for and prosecute any patent application, in any
country, covering such invention.
(ii) Interim reports on the first anniversary of this contract where
extended or renewed and every year thereafter listing all such
inventions made during the period whether or not previously reported or
certifying that no inventions wore conceived or first actually reduced
to practice during the applicable period.
(iii) Prior to final settlement of this contract, a final report
listing all such inventions, including all those previously listed in
interim reports, or certifying that no inventions were conceived or
first actually reduced to practice under the contract.
V. Report of Invention
(a) The Grantee shall submit a written invention report to the Grantor
of each subject invention promptly after conception or first actual reduction to
practice.
(b) Such invention report shall be furnished directly the Grantor in
addition to any other requirement under any grant or award for the submission of
progress or financial reports, and whether or not reference to subject invention
has been made in any progress or other report furnished to the Grantor; such
report shall include description of such invention, appropriately illustrated by
a simple sketch or diagram, to permit the invention to be understood and
evaluated, and such other information as Grantor may require.
-3-
(c) The report shall specify whether or not Grantee intends to file a
U.S. patent application or any foreign patent application on the invention.
Notice of an election not to file a U.S. patent application shall be given
Grantor not less than ninety (90) days prior to the date a statutory bar becomes
effective.
(d) If the Grantee specifies that no U.S. patent application will be
filed (or having specified that it intends to file, thereafter notifies the
Grantor to the contrary), the Grantee shall promptly inform the Grantor of the
date and identification of any known publication of subject invention made by or
known to the Grantee or, where applicable, of any contemplated publication to be
made by or known to the Grantee. and also the date subject invention or any
embodiment thereof was first in public use or on sale in the United States and
shall furnish such other information (and have executed such documents as
provided in VIII(F) as may be required to enable the Grantor to make disposition
of subject invention rights).
VI. Administration of Inventions on Which the Grantee Elects to File Patent
Applications
(a) The Grantee shall require assignment to it of all right, title and
interest in and to each subject invention on which it elects to file any patent
application for administration by it in accordance with and subject to the terms
and conditions herein set forth. Assignments from the inventor to the Grantee
under U.S. patent applications shall be promptly obtained and recorded by the
Grantee in the United States Patent Office, and copies of the recorded
assignment shall be furnished to the Grantor.
(b) The Grantee shall grant to the Government of the United States a
nonexclusive, irrevocable, royalty-free license for governmental purposes and on
behalf of any foreign government, pursuant to any existing or future treaty or
agreement with the United States under each U.S. or foreign patent application
it elects to file on a subject invention. The form of the license to be granted
shall be as set forth in Exhibit "A" attached hereto, and by this reference made
a part hereof. Any license issued by Grantee shall be made expressly subject to
the license to the Government of the United States.
(c) The Grantee shall administer those subject inventions to which it
elects to retain title in the public interest and shall, except as provided in
paragraph (d) below, make them available through licensing on a nonexclusive,
royalty-free or reasonable royalty basis to qualified applicants.
(d) The Grantee may license a subject invention on an exclusive basis
if it determines that nonexclusive licensing will not be effective in bringing
such inventions to the commercial market in a satisfactory manner. Exclusive
licenses should be issued only after reasonable efforts have been made to
license on a nonexclusive basis, or where the grantee has determined that an
exclusive license is necessary as an incentive for development of the invention
or where market conditions art such as to require licensing on an exclusive
basis. Any exclusive license issued by Grantee under a U.S. patent or patent
application shall be for a limited period of time and such period shall not,
unless otherwise approved by the Assistant Secretary (Health and Scientific
Affairs), exceed three years from the date of the first commercial sale in the
United States of America of a product or process embodying the invention, or
eight years from the date of the exclusive license, whichever occurs first,
provided that the licensee shall use all reasonable effort to effect
introduction into the commercial market as soon as
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practicable, consistent with sound and reasonable business practices and
judgment. Any extension of the maximum period of exclusivity shall be subject to
approval of the Grantor. Upon expiration of the period of exclusivity or any
extension thereof, licenses shall be offered to all qualified applicants at a
reasonable royalty rate not in excess of the exclusive license royalty rate.
(e) Any license granted by the Grantee to other than the Government of
the United States under any patent application or patent on a subject invention
shall include adequate safeguards against unreasonable royalty and repressive
practices. Royalties shall not, in any event, be in excess of normal trade
practice. Such license shall also provide that all sales to the U.S. Government
shall be royalty free.
(f) If permitted by its patent policies and the terns of the grant or
award under which an invention is made. the Grantee may share royalties received
with the inventors, provided that the Grantee shall not pay the inventors more
than (1) fifty percent (50%) of the first $3,000 gross royalty paid under the
patent, (2) twenty-five percent (25%) of the gross royalty income between $3,000
and $13,000, and (3) fifteen percent (15%) of the gross royalty in excess of
$13,000. The balance of the royalty income after payment of expenses incident to
the administration of all inventions assigned to it pursuant to the provisions
of this Agreement shall be utilized for the support of educational and research
pursuits.
(g) All licenses issued by the Grantee to other than the Government of
the United States under any patent application or patent on a subject invention
shall be subject to the conditions of this Agreement and shall specifically
reserve to Grantor those rights specified in paragraph XII hereof. The Grantee
shall, upon request, promptly furnish copies of any license agreements entered
into by it to the Department.
VII. Patent Management Organizations
The Grantee shall not assign any subject invention to parties other
than the Grantor in circumstances as set forth in this Agreement except it may
assign rights in the invention to a nonprofit patent management organization,
provided that the patent administration agreement between such organization and
Grantee is approved by the Grantor. Any reference to a Grantee in this Agreement
shall also include a patent management organization when applicable and an
assignment to such an organization shall be subject to all the terms and
conditions of this Agreement.
VIII. Patent Applications
(a) Grantee shall promptly furnish Grantor with a copy of each U.S.
patent application filed in accordance with this Agreement specifying the filing
date and the serial number. Grantee shall promptly notify Grantor of each
foreign patent application filed, including filing date and serial number, and
shall furnish a copy of each application upon request.
(b) Upon request, Grantee shall fully advise the Grantor concerning all
steps and actions taken during the prosecution of any patent application
covering a subject invention and shall, upon request, furnish copies of any
final actions, amendments, petitions, motions, appeals or other papers relating
to the prosecution of said application.
-5-
(c) Upon request, the Grantee shall promptly furnish to the Grantor an
Irrevocable power of attorney granting the right to inspect and make copies of
any patent application covering a subject invention or any of the final actions,
amendments, petitions, motions, appeals, or other papers relating to the
prosecution of said application.
(d) The Grantee shall include the following statement in the first
paragraph of the specification following the abstract of any patent application
filed on a subject invention:
"The invention described herein was made in the course of work under a
grant or award from the Department of Health, Education, and Welfare."
(e) The Grantee shall not abandon any U.S. patent application filed on
a subject invention without first offering to transfer all rights in and to such
application to the Grantor not less than forty-five (45) days prior to the date
a reply to the Patent Office action is due. If the Grantor does not request
assignment within thirty (30) days of receipt of this offer, the Grantee may
permit the application to go abandoned.
(f) If the Grantee elects to file no patent application or to abandon
prosecution of a U.S. patent application on a subject invention, he shall, upon
request, execute instruments or require the execution of instruments (prepared
by the Grantor) and such other papers as are deemed necessary to vest in the
Grantor all right, title and interest in the subject invention to enable the
Grantor to apply for and prosecute patent applications in any country.
IX. Invention Reports and Certifications
Notwithstanding the provisions of this Agreement, the Grantee shall
provide invention reports and certifications as may be required by the terms of
any grant or award.
X. Disclosure-and Publication
The Grantee shall not bar or prohibit publication of disclosures of
inventions on which patent applications have been filed.
The Grantor shall have the right to publish and make disclosure of any
information relating to any subject invention whenever deemed to be in the
public interest, provided that upon request, reasonable opportunity shall be
afforded the Grantee to file U.S. and foreign patent applications.
XI. Reports on Development and Commercial Use
The Grantee shall provide a written annual report to the Department on
or before September 30 of each year covering the preceding year, ending June 30,
regarding the development and commercial use that is being mad or intended to be
made of all subject inventions left for administration by the Grantee. Such
reports shall include information regarding development, the date of first
commercial sale, gross
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sales by licensees, gross royalties received by the Grantee, and such other data
and information as the Department may specify.
XII. Additional Licenses
(a) The Grantee agrees that if it, or its licensee, has not taken
effective steps within three years after a United States patent issues on a
subject invention left for administration to the Grantee to bring that invention
to the point of practical application, and has not made such invention available
for licensing royalty-free or on terms that are reasonable in the circumstances,
and cannot show cause why he should retain all right, title and interest for a
further period of time, the Grantor shall have the right to require (1)
assignment of said patent to the United States, as represented by the Grantor;
(2) cancellation of any outstanding exclusive licenses under said patent; or (3)
the granting of licenses under said patent to an applicant on a nonexclusive,
royalty-free basis or on terms that are reasonable in the circumstances.
(b) The Grantor reserves the right to license or to require the
licensing of other persons under any U.S. patent or U.S. patent application
filed by the Grantee on a subject invention on a royalty-free basis or on terms
that are reasonable in the circumstances, upon a determination by the Assistant
Secretary (Health and Scientific Affairs) that the invention is required for
public use by governmental regulations, that the public health, safety or
welfare requires the issuance of such license(s), or, that the public interest
would otherwise suffer unless such license(s) were granted. The Grantee and its
licensees shall be given written notice of any proposed determination pursuant
to this subparagraph not less than thirty (30) days prior to the effective date
of such determination, and that if requested, shall be granted a hearing before
the determination is issued and otherwise made effective.
XIII. Inventions by Federal Employees
Notwithstanding any provision contained in this Agreement, inventions
made by Federal employees, or by Federal employees jointly with others, shall be
subject to disposition under provisions of Executive Orders, Governmental and
Department Regulations applicable to Federal employees.
XIV. Termination
This Agreement may be terminated by either party for convenience upon
thirty (30) days written notice, Disposition of rights in, and administration of
inventions made under grants or awards entered into during and subject to this
Agreement will not be affected by such a termination except that in the event
the Department terminates this Agreement because of a failure or refusal by
Grantee to comply with its obligations under Articles V or VI of this Agreement,
the Department shall have the right to require that the Grantee's entire right,
title and interest in and to the particular invention with respect to which the
breach occurred be assigned to the United States of America, as represented by
the Secretary of the Department of Health, Education, and Welfare.
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XV. Limitation
It is agreed and understood that this Agreement shall not apply to any
grants or awards issued under statutes containing requirements for disposition
of invention rights with which the provisions of this Agreement are
inconsistent. It is further agreed, that any constituent agency of the
Department of Health, Education, and Welfare may, with the approval of the
Assistant Secretary (Health and Scientific Affairs), provide as a condition of
any grant or award that this Agreement shall not apply thereto. It is also
agreed that any constituent agency of the Department of Health, Education, and
Welfare may provide, subject to approval by the Assistant Secretary (Health and
Scientific Affairs), that this Agreement shall apply to specific research
contracts.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first above written.
UNITED STATES OF AMERICA
BY: /s/
--------------------------------
TITLE: Asst. Secretary of Health
------------------------------
NEW YORK STATE DEPARTMENT OF HEALTH
------------------------------------
(Grantee)
BY: /s/
--------------------------------
Robert P. Whalen
TITLE: Commissioner of Health
------------------------------
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STATE OF NEW YORK)
CITY OF ALBANY ) ss:
COUNTY OF ALBANY )
On the 7th day of April, 1976, before me personally came ROBERT P.
WHALEN, M.D., to me known and known to me to be the same person who executed the
foregoing instrument for and on behalf of the NEW YORK STATE DEPARTMENT OF
HEALTH, and who, being by me duly sworn, did depose and say, that he resides in
the County of Albany, State of New York, and that he is COMMISSIONER of the
Department of Health of the State of New York, and that he executed the
foregoing instrument for and on behalf of the State of New York by virtue of the
authority vested in him in Section 206 of the Public Health Law as such
COMMISSIONER of the Department of Health of the State of New York.
[Notary Stamp]
/s/
-------------------------
NOTARY PUBLIC
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Exhibit "A"
LICENSE TO THE UNITED STATES GOVERNMENT
WHEREAS,___________________________________________________________, of
(Inventor)
___________________________________________________________________________, has
invented___________________________________________________________________, and
(Invention)
filed a patent application thereon in___________________________________________
(Country)
bearing Serial No.__________________________, filing date_______________________
and
WHEREAS, the invention was made In the course of research supported by
grant(s) from the Department of Health, Education, and Welfare; and
WHEREAS, the United States Government is entitled to certain rights in
and to said invention and application by reason of the terms of said grant(s);
and
WHEREAS, the___________________________________________________________
(Institution)
whereinafter called the "Licensor" has acquired by assignment from the inventor
the entire right, title and interest of the inventor to such invention;
NOW, THEREFORE:
1. The Licensor, in consideration of the premises and other good and valuable
consideration, hereby grants and conveys to the United States Government a
royalty-free, nonexclusive and irrevocable license for governmental purposes and
on behalf of any foreign government pursuant to any existing or future treaty or
agreement with the United States under the aforesaid patent application, and any
and all divisions or continuations, and in any and all patents or reissues which
may be granted thereon during the full term or terms thereof. As used herein,
"governmental purpose" means the right of the Government of the United States
(including any agency thereof, state or
EXHIBIT B-2
Certification of Timothy J. Reckart
1. Timothy J. Reckart, am General Counsel and Secretary for Research
Corporation Technologies, Inc.
2. I have reviewed the documents included in Exhibit B-1, namely, the
Institutional Patent Agreement, the Letter to Dr. Roger Herdman dated
September 20, 1979, and the Letter to Roger Herdman dated ("Received")
August 2, 1976.
3. I have caused such documents to be retyped for clarity. These retyped
documents are included in this Exhibit B-2.
4. Based on my review of the documents included in Exhibit B-1, and the
documents included in Exhibit B-2, I certify that, to the best of my
knowledge, the documents shown in Exhibit B-2 are exact transcriptions
of the typed portions of the documents appearing in Exhibit B-1.
- ------------------------------------------------------------
Timothy J. Reckart, Esq.
General Counsel and Secretary
Research Corporation Technologies, Inc.
- ------------------------------------------------------------
Date
EXHIBIT 10.8
DAD17-96-0072
LICENSE AGREEMENT
Effective upon execution of this agreement, as evidenced by the
signature of both parties, the WALTER REED ARMY INSTITUTE OF RESEARCH (hereafter
LICENSOR), as the representative of the United States of America, and JENNER
TECHNOLOGIES, (hereinafter LICENSEE), a corporation of the State of California,
having a principal place of business at 828 Eastbrook Court, Danville,
California 94506, agree as follows:
ARTICLE I
BACKGROUND
1.01 The United States of America is the owner by assignment of the
entire right, title and interest to inventions described and claimed in [*].
1.02 Under the authority of 15 United States Code 3710a and 35 United
States Code section 207, LICENSOR has custody of inventions described and
claimed in, and the right to issue licenses under the LICENSED PATENT
APPLICATION.
1.03 LICENSOR desires that the inventions described and claimed in the
LICENSED PATENT APPLICATION be brought to the POINT OF PRACTICAL APPLICATION in
the shortest possible time and made available to the public, thereby serving the
public interest and broadening the potential supply bass for LICENSOR and other
Government agencies.
1.04 LICENSEE desires to obtain a non-exclusive license under the
LICENSED PATENT APPLICATION for the purpose of developing and commercializing
products to be used in vaccine therapy of persons with cancer.
NOW THEREFORE, in consideration of the foregoing, including the
above-cited patent licensing statutes and the mutual promises and obligations
hereinafter set forth, LICENSOR and LICENSEE, intending to be lawfully bound, do
hereby agree as set forth below.
ARTICLE II
DEFINITIONS
2.01 Terms in this Agreement (other than names of parties and Article
headings) which are set forth in upper case letters have the meanings
established for such terms in the succeeding paragraphs of this ARTICLE II.
2.02 LICENSED PATENT APPLICATION means the [*] and all divisions,
continuations, continuations-in-part, and substitutions thereof; all foreign
patent applications corresponding to the preceding applications; and all U.S.
and foreign patents issuing on any of the preceding applications, including
extensions, reissues, and reexaminations.
2.03 LICENSED PRODUCTS AND METHODS means any and all products and
methods which employ or are produced by inventions described and claimed in the
LICENSED PATENT APPLICATION.
2.04 ROYALTY-BASE PRODUCTS means any and all products which either fall
within the scope of one or more VALID CLAIM of the LICENSED PATENT APPLICATION,
or are produced by the practice of a method claimed in the LICENSED PATENT
APPLICATION in the country of manufacture or sale by LICENSOR, its AFFILIATE(S)
or sublicensees.
2.05 LICENSED TERRITORY means the world.
2.06 GOVERNMENT shall mean the Federal Government of the United States
of America.
2.07 LICENSOR's REPRESENTATIVE means the Command Judge Advocate, U.S.
Army Medical Research and Materiel Command, ATTN: MCMR-JA, Fort Detrick,
Frederick, Maryland 21702-5012.
2.08 POINT OF PRACTICAL APPLICATION means [*] described and claimed in
the LICENSED PATENT APPLICATION, under such conditions as to establish that the
inventions [*] this Agreement, and to continue during the term of this Agreement
[*].
2.09 AFFILIATE(S) means any corporation, firm, partnership or other
entity which, whether de jure or de facto, directly or indirectly, owns
LICENSEE, is owned by LICENSEE or is under common ownership with LICENSEE to the
extent of at least fifty percent (50%) of the equity having the power to vote on
or direct the affairs of the entity and any corporation, firm, partnership or
other entity actually controlled by LICENSEE, controlling LICENSEE or under
common control of LICENSEE.
2.10 NET SALES means the amount billed, invoiced, or received on sales
of any ROYALTY-BASE PRODUCTS by LICENSEE, its AFFILIATES, and sublicensees or,
in the event of disposal of any ROYALTY-BASE PRODUCTS other than as scrap prior
to shipment from its place of manufacture or predisposal storage, or other than
by sales, the amount billed, invoiced, or received on sales for a like quantity
and quality of ROYALTY-BASE PRODUCTS to an independent third party on or about
the time of such disposal, less:
a. customary trade, quantity or cash discounts and
nonaffiliated brokers' or agents' commissions actually allowed and taken;
b. amounts repaid or credited by reason of rejections or
returns; and
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c. any freight or other transportation costs; insurance
charges; import, export, sales taxes, duties, tariffs, and all sales and excise
taxes based on sales or turnover or delivery of ROYALTY-BASE PRODUCTS subject to
this Agreement.
Sales between or among LICENSEE and its AFFILIATE(S) or
sublicensees shall be excluded from the computation of NET SALES except where
such AFFILIATE(S) or sublicensees are end users, but NET SALES shall include the
subsequent final sales to third parties by such AFFILIATE(S) and sublicensees.
2.11 IMPROVEMENT means any modification of any invention, described and
claimed in the LICENSED PATENT APPLICATION, provided such modification, if
unlicensed, would infringe one or more claims of the LICENSED PATENT
APPLICATION.
2.12 VALID CLAIM means a claim of an issued and unexpired patent
included within the LICENSED PATENT APPLICATION which has not been held
unenforceable or invalid by a court or other governmental agency of competent
jurisdiction, and which has not been admitted to be invalid or unenforceable
through reissue, disclaimer or otherwise.
2.13 CONFIDENTIAL INFORMATION shall mean (i) any proprietary or,
confidential information or material in tangible form disclosed in accordance
with this Agreement that is marked "confidential" at the time it is delivered to
the receiving party, or (ii) proprietary or confidential information disclosed
orally hereunder which is identified as confidential or proprietary when
disclosed and such disclosure of confidential information is confirmed in
writing within thirty (30) days by the disclosing party.
ARTICLE III
LICENSE GRANT
3.01 The LICENSOR grants to the LICENSEE a non-exclusive license under
the LICENSED PATENT APPLICATION, with the right to grant and authorize
sublicenses, to make, have made, import, use, offer for sale and sell
ROYALTY-BASE PRODUCTS AND METHODS throughout the LICENSED TERRITORY for the term
of this Agreement and for the purpose stated in Paragraph 1.04 of ARTICLE I.
LICENSEE shall have the right to extend this license to any AFFILIATE(S) of its
choice provided that it shall first notify LICENSOR in writing of the identity
and relationship of any AFFILIATE(S) to be included under this Paragraph 3.01.
3.02 No right or license is granted or implied to LICENSEE or any
person claiming through LICENSEE under any patent or patent application other
than that specifically identified herein as the LICENSED PATENT APPLICATION.
3.03 The LICENSEE grants to the LICENSOR a royalty-free, nonexclusive,
worldwide license to practice and have practiced on behalf of the United States,
and on behalf of any foreign
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government or international organization pursuant to any existing or future
treaty or agreement with the United States, any IMPROVEMENT made by LICENSEE for
the term set forth in ARTICLE XI of this Agreement.
ARTICLE IV
ROYALTIES AND PAYMENT
4.01 LICENSEE shall pay LICENSOR a royalty on the NET SALES of all
ROYALTY- BASE PRODUCTS of LICENSEE and its included AFFILIATE(S) and
sublicensees sold to third- parties or otherwise disposed of within the LICENSED
TERRITORY. The royalty rate for all ROYALTY-BASE PRODUCTS shall be [*].
4.02 No royalty shall be payable under paragraph 4.01 above with
respect to sales of ROYALTY-BASE PRODUCTS among LICENSEE and its AFFILIATE(S) or
Sublicensees, nor shall a royalty be payable under this Article IV with respect
to ROYALTY-BASE PRODUCTS distributed for use in research and/or development, in
clinical trials, or as promotional samples.
4.03 Royalties due under this Article IV shall be payable on a
country-by-country and ROYALTY-BASE PRODUCT-by-ROYALTY-BASE PRODUCT basis until
the expiration of the last-to-expire issued VALID CLAIM covering such
ROYALTY-BASE PRODUCT in such country, (or if no such patent has issued in a
country in which an application is pending, until the fifth anniversary of the
first commercial sale of a ROYALTY-BASE PRODUCT in such country).
4.04 If it is determined by a competent court, or by mutual agreement
of the parties hereto, that LICENSEE must avoid infringement by acquiring a
license from another party in the course of practicing LICENSOR's LICENSED
PATENT APPLICATION, then LICENSEE may offset any amounts paid to such third
party against royalties due LICENSOR, [*].
4.05 For prototype products in the early part of the product life cycle
before sales to third parties, instead of NET SALES, milestone payments shall be
required at certain stages of the product development cycle. LICENSEE shall pay
LICENSOR according to the following schedule:
a. LICENSEE shall pay to LICENSOR [*].
b. LICENSEE shall pay to LICENSOR [*].
c. LICENSEE shall pay to LICENSOR [*].
4.06 Royalties shall be payable in United States dollars, paid by check
to the "Finance and Accounting Officer, U.S. Army Research Laboratory" and
mailed to Commander, U.S. Army Research Laboratory, ATTN: AMSRL-OP-RM-FA-DI,
2800 Powder Mill Road, Adelphi, Maryland 20783-1145. All checks and bank drafts
shall be drawn on United States banks.
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4.07 For purposes of converting currencies other than U.S. Dollars to
U.S. Dollars, the current exchange rate as reported in the Wall Street Journal
under the column headed "Currency Trading" and subtitled "Exchange Rates" for
the last Tuesday of the calendar quarter in which the sales were made shall be
used. Any and all loss of exchange, value, taxes or other expenses incurred in
the transfer or conversion of other currency to United States dollars shall be
paid entirely by LICENSEE.
4.08 In the event that LICENSEE is unable, as a result of any legal or
government restrictions to remit royalties from any country in the LICENSED
TERRITORY in respect of sales in that country, LICENSEE shall deposit the
appropriate royalties in an account in a bank in such country agreed to by
LICENSOR, such agreement not to be unreasonably withheld. For as long as such a
restriction applies, LICENSEE shall be relieved of any further obligations to
LICENSOR in respect of such royalties except that of reporting to LICENSOR under
ARTICLE V concerning the amount of royalty payable and so deposited.
4.09 LICENSEE shall pay royalties accrued for sales made subject to
such royalties to include sales by its AFFILIATE(S) and sublicensees not later
than [*]. LICENSEE shall submit with its payment the written report required in
ARTICLE V, paragraph 5.03 of this Agreement. If no royalties are due, the report
shall so state. Sales shall be considered to be made, for purposes of this
paragraph, when billed out, except that upon any termination of this Agreement,
all shipments made on or prior thereto shall be considered as sold (and
therefore subject to royalty). Royalties paid on sales of ROYALTY-BASE PRODUCTS
which are not accepted by the customer shall be credited to LICENSEE.
4.10 LICENSEE shall pay within [*] any termination of this Agreement
royalties accrued or accruable for payment at the time of any such termination.
4.11 Royalty payments not received by LICENSOR by the due date shall be
subject to interest charges computed at [*].
4.12 No royalty shall be payable under this Agreement for direct sales
of ROYALTY- BASE PRODUCTS by LICENSEE to the GOVERNMENT or any of its agencies
for governmental purposes or for sales made for the purpose of conducting
clinical trials.
ARTICLE V
REPORTS AND RECORDS
5.01 LICENSEE agrees to keep records showing the sales or other
disposition of ROYALTY-BASE PRODUCTS sold or otherwise disposed of under the
license granted in this Agreement. Such records shall be maintained as
CONFIDENTIAL INFORMATION of LICENSEE. Records should be in sufficient detail to
enable the royalties payable hereunder by LICENSEE to be determined, and
LICENSEE further agrees to permit its books and records to be examined, upon [*]
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prior written notice once per calendar year for the sole purpose of verifying
the accuracy of LICENSEE's payments and compliance with this Agreement, such
examination to be made at the expense of the LICENSOR by an auditor or certified
public accountant appointed by LICENSOR who shall be reasonably acceptable to
LICENSEE, or, at the expense of LICENSEE, by a certified public accountant
appointed by LICENSEE who shall be reasonably acceptable to LICENSOR. The
auditor shall enter into a reasonable confidentiality agreement with LICENSEE
and shall report to LICENSOR only whether there has been a royalty underpayment
and, if so, the amount thereof. Such access shall be permitted during LICENSEE'S
normal business hours during the term of this Agreement and for [*] after the
expiration or termination of this Agreement.
5.02 Prior to the first commercial sale of ROYALTY-BASE PRODUCTS,
LICENSEE shall provide [*] progress reports within [*] of the end of each [*]
detailing its efforts, and the efforts of all AFFILIATE(S) and sublicensees, to
bring the inventions licensed under this Agreement to the POINT OF PRACTICAL
APPLICATION. These reports shall contain reasonably sufficient information to
substantiate that LICENSEE's development plan is being executed (see Application
for License to Practice Government-Owned Invention attached hereto as Appendix
A). No further annual progress reports will be required after notification of
the first commercial sale of ROYALTY- BASE PRODUCTS unless otherwise requested
by LICENSOR.
5.03 Concurrently with each payment of royalties as required in ARTICLE
IV, paragraph 4.09, of this Agreement, LICENSEE shall submit a written report
setting forth for the preceding [*] reporting period the amount of ROYALTY-BASE
PRODUCT made, used, sold or otherwise disposed of by LICENSEE and its
AFFILIATE(S) and sublicensees in the LICENSED TERRITORY, the NET SALES thereof,
and the amount of royalties due thereon. If no royalties are due LICENSOR for
any report period, the report shall so state.
5.04 The reports required under this ARTICLE V shall also be made
within [*] of the termination of this Agreement concurrently with any payment of
royalties required under ARTICLE IV, paragraph 4.10.
ARTICLE VI
[*]
6.01 [*] during the term of this Agreement [*] to submission to, and
approval [*], which approval shall not be unreasonably withheld. [*] shall make
reference to this Agreement including those [*]. A copy of any [*] shall be
furnished to [*] promptly after its execution.
6.02 [*] paid by an [*] be payable to [*].
6.03 Modification or termination under ARTICLE XI paragraph 11.03, or
any of the provisions this Agreement shall [*], provided that [*] by advising
[*], within sixty (60) days of the [*]
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receipt of written notice of such [*] contain provisions corresponding to those
of this paragraph respecting [*] and termination and the conditions of [*].
ARTICLE VII
LICENSEE PERFORMANCE
7.01 LICENSEE shall expend reasonable efforts and resources to carry
out the development and marketing of the inventions, described and claimed in
the LICENSED PATENT APPLICATION.
7.02 After bringing the inventions, described and claimed in the
LICENSED PATENT APPLICATION, to the POINT OF PRACTICAL APPLICATION in the
LICENSED TERRITORY, LICENSEE agrees to keep LICENSED PRODUCTS AND METHODS
available to the public on reasonable terms during the term of this agreement.
LICENSEE shall promptly report discontinuance of its making the benefits of the
inventions reasonably accessible to the public.
7.03 Failure to comply with the terms of this ARTICLE VII shall be
cause for modification or termination of this Agreement in accordance with the
provisions of ARTICLE XI below.
ARTICLE VIII
MARKINGS
8.01 LICENSEE and its AFFILIATES shall identify, within a reasonable
period of time, ROYALTY-BASE PRODUCTS with the marking "Licensed Under U.S.
Patent (number)" or "U.S. Patent Pending" as permitted or required by statute or
identify product as patented in any promotional literature used.
8.02 The name of the GOVERNMENT employee inventor(s), the name of the
agency or department of the Government or any adaptation of the above shall not
be used in any promotional activity without prior written approval from
LICENSOR.
ARTICLE IX
PATENT ENFORCEMENT
9.01 LICENSOR and LICENSEE shall notify each other promptly in writing
of any infringement of the LICENSED PATENT APPLICATION which becomes known to
either of them. LICENSEE shall notify LICENSOR promptly of any action taken in
accordance with this ARTICLE VIII to prevent or eliminate such infringement.
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9.02 Upon receipt by either party of a notice of infringement of the
LICENSED PATENT APPLICATIONS, LICENSOR shall have the responsibility to, enforce
the LICENSED PATENT APPLICATION. If any unlicensed third party infringes the
LICENSED PATENT APPLICATION, AND LICENSOR fails to bring an action to enforce
the LICENSED PATENT APPLICATION within one hundred eighty (180) days of
receiving notice of such an infringement, no further royalties shall be due
under this Agreement until the infringement has ceased.
ARTICLE X
RESERVATION OF RIGHTS
10.01 The license granted in ARTICLE III of this Agreement shall be
subject to the irrevocable, royalty-free right of the GOVERNMENT to practice the
inventions, described and claimed in the LICENSED PATENT APPLICATION, on behalf
of the United States and on behalf of any foreign government or international
organization pursuant to any existing or future treaty or agreement with the
United States, including the right to engage in research on inventions,
described and claimed in the LICENSED PATENT APPLICATION, either alone or with
one or more third parties.
ARTICLE XI
TERM AND TERMINATION
11.01 The term of this Agreement begins with its effective date as set
forth in the heading paragraph located above ARTICLE I and, unless sooner
terminated in accordance with this ARTICLE XI, shall run until the expiration of
the last to expire patent within the LICENSED PATENT APPLICATION, including any
extensions granted under the Patent Term Restoration Act or any other statute.
11.02 The LICENSOR may modify or terminate this license, in whole or in
part, if:
a. LICENSEE or any of its sublicensees fails to meet the
obligations set forth in ARTICLE VII above;
b. The LICENSOR determines that such action is necessary to
meet requirements for public use specified by Federal regulations issued after
the date of this Agreement and such requirements are not reasonably satisfied by
the LICENSEE;
c. The LICENSEE has willfully made a false statement of, or
willfully omitted, a material fact in the license application or in any report
required by this Agreement;
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d. The LICENSEE commits a substantial breach of a covenant or
agreement contained in this Agreement;
e. The LICENSEE defaults in making any payment or report
required by this Agreement;
f. The LICENSEE is adjudged a bankrupt or has its assets
placed in the hands of a receiver or makes any assignment or other accommodation
for the benefit or creditors; or
g. The LICENSEE or any of its AFFILIATE(S) or sublicensee
misuses the LICENSED PATENT APPLICATION.
11.03 Prior to any modification or termination of this Agreement, other
than by mutual agreement, LICENSOR shall furnish LICENSEE and any AFFILIATE(S)
and sublicensees of record a written notice of intention to modify or terminate,
and the LICENSEE and any notified AFFILIATE(S) and sublicensees shall be allowed
ninety (90) days after the date of such notice to remedy the breach or default
of any covenant or agreement of this Agreement or to show cause why this
Agreement should not be modified or terminated.
11.04 The word "termination" and cognate words, such as "term" and
"terminate," used in this ARTICLE XI and elsewhere in this Agreement are to be
read, except where the contrary is specifically indicated, as omitting from
their effect the following rights and obligations, all of which survive any
termination to the degree necessary to permit their complete fulfillment or
discharge:
a. LICENSEE's obligation to supply a terminal report as
specified in ARTICLE V, paragraph 5.04, of this Agreement;
b. LICENSOR's right to receive or recover and LICENSEE's
obligation to pay royalties accrued or accruable for payment at the time of any
termination as specified in ARTICLE IV, paragraph 4.10, of this Agreement;
c. LICENSEE's obligation to maintain records and LICENSOR's
right to conduct a final audit as provided in ARTICLE V of this Agreement;
d. Licenses, releases, and agreements of nonassertion running
in favor of customers or transferees of LICENSEE in respect to ROYALTY-BASE
PRODUCTS sold or transferred by LICENSEE prior to any termination and on which
royalties shall have been paid as provided in ARTICLE IV of this Agreement; and
e. Any cause of action or claim of LICENSOR accrued or to
accrue, because of any breach or default by LICENSEE.
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11.05 Either party shall have the right to terminate this Agreement by
giving written notice thereof if the other party materially breaches the terms,
covenants, and conditions hereof, and fails to correct such material breach
within ninety (90) days after such party has been given written notice thereof.
Such termination shall take place upon expiration of the ninety (90) day period.
The notice of termination shall specify the breach alleged to have occurred.
11.06 In the event of termination of this Agreement or conversion of
the license granted hereunder, any sublicense of record granted pursuant to this
Agreement may, at sublicensee's option, be converted to a license directly
between sublicensee and LICENSOR in accordance with the provisions of ARTICLE VI
herein.
11.07 LICENSEE will have the right to terminate this Agreement, with or
without cause, at any time effective sixty (60) days after written notice as to
any patent application or patent within the LICENSED PATENT APPLICATION.
11.08 In the event of any termination of this Agreement under this
Article XI (other than upon expiration of the term specified in paragraph 11.01
hereof), LICENSEE, its AFFILIATE(S) and sublicensees shall be permitted for a
period of ninety (90) days, to complete the sale of its existing inventory of
ROYALTY-BASE PRODUCTS and LICENSOR shall be entitled to the payment of royalties
as provided in Article IV, paragraph 4.10 with respect thereto.
ARTICLE XII
ACKNOWLEDGMENTS AND REPRESENTATIONS
12.01 LICENSOR acknowledges that: (i) it is the sole and exclusive
owner of all right, title and interest in the LICENSED PATENT APPLICATION; (ii)
it has the right to grant the rights and licenses granted herein, and the
LICENSED PATENT APPLICATION is free and clear of any lien, encumbrance, security
interest or restriction on license; (iii) it has not previously granted, and
will not grant during the term of this Agreement any right, license, or interest
in and to the LICENSED PATENT APPLICATION, or any portion thereof, inconsistent
with the license granted to LICENSEE herein; (iv) to the best of its knowledge,
no other intellectual property owned by LICENSOR is necessary to practice the
LICENSED PATENT APPLICATION; and (v) there are no threatened or pending actions,
suits, investigation, claims or proceedings in any way relating to the LICENSED
PATENT APPLICATION.
12.02 LICENSEE represents and warrants that: (i) it is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California; and (ii) the execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action on the
part of LICENSEE.
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ARTICLE XIII
GENERAL
13.01 This Agreement shall not be transferred or assigned by LICENSEE
to any party other than to a successor or assignee of the entire business
interest of LICENSEE without the approval of LICENSOR'S REPRESENTATIVE.
13.02 This Agreement does not confer any immunity from or defenses
under the antitrust laws, the laws and regulations pertaining to or administered
by the Food and Drug Administration, or the export laws nor does it confer
immunity from a charge of patent misuse. Furthermore, LICENSEE'S, AFFILIATE(S),
or sublicensee's acquisition and exercise of rights hereunder are not immunized
from the operation of any state or Federal law by reason of the source of the
grant. This Agreement does not constitute an endorsement by LICENSOR of any
ROYALTY-BASE PRODUCTS and LICENSEE shall not state or imply in any medium that
such endorsement exists as the result of this Agreement.
13.03 LICENSOR makes no warranty, express or implied, or any
representations regarding the patentability, validity or scope of the LICENSED
PATENT APPLICATION or that LICENSED PATENT APPLICATION may be exploited without
infringing patents of third parties.
13.04 LICENSEE, its AFFILIATE(S) and sublicensees agree that
ROYALTY-BASE PRODUCTS will be manufactured substantially in the United States in
compliance with 35 United States Code 209(b).
13.05 The decision of LICENSOR'S REPRESENTATIVE on any requirement,
dispute, interpretation, modification, or termination of this Agreement shall be
reduced to writing and a copy mailed or otherwise furnished to LICENSEE. Such
decision shall be final, provided that LICENSEE may, within thirty (30) days of
receiving notice of such decision, submit a written appeal through LICENSOR'S
REPRESENTATIVE and the Intellectual Property Counsel of the Army to the Judge
Advocate General, Department of the Army, Washington, DC 20310-2207, which
appeal shall set forth in detail the decision being appealed and the basis of
the appeal and may include appropriate supporting materials. Implementation of
such decision shall be stayed pending a final resolution of such appeal. Pending
such final resolution, LICENSEE shall proceed diligently with the performance of
its obligations under this Agreement.
13.06 Except as expressly provided herein, the parties agree that, for
the term of this Agreement and for five (5) years thereafter, the receiving
party shall keep completely confidential and shall not publish or otherwise
disclose and shall not use for any purpose except for the purposes contemplated
by this Agreement any CONFIDENTIAL INFORMATION furnished to it by the disclosing
party hereto pursuant to this Agreement, except that it can be established by
the receiving party by competent proof that such CONFIDENTIAL INFORMATION:
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i. was already known to the receiving party, other than
under an obligation of confidentiality, at the time of disclosure;
ii. was generally available to the public or otherwise part
of the public domain at the time of its disclosure to the receiving party;
iii. became generally available to the public or otherwise
part of the public domain after its disclosure and other than through any act or
omission of the receiving party in breach of this Agreement; or
iv. was subsequently lawfully disclosed to the receiving
party by a person other than a party hereto.
13.07 LICENSEE may use or disclose information disclosed to it by
LICENSOR to the extent such disclosure is reasonably necessary in filing or
prosecuting patent applications, prosecuting or defending litigation, complying
with applicable governmental regulations or otherwise submitting information to
tax or governmental authorities, conducting clinical trials, acquiring potential
investors who are bona fide investment banks and/or venture capital firms, or
making a permitted sublicense or otherwise exercising its rights hereunder,
provided that if LICENSEE is required to make any such disclosure of LICENSOR'S
CONFIDENTIAL INFORMATION, other than pursuant to a confidentiality agreement, it
will give reasonable notice to LICENSOR of such disclosure and, save to the
extent inappropriate in the case of patent applications, will use its best
efforts to secure confidential treatment of such information prior to its
disclosure (whether through protective orders or otherwise). LICENSEE agrees to
keep records of confidentiality agreements between itself and third parties in
accordance with the treatment of CONFIDENTIAL INFORMATION given in ARTICLE V,
paragraph 5.01, above.
13.08 The parties shall notify each other of any changes in name,
address, or business status, and any notice or report required to be given under
the provisions of this Agreement shall be considered duly given if mailed by
first class mail, postage prepaid and addressed as follows:
a. If to LICENSOR: Command Judge Advocate
U.S. Army Medical Research and Material Command
ATTN: MCMR-JA
Fort Detrick Frederick, Maryland 21702-5012
b. If to LICENSEE: Jenner Technologies, Inc.
828 Eastbrook Court
Danville, California 94506
Attention: Anthony E. Maida, III
Chief Executive Officer
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13.09 The interpretation and application of the provisions of this
Agreement shall be governed by the laws of the United States as interpreted and
applied by the Federal courts in the District of Columbia, United States of
America.
13.10 This Agreement constitutes the entire understanding between the
parties and neither party shall be obligated by any condition or representation
other than those expressly stated herein or as may be subsequently agreed to by
the parties hereto in writing.
13.11 All prior reviews and approvals required by regulations or law
have been obtained by the Command prior to the execution of this Agreement. The
Command official executing this Agreement has the requisite authority to do so.
Notwithstanding the delegation of authority to execute this Agreement to the
individual designated, the Secretary of the Army has reserved to the Assistant
Secretary of the Army (Research, Development and Acquisition) the opportunity
provided by 15 U.S.C. Section 3710a(c)(5)(A), to disapprove or require the
modification of this Agreement within 30 days of the date it is presented to him
or her by the Command.
13.12 Failure of any party to enforce any term, covenant, or condition
herein contained shall not be deemed to be a waiver of such term, covenant, or
condition herein contained.
13.13 Neither party shall be in default hereunder by reason of its
delay in the performance of, or failure to perform, any of its obligations
hereunder, other than LICENSEE'S obligations to make payments to LICENSOR in
accordance with the terms of this Agreement, if such delay is caused by strikes,
acts of God or the public enemy, riots, or without the fault or negligence of
the other party. During the pendency of such intervening event, each of the
parties shall take all reasonable steps to furnish the services required
hereunder by other means, and, in any event, shall, upon termination of such
intervening event, forthwith resume obligations under this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in triplicate originals by its duly authorized officers
or representatives.
FOR LICENSEE:
Anthony E. Maida, III
-----------------------------------------
CEO
-----------------------------------------
Jenner Technologies
-----------------------------------------
/s/ ANTHONY E. MAIDA
-----------------------------------------
Dated: February 22, 1996
-----------------------------------
Witness: Jackie A. Field
---------------------------------
Dated: 2/22/96
-----------------------------------
FOR LICENSOR:
/s/ ERNEST T. TAKAFUJI
-----------------------------------------
Ernest T. Takafuji, Colonel, MC
-----------------------------------------
Director
-----------------------------------------
Walter Reed Army Institute of Research
-----------------------------------------
Dated: 29 March 1996
-----------------------------------
Witness: Marvin Rogul
---------------------------------
Dated: 29 March 1996
-----------------------------------
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EXHIBIT 10.9
DAMD17-94-0773
A COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
BETWEEN
JENNER TECHNOLOGIES, INC.
TIBURON, CALIFORNIA 94920
("JENNER:)
AND
WALTER REED ARMY INSTITUTE OF RESEARCH
WASHINGTON, DC 20307-5100
("WRAIR")
A. WHEREAS the Federal Technology Transfer Act of 1986, 15 USC 3710a,
provides each Federal agency with the authority to permit the Directors of
Government-operated Federal Laboratories to enter into cooperative research and
development agreements (CRDAs) with Federal non-Federal entities, including
private firms and organizations. This authority allows Federal laboratories to
accept, retain, and use funds, personnel, services, and property from
collaborating parties and to provide personnel, services, and property to
collaborating parties. This authority also includes the disposition of patent
rights in any inventions which may result from such collaboration, or by
delegation of the Assistant Secretary of the Army for Research, Development and
Acquisition, other patent rights which are owned by the Government.
B. WHEREAS WRAIR and JENNER desire to collaborate in research and
development on formulation of liposome-encapsulated vaccines.
C. WHEREAS Title 41 Code of Federal Regulations 304 governs the
acceptance of payment from non-federal sources for travel expenses and is the
authority for receipt of in-kind travel expenses contemplated under this
Agreement.
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1. DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings and such meanings should be equally applicable to both the singular and
the plural forms of the terms defined:
1.1 "Agreement" means this Cooperative Research and Development
Agreement.
1.2 "Invention" means any invention or discovery which is or may be
patentable or otherwise protected under Title 35 of the United States Code.
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1.3 "Made" in relation to any Invention means the conception or first
actual reduction to practice of such Invention.
1.4 "Proprietary Information" means JENNER information marked with a
proprietary legend or orally disclosed by JENNER which embodies proprietary
technical information or trade secrets which is confidential business or
financial information provided that such information:
(i) is not generally known or available from other sources
without obligations concerning their confidentiality;
(ii) has not been made available by the owners to others
without obligation concerning its confidentiality; and
(iii) is not already available to the Government without
obligation concerning its confidentiality.
1.5 "Subject Data" means all recorded information, including without
limitation, protocols, procedures, data and results, in any form, first produced
in the performance of this Agreement.
1.6 "Subject Invention" means any invention Made in the performance of
work under this Agreement.
Article 2. Sponsored Research
2.1 Scope of Work. Sponsored research performed under this Agreement
shall be performed in accordance with the Statement of Work (SOW), incorporated
as a part of this Agreement at Appendix A. WRAIR agrees to provide WRAIR
resources, facilities and equipment required for the performance of the SOW.
2.2 Review of Work. Quarterly conferences shall be held between WRAIR
and JENNER personnel for the purpose of reviewing the progress of the work under
this Agreement. It is understood that the nature of this sponsored research is
such that completion within the period of performance specified, or within the
limits of financial support allocated, cannot be guaranteed. Accordingly, it is
agreed that all sponsored research will be performed by WRAIR on a best efforts
basis.
2.3 Principal Investigator(s). Any work required by WRAIR under the SOW
will be performed under the direction of [*], who as co-principal investigator
has responsibility for the scientific and technical conduct of this project on
behalf of WRAIR. Any work required by JENNER under the SOW will be performed
under the direction of [*], who as co-principal investigator has responsibility
for the scientific and technical conduct of this project on behalf of JENNER.
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2.4 [*] agrees to [*] and be [*] to the performance of work under this
Agreement. The parties will mutually agree upon the [*] pursuant to this
section. [*] will be solely [*] and, in performing the work under this
Agreement, [*] but only those entitlements and benefits provided pursuant to an
employment contract between [*] will be a [*] who will be assigned [*]. It is
understood by [*] that this is a commitment of [*] and that such employee is
required for the performance of the work. [*] agrees to assign [*] to the [*]
and to provide the [*] access to those [*] and resources necessary for the
accomplishment of the SOW, consistent with the [*] internal management policies.
[*] agrees to continue the [*], even if this Agreement is terminated earlier.
2.5 Scope Change. If at any time either co-principal investigator
determines that the research data dictates a substantial change in the direction
of the work, the parties shall make a good faith effort to agree on any
necessary change(s) to the SOW.
2.6 Final Report. The parties shall prepare a final written report
detailing the Subject Data and the results and achievements of this research
collaboration, including, without limitation, any Subject Inventions, within
three months after completing the SOW.
Article 3. Financial Obligation
3.1 Performance Condition. The performance of research by WRAIR under
this Agreement is conditioned on the advance payment by JENNER of WRAIR's
partial cost for the performance of the research as provided in Section 3.2.
WRAIR shall not be obligated to perform any of the research specified herein or
to take any other action required by this Agreement if the agreed to funds are
not deposited as required by this Article.
3.2 Deposit Account. JENNER shall pay a total of [*] to WRAIR upon the
execution of this Agreement for the performance of the research specified by
Article 2. Such funds shall be deposited in Department of the Army Special
Collaborative Agreement Account No. ______.
3.3 Accounting Records. WRAIR shall maintain separate and distinct
current accounts, records, and other evidence supporting all its expenditures
under this Agreement. WRAIR shall provide JENNER a semiannual report accounting
for the use of JENNER's funds and a final fiscal report within six months after
completing the SOW or ending its research and development activities under this
Agreement. The accounts and records of WRAIR which are relevant to the conduct
of this project shall be available for reasonable inspection and copying by
JENNER or its authorized representative at least once per year.
Article 4. Title to Physical Property
4.1 Physical Property. All materials or equipment developed or acquired
under this Agreement by the parties shall be the property of the party which
developed or acquired the property.
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ARTICLE 5. PATENT RIGHTS
5.1 Reporting. Each party shall promptly notify each other of all
Subject Inventions reported to either party by its employees and provide a
detailed written description of each Subject Invention within 30 days of when
any Subject Invention is Made. All Subject Inventions Made during the
performance of this Agreement shall be listed in the Final Report required by
this Agreement.
5.2 JENNER Subject Inventions. WRAIR, on behalf of the U.S. Government,
waives any ownership rights the U.S. Government may have in Subject Inventions
Made by JENNER employees and agrees that JENNER shall retain ownership of and
title to any Subject Inventions made solely by JENNER employees. JENNER shall
file patent applications on JENNER's Subject Inventions at its own expense.
JENNER agrees to grant the U.S. Government a nonexclusive, irrevocable, paid-up
license under its interest in any patents covering a JENNER Subject Invention,
to practice or have practiced, such patents throughout the world by, or on
behalf of the U.S. Government. Such nonexclusive license shall be evidenced by a
confirmatory license agreement prepared by JENNER in a form satisfactory to
WRAIR.
5.3 WRAIR Subject Inventions. WRAIR, on behalf of the U.S. Government,
shall retain ownership of and title to, and file patents on, each Subject
Invention Made solely by WRAIR employees. WRAIR agrees to grant Jenner an
exclusive license to such Subject Inventions, pursuant to Section 5.7 herein.
5.4 Joint Subject Inventions. In the event that Subject Inventions are
made jointly by WRAIR and JENNER employees, each party shall have an undivided
interest in such Subject Inventions. WRAIR shall have the initial option to file
patents on each Subject Invention Made jointly by JENNER and WRAIR employees.
WRAIR agrees to license to Jenner its entire right, title and interest in each
such joint Subject Invention, pursuant to Section 5.7 herein. JENNER agrees to
grant the U.S. Government a nonexclusive, irrevocable, paid-up license under its
interest in any patents covering a joint Subject Invention, to practice or have
practiced, such patents throughout the world by, or on behalf of the U.S.
Government. Such nonexclusive license shall be evidenced by a confirmatory
license agreement prepared by JENNER in a form satisfactory to WRAIR.
5.5 Filing of Patent Applications. The party having the right to retain
title and/or file patent applications on a specific Subject Invention may elect
not to file patent applications, provided it so advises the other party within
90 days from the date it reports the Subject Invention to the other party.
Thereafter, the other party may elect to file patent applications on the Subject
Invention at its own expense.
5.6 Patent Expenses. The expenses attendant to the filing of patent
applications shall be [*] shall provide [*] documents retained in the official
patent application files by the applicable patent office. The parties [*] patent
applications resulting from this Agreement.
5.7 Exclusive License.
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5.7.1 Grant. WRAIR, on behalf of the U.S. Government, hereby
agrees to grant to JENNER an exclusive irrevocable license, with right to grant
and authorize sublicenses, to each U.S. and foreign patent application, and any
division, substitution, continuation, continuations-in-part of such
applications, and any patents issued thereon, and any renewal, extension,
re-issue, or re-examination thereof, covering a Subject Invention, which is
owned in whole or part by WRAIR on behalf of the U.S. Government, to develop,
make, have made, use, sell, and have sold products and processes covered by such
patents and patent applications, subject to the reservation of a nonexclusive,
irrevocable, paid-up license to practice and have practiced the Subject
Invention(s) on behalf of the U.S. Government.
5.7.2 Exclusive License Terms. JENNER shall elect or decline
to exercise its right to acquire an exclusive license to any Subject Invention
within [*] of being informed by WRAIR of the Subject Invention. The terms of the
license provided for in Section 5.7.1 shall be negotiated promptly in good faith
and in conformance with the laws of the United States but shall include at least
the following terms: (i) a royalty rate of [*] within the scope of a valid claim
of an issued patent claiming a Subject Invention jointly owned by WRAIR and
JENNER; (ii) a royalty rate of [*] within the scope of a valid claim of an
issued patent claiming a Subject Invention owned solely by WRAIR. In addition,
such license shall provide for the payment of milestone payments by JENNER to
WRAIR, on a product-by-product basis, of: (i) [*], and (ii) [*]; provided,
however, no milestone payments shall be required with respect to [*]. Such
license shall terminate, on a country-by country basis, upon the expiration of
any patents licensed to Jenner pursuant to this Section 5.7, unless terminated
earlier pursuant to the terms of such Agreement.
ARTICLE 6. DATA AND PUBLICATION
6.1 Rights. Subject Data shall be jointly owned by the parties and may
be used by either party, subject to this Article 6. Either party shall, upon
request, have the right to review and receive copies of all Subject Data which
has not been delivered to the other party.
6.2 Proprietary Information. WRAIR agrees that any Proprietary
Information furnished by JENNER to WRAIR under this Agreement, or in
contemplation of this Agreement, shall be used, reproduced and disclosed by
WRAIR only for the purpose of carrying out this Agreement, and shall not be
disclosed by WRAIR to third parties unless prior written consent to the release
is obtained from JENNER.
6.3 Release Restrictions. WRAIR shall have the right to use all Subject
Data for any U.S. Governmental purpose, but shall not release Subject Data
publicly except: (i) subject to Section 6.4, WRAIR, in reporting results of
sponsored research, may publish Subject Data in technical articles and other
documents to the extent it determines to be appropriate; and (ii) WRAIR may
release such Subject Data where such release is required by law or court order.
6.4 Publication. WRAIR and JENNER agree to confer prior to the
publication of any Subject Data to assure that no Proprietary Information is
released and that patent rights are not
-5-
jeopardized. Prior to submitting an abstract or manuscript for review which
contains any Subject Data or results of the research under this Agreement, each
party shall have [*] to review each such proposed abstract or manuscript. Nor
shall WRAIR make any oral disclosure of Subject Data to third parties without
providing JENNER a written description of the topic and contents of any such
proposed disclosure at least [*] in advance of any oral disclosure.
6.5 FDA Documents. If this Agreement involves a product regulated by
the U.S. Food and Drug Administration (FDA), then the JENNER or the U.S. Army
Medical Research and Development Command, as appropriate, may file Subject Data
or any required documentation relating to the SOW with the FDA; provided,
however, each party shall request that any such filings be treated confidential
to the maximum extent allowed by law. In addition, the parties authorize and
consent to allow each other or its contractor or agent access to, or to
cross-reference, any documents filed with the FDA related to the product.
ARTICLE 7. REPRESENTATIONS AND WARRANTIES.
7.1 Representations and Warranties of WRAIR. WRAIR hereby represents
and warrants to JENNER as follows:
7.1.1 Organization. WRAIR is a Federal laboratory of the U.S.
Army Medical Research and Development Command and is wholly owned by the
Government of the United States and whose substantial purpose is the performance
of research, development or engineering;
7.1.2 Mission. The performance of the activities specified by
this Agreement are consistent with the mission of the WRAIR;
7.1.3 Authority. All prior reviews and approvals of this
Agreement required by regulations or law have been obtained by WRAIR prior to
the execution of this Agreement. The WRAIR official executing this Agreement on
behalf of WRAIR has the requisite authority to do so. Notwithstanding the
delegation of authority to execute this Agreement to the individual designated,
the Secretary of the Army has reserved to the Assistant Secretary of the Army
(Research, Development and Acquisition) the opportunity provided by 15 USC Sect.
3710a(c)(5)(A), to disapprove or require the modification of this Agreement
within 30 days of the date it is presented to him or her by WRAIR;
7.1.4 Statutory Compliance. WRAIR's Commander prior to
entering into this Agreement has given special consideration to entering into
CRDAs with small business firms and consortia involving small business firms.
7.1.5 No Conflicting Agreements. WRAIR has not previously
entered and during the term of this Agreement will not enter any agreement with
any third party granting rights inconsistent with those granted to JENNER
herein.
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7.2 Representations and Warranties of JENNER. JENNER hereby represents
and warrants to WRAIR as follows:
7.2.1 Corporate Organization. JENNER, as of the date hereof,
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California;
7.2.2 Power and Authority. JENNER has the requisite power and
authority to enter into this Agreement and to perform according to the terms
thereof;
7.2.3 Due Authorization. The Board of Directors of JENNER have
taken all actions required to be taken by law, JENNER's Charter, Certificate or
Articles of Incorporation, its bylaws or otherwise, to authorize the execution
and delivery of this Agreement;
7.2.4 No Violation. To the best of JENNER's knowledge, the
execution and delivery of this Agreement does not contravene any material
provision of, or constitute a material default under any material agreement
binding on JENNER, or any valid order of any court, or any regulatory agency or
other body having authority to which JENNER is subject.
ARTICLE 8. TERMINATION.
8.1 Termination by Mutual Consent. JENNER and WRAIR may elect to
terminate this Agreement, at any time by mutual consent.
8.2 Termination by Unilateral Action. Either party may unilaterally
terminate this entire Agreement at any time by giving the other party written
notice, not less than 30 days prior to the desired termination date.
8.3 Termination Procedures. In the event this Agreement terminates
before the SOW is completed, the parties shall return to the other all property
or information, including Proprietary Information, owned solely by the other.
Each party shall have the right to retain any joint property in its possession;
provided, however, that any party in the sole possession of joint property shall
promptly provide the other party with a copy or sample of such joint property on
the request of the other party. Upon the receipt of a written termination
notice, the parties shall not make any new commitments that relate to this
Agreement.
8.4 Termination Costs. Within 90 days following termination of this
Agreement, WRAIR shall submit a statement of all costs incurred prior to the
date of termination and for all termination costs. Any unspent funds provided to
WRAIR by JENNER shall be used to fund reasonable termination costs and any
remainder returned to Jenner. In the event funds are insufficient to cover all
of the termination costs, JENNER agrees to promptly meet with WRAIR to negotiate
a settlement agreement regarding the payment of any remaining reasonable
termination costs.
ARTICLE 9. DISPUTES.
-7-
9.1 Settlement. Any dispute arising under this Agreement which is not
disposed of by agreement of the co-principal investigators shall be submitted
jointly to the signatories of this Agree ment. A joint decision of the
signatories or their designees shall be the disposition of such dispute.
Notwithstanding the above, nothing in this section shall prevent any party from
pursuing any and all administrative and/or judicial remedies which may be
allowable.
ARTICLE 10. LIABILITY.
10.1 Property. Neither party shall be responsible for damages to any
property provided to, or acquired by, the other party pursuant to this
Agreement.
10.2 JENNER's Employees. JENNER agrees to indemnify and hold harmless
the U.S. Government for any loss, claim, damage or liability of any kind
involving an employee of JENNER arising in connection with this Agreement under
the provisions of the Federal Tort Claims Act, except to the extent that such
loss, claim, damage or liability is due in whole or part to the negligence or
wilful misconduct of WRAIR.
10.3 No Warranty. Except as specifically stated elsewhere in this
Agreement, WRAIR makes no express or implied warranty as to any matter
whatsoever, including the conditions of the research or any Subject Invention or
product, whether tangible or intangible, made, or developed under this
Agreement, or the ownership, merchantability, or fitness for a particular
purpose of the research or any Subject Invention.
10.4 Indemnification. JENNER holds the U.S. Government harmless and
indemnifies the U.S. Government for all liabilities, demands, damages, expenses
and losses arising out of use by JENNER of research and technical developments
solely owned by WRAIR developed pursuant to this Agreement, or out of any use,
sale or other disposition by JENNER of products made by the use of technical
developments solely owned by WRAIR developed pursuant to this Agreement;
provided, however, in no case shall JENNER be obligated to indemnify WRAIR or
the U.S. Government for any amount in excess of the research funds provided by
JENNER to WRAIR pursuant to this Agreement. This provision shall survive
termination or expiration of this Agreement.
ARTICLE 11. MISCELLANEOUS.
11.1 No Benefits. No member of, or delegate to the United States
Congress, or resident commissioner, shall be admitted to any share or part of
this Agreement, nor to any benefit that may arise therefrom; but this provision
shall not be construed to extend to this Agreement if made with a corporation
for its general benefit.
11.2 Governing Law. This Agreement shall be governed by the laws of the
United States Government.
-8-
11.3 Further Assurances. From time to time, either party shall at the
request of the other: (i) deliver to the other party such records, data or other
documents consistent with the provisions of this Agreement; (ii) execute and
deliver or cause to be delivered, all such consents, assignments, licenses, or
further instruments of transfer as provided by the Agreement to allow the
parties to obtain the benefits provided for herein.
11.4 Notices. All notices pertaining to or required by this Agreement
shall be in writing and shall be signed by an authorized representative and
shall be delivered by hand or sent by certified mail, return receipt requested,
with postage prepaid, addressed as follows:
If to JENNER: Anthony E. Maida, III
Chief Executive Officer
JENNER Technologies, Inc.
1895 Mountain View Drive
Tiburon, California 94920
If to WRAIR: Director
Walter Reed Army Institute of Research
ATTN: Office of Research Management
Washington, D.C. 20307-5100
Any party may change such address by notice given to the other party in the
manner set forth above.
11.5 Independent Contractors. The relationship of the parties to this
Agreement is that of independent contractors and not as agents of each other or
as joint venturers or partners.
11.6 Use of Name or Endorsements. (i) JENNER shall not use the name of
WRAIR or the Department of the Army on any product or service which is directly
or indirectly related to either this Agreement or any patent license or
assignment agreement which implements this Agreement, without the prior approval
of WRAIR. (ii) By entering into this Agreement WRAIR does not directly or
indirectly endorse any product or service provided, or to be provided, by
JENNER, its successors, assignees, or licensees. JENNER shall not in any way
imply that this Agreement is an endorsement of such products or service.
11.7 The rights specified in the provisions of this Agreement covering
"Patent Rights," "Data and Publication," and "Liability" shall survive the
termination or expiration of this Agreement.
ARTICLE 12. DURATION OF AGREEMENT AND EFFECTIVE DATE
12.1 Expiration of Agreement. This Agreement will automatically expire
on December 15, 1994, unless terminated earlier as provided by the terms of this
Agreement.
12.2 Effective Date. This Agreement shall enter into force as of
December 15, 1993.
-9-
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as follows:
For JENNER TECHNOLOGIES, INC.:
10/20/93 /s/ ANTHONY E. MAIDA
- ------------------------------- ---------------------------------------
Date Anthony E. Maida, III
Chief Executive Officer
JENNER Technologies, Inc.
For the U.S. GOVERNMENT:
30 September '93 /s/ AUGUST J. SALVADO
- ------------------------------- ---------------------------------------
Date August J. Salvado
Colonel, Medical Corps
Director, Walter Reed Army Institute of
Research
-10-
Cooperative Research and Development Agreement Between WRAIR and JENNER
Technologies, Inc.
APPENDIX A
STATEMENT OF WORK
[*]
-1-
DAMD17-94-0773
NOTICE OF MODIFICATION
of
COOPERATIVE RESEARCH AND DEVELOPMENT AGREEMENT
between
WALTER REED ARMY INSTITUTE OF RESEARCH
and
JENNER TECHNOLOGIES, INC.
WHEREAS, the Walter Reed Army Institute of Research ("WRAIR"),
Washington, DC and Jenner Technologies, Inc. ("JENNER"), 828 Eastbrook Court,
Danville, California 94506-1206, entered into a Cooperative Research and
Development Agreement ("Agreement") (Department of the Army Control Number
9311-M-C318, U.S. Army Medical Research and Materiel Command Control Number
DAMD17-94-0773) on December 15, 1993 for research and development on
"Formulation of Liposome-Encapsulated Vaccines," and inasmuch the parties desire
to modify the expiration date and the financial reimbursement provisions of the
Agreement,
NOW, THEREFORE, the parties agree as follows:
1. In Article 12.1 of the Agreement, the expiration date "December 15,
1994" is changed to read "December 15, 1997";
2. Article 3.2 of the Agreement is changed to read as follows:
"3.2 Deposit Account: JENNER shall reimburse WRAIR a total of
[*] for the performance of the research specified by Article 2. Such funds shall
be deposited in Department of the Army Special Collaborative Agreement Account
No. [to be named] as follows:
[*]
IN WITNESS WHEREOF, the parties have caused these modifications to be
executed by their duly authorized representatives as follows:
For JENNER TECHNOLOGIES, INC.:
/s/ ANTHONY E. MAIDA, III
----------------------------------------
Anthony E. Maida, III
Chief Executive Officer
Date: March 9, 1995
----------------------------------
For the UNITED STATES GOVERNMENT:
/s/ AUGUST J. SALVADO
----------------------------------------
August J. Salvado
Colonel, Medical Corps
Director, Walter Reed Army Institute of
Research
Date: 17 March '95
----------------------------------
-2-
EXHIBIT 10.10
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement is signed as of November 20, 1994
("Execution Date"), but made effective as of May 5, 1993 ("Effective Date"), by
and between Jenner Technologies, a California corporation (the "Company") and
Anthony E. Maida III (the "Executive").
1. Position and Duties. The Company hereby hires the Executive and the
Executive hereby accepts employment as Chief Executive Officer of the Company.
The Executive will, to the best of his ability during his employment, devote his
full time and best efforts to the performance of the duties and functions of the
position of Chief Executive Officer of the Company, and in the performance of
those duties, will comply with the policies of the Company and the direction of
the board of directors. If requested, the Executive agrees to serve as a
director of the Company without any additional compensation.
2. Compensation.
(a) Salary. The Company agrees to pay the Executive and the
Executive agrees to accept as compensation for his services, a monthly base
salary of $8,333.33 payable in accordance with the Company's standard payroll
policy. The first and last payment by the Company to the Executive shall be
prorated, if necessary, to reflect a commencement or termination date other than
the first or last working day of a pay period. From time to time, the board of
directors will consider increases in Executive's annual rate of salary in light
of the Executive's individual performance and other relevant factors.
(b) Benefits. The Executive will be entitled to standard
vacation, fringe benefits and reimbursement for reasonable out-of-pocket
expenses in accordance with the Company's practices covering executive
personnel, as such may be in effect from time to time.
3. Proprietary Information Agreement. In connection with the execution
of this Agreement, the Executive reaffirms and agrees to abide by the terms of
his Employee Proprietary Information Agreement with the Company (except to the
extent that such agreement references at- will employment).
4. Terms and Termination.
(a) Term. Except as otherwise set forth herein, this Agreement
will terminate on November 20, 1997; provided however that, on each anniversary
of the Execution Date, the term of this Agreement shall be extended to a date
three (3) years from the date of the respective anniversary date, unless the
Company shall have given Executive sixty (60) days notice prior to such
anniversary date of its intent not to renew the Agreement. The final date of
termination of this Agreement is referred to herein as the "Termination Date."
(b) Termination For Cause. This Agreement may be terminated by
the Company at any time for cause (as defined below) without any severance
obligation on the part of the Company. For purposes of this Agreement, "for
cause" shall include (i) acts of moral turpitude by the
-1-
Executive, (ii) willful or habitual neglect of Executive's obligations under
this Agreement, (iii) an act of theft or dishonesty involving the Company, (iv)
the wrongful disclosure of trade secrets, (v) any other intentional action by
Executive that causes material damage to the Company or its relations with
customers, suppliers, employees or consultants, or (vi) conviction of the
Executive of a felony.
(c) Termination Without Cause. This Agreement may be
terminated by the Company at any time without cause; provided that the Company
shall pay to Executive as a severance payment (i) an amount equal to Executive's
remaining salary payable under this Agreement through and including the
Termination Date computed at Executive's then applicable monthly base salary,
(ii) any bonus which has not been paid at the time of termination, and (iii) any
vacation, sick leave or other accrued benefits payable in accordance with the
Company's policies then in effect. The payment to the Executive of the severance
payment described in this Section 4(c) and the vesting of stock described in
Section 4(e) below will discharge all of the Company's obligations to the
Executive.
(d) Termination in the Event of Bankruptcy. In the event that
the Company is the subject of, (i) any bankruptcy proceeding, (ii) assignment
for the benefit of creditors, (iii) a general cessation of operations, or (iv)
any other determination that the Company is insolvent and unable to continue its
normal business functions and activities (individually and/or collectively
"Bankruptcy"); and such Bankruptcy is the cause for termination of this
Agreement, then the Company shall pay to Executive $50,000 as a severance
payment, to the greatest extent such payment is allowed by applicable law and/or
any court of competent jurisdiction.
(e) Termination by Executive; Death. This Agreement may be
terminated by the Executive at any time upon 30 days written notice, in which
case the Company shall have no severance obligation to the Executive. If
Executive dies before the end of the term of this Agreement, Executive's estate
shall be entitled to receive (i) an amount equal to Executive's remaining salary
payable under this Agreement through and including the Termination Date computed
at Executive's then applicable monthly base salary, (ii) any bonus which has not
been paid at the time of death, and (iii) any vacation, sick leave and other
accrued benefits payable in accordance with the Company's policies then in
effect.
(f) Status as an Employee; Vesting of Stock. Executive's
status as an employee of the Company will be deemed to cease on the date of any
termination of employment as provided above. In the event that this Agreement is
terminated by the Company without cause (as provided in Section 4(c) above), or
the Executive dies or becomes disabled (as such terms is defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended) before the end of the
term of this Agreement (as provided in the second sentence of Section 4(e)
above), then 100% of the shares subject to the Stock Purchase Agreement dated as
of December 10, 1992 between the Company and the Executive (the "Stock Purchase
Agreement") shall be released from the Repurchase Option set forth in Section 4
of such Stock Purchase Agreement.
-2-
5. Conflicting Agreements. The Executive represents and warrants that
he is free to enter into this Agreement and that there are no employment
contracts or restrictive covenants preventing full performance of his duties
hereunder.
6. Withholding. All amounts payable to Executive under this Agreement
shall be subject to applicable withholding by the Company for taxes payable by
the Executive.
7. Miscellaneous.
(a) Assignment. This Agreement is predicated upon the unique
abilities and personal relationship of Executive and the Company. Accordingly,
Executive may not assign this Agreement or any of his rights hereunder without
the express written consent of the Company. This Agreement will inure to the
benefit of and will be binding upon the successors and assigns of the Company.
(b) Entire Agreement; Amendment. This Agreement contains the
entire agreement of the parties, and may not be changed orally, but only by a
subsequent writing signed by the party against whom enforcement of such change
is sought.
(c) Prior Agreements; Waiver. This Agreement supersedes any
prior agreement between the parties related to the subject matter hereof. It is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by the same party.
(d) Severability. In case one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement but such provisions
shall be deemed deleted and such deletion shall not affect the validity of any
other provision of this Agreement.
(e) Governing Law. This Agreement shall be governed by and
construed according to the internal laws of the State of California. The federal
and state courts of the state of California shall have exclusive jurisdiction to
adjudicate any dispute rising out of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
JENNER TECHNOLOGIES ANTHONY E. MAIDA III
By:/s/ LYNN SPITLER /s/ ANTHONY E. MAIDA
-------------------------- --------------------------
Title:Chairman
-----------------------
-3-
EXHIBIT 10.11
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement is signed as of November 20, 1994
("Execution Date"), but made effective as of May 5, 1993 ("Effective Date"), by
and between Jenner Technologies, a California corporation (the "Company") and
Lynn E. Spitler, M.D. (the "Executive").
1. Position and Duties. The Company hereby hires the Executive and the
Executive hereby accepts employment as President of the Company. The Executive
will, to the best of her ability during her employment, devote her full time and
best efforts to the performance of the duties and functions of the position of
President of the Company, and in the performance of those duties, will comply
with the policies of the Company and the direction of the board of directors. If
requested, the Executive agrees to serve as a director of the Company without
any additional compensation.
2. Compensation.
(a) Salary. The Company agrees to pay the Executive and the
Executive agrees to accept as compensation for her services, a monthly base
salary of $8,333.33 payable in accordance with the Company's standard payroll
policy. The first and last payment by the Company to the Executive shall be
prorated, if necessary, to reflect a commencement or termination date other than
the first or last working day of a pay period. From time to time, the board of
directors will consider increases in Executive's annual rate of salary in light
of the Executive's individual performance and other relevant factors.
(b) Benefits. The Executive will be entitled to standard
vacation, fringe benefits and reimbursement for reasonable out-of-pocket
expenses in accordance with the Company's practices covering executive
personnel, as such may be in effect from time to time.
3. Proprietary Information Agreement. In connection with the execution
of this Agreement, the Executive reaffirms and agrees to abide by the terms of
her Employee Proprietary Information Agreement with the Company (except to the
extent that such agreement references at- will employment).
4. Terms and Termination.
(a) Term. Except as otherwise set forth herein, this Agreement
will terminate on November 20, 1997; provided however that, on each anniversary
of the Execution Date, the term of this Agreement shall be extended to a date
three (3) years from the date of the respective anniversary date, unless the
Company shall have given Executive sixty (60) days notice prior to such
anniversary date of its intent not to renew the Agreement. The final date of
termination of this Agreement is referred to herein as the "Termination Date."
(b) Termination For Cause. This Agreement may be terminated by
the Company at any time for cause (as defined below) without any severance
obligation on the part of the Company. For purposes of this Agreement, "for
cause" shall include (i) acts of moral turpitude by the
-1-
Executive, (ii) willful or habitual neglect of Executive's obligations under
this Agreement, (iii) an act of theft or dishonesty involving the Company, (iv)
the wrongful disclosure of trade secrets, (v) any other intentional action by
Executive that causes material damage to the Company or its relations with
customers, suppliers, employees or consultants, or (vi) conviction of the
Executive of a felony.
(c) Termination Without Cause. This Agreement may be
terminated by the Company at any time without cause; provided that the Company
shall pay to Executive as a severance payment (i) an amount equal to Executive's
remaining salary payable under this Agreement through and including the
Termination Date computed at Executive's then applicable monthly base salary,
(ii) any bonus which has not been paid at the time of termination, and (iii) any
vacation, sick leave or other accrued benefits payable in accordance with the
Company's policies then in effect. The payment to the Executive of the severance
payment described in this Section 4(c) and the vesting of stock described in
Section 4(e) below will discharge all of the Company's obligations to the
Executive.
(d) Termination in the Event of Bankruptcy. In the event that
the Company is the subject of, (i) any bankruptcy proceeding, (ii) assignment
for the benefit of creditors, (iii) a general cessation of operations, or (iv)
any other determination that the Company is insolvent and unable to continue its
normal business functions and activities (individually and/or collectively
"Bankruptcy"); and such Bankruptcy is the cause for termination of this
Agreement, then the Company shall pay to Executive $50,000 as a severance
payment, to the greatest extent such payment is allowed by applicable law and/or
any court of competent jurisdiction.
(e) Termination by Executive; Death. This Agreement may be
terminated by the Executive at any time upon 30 days written notice, in which
case the Company shall have no severance obligation to the Executive. If
Executive dies before the end of the term of this Agreement, Executive's estate
shall be entitled to receive (i) an amount equal to Executive's remaining salary
payable under this Agreement through and including the Termination Date computed
at Executive's then applicable monthly base salary, (ii) any bonus which has not
been paid at the time of death, and (iii) any vacation, sick leave and other
accrued benefits payable in accordance with the Company's policies then in
effect.
(f) Status as an Employee; Vesting of Stock. Executive's
status as an employee of the Company will be deemed to cease on the date of any
termination of employment as provided above. In the event that this Agreement is
terminated by the Company without cause (as provided in Section 4(c) above), or
the Executive dies or becomes disabled (as such term is defined in Section
22(e)(3) of the Internal Revenue Code of 1986, as amended) before the end of the
term of this Agreement (as provided in the second sentence of Section 4(e)
above), then 100% of the shares subject to the Stock Purchase Agreement dated as
of December 10, 1992 between the Company and the Executive (the "Stock Purchase
Agreement") shall be released from the Repurchase Option set forth in Section 4
of such Stock Purchase Agreement.
-2-
5. Conflicting Agreements. The Executive represents and warrants that
she is free to enter into this Agreement and that there are no employment
contracts or restrictive covenants preventing full performance of her duties
hereunder.
6. Withholding. All amounts payable to Executive under this Agreement
shall be subject to applicable withholding by the Company for taxes payable by
the Executive.
7. Miscellaneous.
(a) Assignment. This Agreement is predicated upon the unique
abilities and personal relationship of Executive and the Company. Accordingly,
Executive may not assign this Agreement or any of her rights hereunder without
the express written consent of the Company. This Agreement will inure to the
benefit of and will be binding upon the successors and assigns of the Company.
(b) Entire Agreement; Amendment. This Agreement contains the
entire agreement of the parties, and may not be changed orally, but only by a
subsequent writing signed by the party against whom enforcement of such change
is sought.
(c) Prior Agreements; Waiver. This Agreement supersedes any
prior agreement between the parties related to the subject matter hereof. It is
agreed that a waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
by the same party.
(d) Severability. In case one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement but such provisions
shall be deemed deleted and such deletion shall not affect the validity of any
other provision of this Agreement.
(e) Governing Law. This Agreement shall be governed by and
construed according to the internal laws of the State of California. The federal
and state courts of the state of California shall have exclusive jurisdiction to
adjudicate any dispute rising out of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
JENNER TECHNOLOGIES LYNN E. SPITLER, M.D.
By:/s/ ANTHONY E. MAIDA /s/ LYNN SPITLER
-------------------------- -------------------------
Title: CEO
-3-
EXHIBIT 10.12
December 26, 1996
Thomas P.H. Twaddell, M.D., F.A.C.G.
600 Duncan Street
San Francisco, CA 94131
Dear Dr. Twaddell:
On behalf of Jenner Technologies (the "Company"), I am pleased to
invite you to join the Company as its Vice President of Clinical Research and
Product Development. In this position, you will be expected to devote your fill
business time, attention and energies to the performance of your duties with the
Company. The effective date of your employment will be on or before January 15,
1997.
The terms of this offer of employment are as follows:
1. Compensation. The Company will pay you a salary of $7,083.33
twice a month in accordance with the Company's standard
payroll policies ($170,000 annual). Your salary will begin as
of the effective date of employment. The first and last
payment by the Company to you will be adjusted, if necessary,
to reflect a commencement or termination date other than the
first or last working day of a pay period.
2. Benefits. You will be entitled during the term of your
employment to the Company's standard vacation and benefits
covering employees, as such may be in effect from time to
time, in addition, when you travel for Company business
matters, the Company will reimburse you for all business class
flights, first class if business class not available.
3. Stock Option. Subject to action by the Company's Board of
Directors and compliance with applicable state and federal
securities laws, the Company will grant to you an option to
purchase 150,000 shares of the Company's Common Stock pursuant
to the Company's 1993 Employee Stock Plan, or other Employee
Stock Plan adopted by the Company (the "Plan"). The exercise
price of the option will be $1.73 per share. The option will
vest over four years with 1/4 of the shares subject to the
option vesting one year from the effective date of your
employment and 1/48 of the shares vesting at the end of each
full month thereafter until all
shares are vested, subject to all provisions of the Plan and
your continued employment with the Company.
4. At-Will Employment. Your employment with the Company is for no
specified period and constitutes "at-will" employment. As a
result, you are free to terminate your employment at any time,
for any reason or for no reason. Similarly, the Company is
free to terminate your employment at any time, for any reason
or for no reason. In the event of termination of your
employment, you will not be entitled to any payments,
benefits, damages, awards or compensation other than as set
forth herein and as may otherwise be available in accordance
with the Company's established employee plans and policies at
the time of termination.
5. Severance. In the event your employment with the Company is
terminated without Cause by the Company, you will be entitled
to continuation of your base salary for a period of six (6)
months. For purposes of this severance provision, "Cause"
means gross negligence, gross misconduct, habitual neglect of
duties, dishonesty, criminal acts, violation of any state or
federal securities laws, and disobeyment of the lawful
policies or instruction of the Board of Directors.
6. Proprietary Information Agreement. As a condition of accepting
this offer of employment, you will be required to complete,
sign and return the Employee Proprietary Information
Agreement, attached hereto, along with a copy of this offer
letter.
7. Immigration Laws. For purposes of federal immigration laws,
you will be required to provide to the Company documentary
evidence of your identity and eligibility for employment in
the United States. Such documentation must be provided within
3 business days of the effective date of your employment, or
your employment relationship with the Company may be
terminated.
8. General. This offer letter, the Employee Proprietary
Information Agreement and the agreement(s) representing stock
options granted to you under the Plan, when signed by you, set
forth in the terms of your employment with the Company and
supersede any and all prior representations and agreements,
whether written or oral. This agreement can only be amended in
a writing signed by you and an officer of the Company. Any
waiver of a right under this agreement must be in writing.
This agreement will be governed by California law.
We look forward to you joining the Company. If the foregoing terms are
agreeable, please indicate your acceptance by signing the enclosed copy of this
letter in the space provided below and returning it to me, along with your
completed and signed Employee Proprietary Information Agreement. This offer will
terminate if not accepted on or before January 15, 1997.
Sincerely,
JENNER TECHNOLOGIES
/s/ ANTHONY E. MAIDA
------------------------------
Anthony E. Maida, III, MA, MBA
Chief Executive Officer
ACCEPTED:
/s/ Thomas Twaddell
- --------------------------------------
Thomas P.H. Twaddell, M.D., F.A.C.G.
EXHIBIT 10.13
FIRST AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
----------------------------------------------------
THIS FIRST AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT is entered
into as of the date provided below among Jenner Technologies, a California
corporation (the "Company"), the purchasers of the Company's Series A Preferred
Stock under that certain Series A Preferred Stock Subscription Agreement
confirmed and accepted as of May 28, 1993 (the "Series A Investors") and Hayden
Leason (the "Series B Investor"). Both the Series A Investors and the Series B
Investor are collectively referred to herein as the "Investors" and are listed
on the Schedule of Investors attached to this Agreement as Exhibit A.
RECITALS
WHEREAS, the Company and the Series A Investors are parties to that
certain Investor Rights Agreement dated May 7, 1993 (the "Prior Agreement"); and
WHEREAS, the Series A Investors have certain registration rights upon
conversion of their Series A Preferred Stock under the Prior Agreement; and
WHEREAS, the Company and Series A Investors wish to induce the Series B
Investor to purchase Series B Preferred Stock pursuant to the Series B Preferred
Stock and Warrant Purchase Agreement dated as of July 25, 1995; and
WHEREAS, the sale of the Series B Preferred Stock to the Series B
Investor is conditioned upon the registration rights being extended to the
Series B Investor; and
WHEREAS, the Prior Agreement may be amended as set forth in Sections
1.15 and 3.6 thereof; and
WHEREAS, the Series A Investors wish to amend and restate the Prior
Agreement to include the Series B Investor;
NOW THEREFORE, in consideration of the foregoing, the parties agree as
follows:
NOW THEREFORE, the parties hereby agree as follows:
1. Registration Rights. The Company covenants and agrees as follows:
1.1 Certain Definitions. As used in this Agreement, the
following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Act.
"Company" shall mean Jenner Technologies, a California
corporation.
"Holder" shall mean any person holding Registrable
Securities (or securities convertible into or exchangeable for Registrable
Securities) to whom the rights under this Section 1 were granted directly from
the Company and any person holding Registrable Securities (or securities
convertible into or exchangeable for Registrable Securities) to whom the rights
under this Section 1 have been transferred in accordance with Section 1.13
hereof.
"Initiating Holders" shall mean any Holders who in the
aggregate possess at least 80% of the Registrable Securities (or securities
convertible or exchangeable for Registrable Securities).
"Registerable Securities" means (i) the Common Stock
issued or issuable upon conversion of the Series A Preferred Stock issued
pursuant to the Series A Preferred Stock Subscription Agreements between the
Company and certain Series A Investors confirmed and accepted as of May 28,
1993, (ii) the Common Stock issued or issuable upon conversion of the Series B
Preferred Stock issued pursuant to the Series B Preferred Stock and Warrant
Purchase Agreement dated July 25, 1995 between the Company and the Series B
Investor, (iii) the Common Stock issued or issuable upon exercise of the Warrant
dated July 25, 1995 issued by the Company to the Series B Investor, and (iv) any
Common Stock of the Company issued or issuable in respect of the above described
securities upon any stock split, stock dividend, recapitalization, or similar
event, or any Common Stock otherwise issued or issuable with respect to the
above described securities, provided, however, that shares of Common Stock or
other securities shall only be treated as Registrable Securities if and so long
as they have not been (A) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, or (B) sold or are
available for immediate sale in the opinion of counsel to the Company in a
transaction exempt from the registration and prospectus delivery requirements of
the Act so that all transfer restric tions and restrictive legends with respect
thereto are removed upon the consummation of such sale.
The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except
as otherwise stated below, incurred by the Company in complying with Sections
1.5, 1.6 and 1.7 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the
Company required to bear the legend set forth in Section 1.3 hereof.
"Act" means the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders.
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1.2 Restrictions on Transferability. The Restricted Securities
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Section 1, which conditions are intended to ensure compliance
with the provisions of the Act. Each Investor will cause any proposed purchaser,
assignee, transferee, or pledgee of the Securities held by an Investor to agree
to take and hold such securities subject to the provisions and upon the
conditions specified in this Section 1.
1.3 Restrictive Legend. Each certificate or instrument
representing Registrable Securities, or securities convertible into,
exchangeable for or exercisable for Registrable Securities shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with a legend in the following form (in addition to any
legend required under applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. SUCH
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY
RECEIVES AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER
IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SAID ACT.
Each Investor and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the securities in
order to implement the restrictions on transfer established in this Section 1.
1.4 Notice of Proposed Transfers. The holder of each
certificate representing Restricted Securities by acceptance thereof agrees to
comply in all respects with the provisions of this Section 1.4. Prior to any
proposed sale, assignment, transfer or pledge of any Restricted Securities
(other than (i) a transfer not involving a change in beneficial ownership (ii)
in transactions involving the distribution without consideration of Restricted
Securities by any of the Investors to any of its partners, or retired partners,
or to the estate of any of its partners or retired partners in a transaction not
involving a change in beneficial ownership, (iii) a transfer in compliance with
Rule 144, so long as the Company is furnished with satisfactory evidence of
compliance with such Rule, (iv) transfers by any holder who is an individual to
a trust for the benefit of such holder or his family, and (v) transfers by gift,
will or intestate succession to the spouse, lineal descendants or ancestors of
any holder or spouse of a holder), unless there is in effect a registration
statement under the Act covering the proposed transfer, the holder thereof shall
give written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied, at such holder's expense by either
(i) an unqualified written opinion of legal counsel who shall, and whose legal
opinion shall be, reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be effected without registration under the Act, or (ii) a "no
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action" letter from the Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto, whereupon the
holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of the notice delivered by
the holder to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Section
1.3 above, except that such certificate shall not bear such restrictive legend
if in the opinion of counsel for such holder and the Company such legend is not
required in order to establish compliance with any provision of the Act.
1.5 Requested Registration.
(a) In case the Company shall receive from Initiating
Holders a written request that the Company effect any registration,
qualification or compliance with respect to at least 80% of such shares of
Registrable Securities the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts
to effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 20 days after receipt of such written notice from the
Company;
Provided, however, that the Company shall not be obligated to
take any action to effect any such registration, qualification or compliance
pursuant to this Section 1.5:
(A) In any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in effecting such registration, qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as may be
required by the Act;
(B) Prior to the earlier of (i) February
15, 1999 or (ii) within six months of the effective date of any registered
public offering of the Company's stock;
(C) During the period starting with the
date sixty (60) days prior to the Company's estimated date of filing of, and
ending on the date six (6) months immediately following the effective date of,
any registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided
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that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(D) If the aggregate offering price to
the public from the proposed sale of such Registrable Securities would be less
than $7,500,000;
(E) After the Company has effected one
such registrations pursuant to this Section 1.5(a), and such registration has
been declared or ordered effective;
(F) If the Company shall furnish to such
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for a registration statement to be filed at
such time, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a period not to
exceed 180 days from the date of receipt of written request from the Initiating
Holders.
Subject to the foregoing clauses (A) through (F), the Company
shall file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable, after receipt of the request
or requests of the Initiating Holders.
(b) In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). In such event, the right of any Holder to registration
pursuant to Section 1.5 shall be conditioned upon such Holder's participation in
the underwriting arrangements required by this Section 1.5, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by a majority in interest of the Initiating Holders, but
subject to the Company's reasonable approval. Notwithstanding any other
provision of this Section 1.5, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof (except those Holders who have indicated to
the Company their decision not to distribute any of their Registrable Securities
through such underwriting) in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the time of
filing the registration statement. No Registrable Securities excluded from the
underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares.
-5-
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration, and such Registrable Securities shall not
be transferred in a public distribution prior to 90 days after the effective
date of such registration, or such other shorter period of time as the
underwriters may require.
1.6 Company Registration.
(a) If at any time or from time to time the Company
shall determine to register any of its securities, either for its own account or
the account of a security holder or holders, other than (i) a registration
relating solely to employee benefit plans, or (ii) a registration relating
solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written
notice thereof; and
(ii) include in such registration (and any
related qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within 20 days after receipt of such written
notice from the Company, by any Holder.
(b) If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.6, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities or other securities to be included in such registration, provided,
however, that after the Company's initial firm commitment underwritten public
offering no such limitation shall reduce the percentage of such registration
consisting of Registrable Securities below 15%. The Company shall so advise all
Holders and other holders distributing their secu rities through such
underwriting and the number of shares of Registrable Securities and other
securities that may be included in the registration and underwriting shall be
allocated among all Holders and such other holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities and other
securities contractually entitled to registration in the offering held by such
Holders and such other holders at the time of filing the registration statement.
To facilitate the allocation of shares in accordance with the above provisions,
the Company may round the number of shares allocated to any Holder or holder to
the nearest 100 shares. If any Holder or holder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing
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underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 90 days after the effective date of the registration
statement relating thereto, or such other shorter period of time as the
underwriters may require.
(c) The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 1.6 prior to the
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration.
1.7 Registration on Form S-3.
(a) If any Holder or Holders request that the Company
file a registration statement on Form S-3 (or any successor form to Form S-3)
for a public offering of shares of the Regis trable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than two registrations pursuant to this
Section 1.7. The substantive provisions of Section 1.5(b) shall be applicable to
a registration initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall
not be obligated to take any action pursuant to this Section 1.7: (i) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Act; (ii) if the Company,
within ten (10) days of the receipt of the request of the initiating Holders,
gives notice of its bona fide intention to effect the filing of a registration
statement with the Commission within ninety (90) days of receipt of such request
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration which is
not appropriate for the registration of Registrable Securities) provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; (iii) during the period
starting with the date sixty (60) days prior to the Company's estimated date of
filing of, and ending on the date six (6) months immediately following, the
effective date of any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
with respect to an employee benefit plan), provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective; or (iv) if the Company shall furnish to such
Holder a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for registration statements to be filed at
such time, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 90 days from
the receipt of the request to file such registration by such Holder.
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1.8 Expenses of Registration. All Registration Expenses
incurred in connection with one registration pursuant to Section 1.5 shall be
borne by the Company. All Selling Expenses relating to securities registered on
behalf of the Holders and all other Registration Expenses shall be borne by the
Holders of such securities pro rata on the basis of the number of shares so
registered.
1.9 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a
registration statement with respect to such securities and use its best efforts
to cause such registration statement to become and remain effective for at least
ninety (90) days or until the distribution described in the Registration
Statement has been completed;
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing under writer of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
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(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1, (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities and (ii) a letter
dated such date, from the independent accountants of the Company, in form and
substance as is customarily given by independent accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
1.10 Indemnification.
(a) The Company will indemnify each Holder, each of
its officers and directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Act, against all expenses, claims, losses,
damages or liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held
by such Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the Act, and
each other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Act, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact
-9-
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited in an amount equal to the public offering price
of the shares sold by such Holder, unless such liability arises out of or is
based on willful conduct by such Holder. A Holder will not be required to enter
into any agreement or undertaking in connection with any registration under this
Section 6 providing for any indemnification or contribution on the part of such
Holder greater than the Holder's obligations under this Section 1.10(b).
(c) Each party entitled to indemnification under this
Section 1.10 (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, provided, however, that the Indemnifying Party
shall bear the expense of independent counsel for the Indemnified Party if the
Indemnified Party reasonably determines that representation of both parties by
the same counsel would be inappropriate due to actual or potential conflicts of
interest, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.11 Information by Holder. The Holder or Holders of
Registrable Securities included in any registration shall furnish to the Company
such information regarding such Holder or Holders, the Registrable Securities
held by them and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Section 1.
1.12 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to use its best efforts to:
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(a) Make and keep public information available, as
those terms are understood and defined in Rule 144 under the Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Act or the Securities Exchange Act of 1934, as amended.
(b) Use its best efforts to file with the Commission
in a timely manner all reports and other documents required of the Company under
the Act and the Securities Exchange Act of 1934, as amended (at any time after
it has become subject to such reporting requirements);
(c) So long as a Purchaser owns any Restricted
Securities to furnish to the Purchaser forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Act and the Securities Exchange Act of 1934 (at
any time after it has become subject to such reporting requirements), a copy of
the most recent annual or quarterly report of the Company, and such other
reports and documents of the Company and other information in the possession of
or reasonably obtainable by the Company as a Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Purchaser
to sell any such securities without registration.
1.13 Transfer of Registration Rights. The rights to cause the
Company to register securities granted Investor under Sections 1.5, 1.6 and 1.7
may be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by an Investor provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, and (ii) such assignee or transferee acquires at least 80,000 shares of
Registrable Securities or the securities into which they are convertible.
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned, in connection with a distribution by such Investor,
to any partner, former partner, affiliate or the estate of any such partner
without compliance with item (ii) above, provided written notice thereof is
promptly given to the Company.
1.14 Standoff Agreement. Each Holder agrees, so long as such
Holder holds at least one percent (1%) of the Company's outstanding voting
equity securities, in connection with the Company's initial public offering of
the Company's securities that, upon request of the Company or the underwriters
managing any underwritten offering of the Company's securities, not to sell,
make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Common Stock of the Company (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as may
be requested by the underwriters; provided, that all other Holders of at least
one percent (1%) of the Company's outstanding voting equity securities and all
of the officers and directors of the Company who own stock of the Company also
agree to such restrictions.
1.15 Amendment of Registration Rights. With the written
consent of the holders of more than 50% of the then outstanding Registrable
Securities (including the securities convertible into Registrable Securities),
the Company may amend this Section 1, or enter into any agreement with any
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holder or prospective holder of any securities of the Company which would allow
such holder or prospective holder to include such securities as Registrable
Securities under the provisions hereof.
1.16 Termination of Registration Rights. No Holder of
Registrable Securities shall be entitled to exercise any right provided in this
Section 1 after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten public offering
of its securities to the general public.
2. Financial Covenants.
2.1 Financial Statements. For so long as the Investor
(including any affiliated entities of the Investor) owns at least 250,000 shares
of Preferred Stock (or Common Stock issued upon conversion thereof) or until the
closing of a public offering pursuant to an effective registration statement
under the Act, whichever first occurs, the Company shall furnish to the Investor
the following financial statements and reports, such financial statements to be
prepared in accordance with then generally accepted accounting principles
consistently applied:
(a) as soon as available, and in any event within 30
days after the end of each month, an unaudited balance sheet of the Company as
of the end of such month and an unaudited statement of operations of the Company
for the portion of such fiscal year ended with the last day of such month
prepared in accordance with generally accepted accounting principles (except
that no footnotes need be provided) and certified by the chief financial officer
of the Company, subject, however, to normal year-end audit adjustments;
(b) as soon as available, and in any event within 90
days after the end of each fiscal year of the Company, a balance sheet of the
Company as of the end of such fiscal year, a statement of operations of the
Company for such fiscal year, and a statement of cash flows of the Company for
such fiscal year, all in reasonable detail and stating in comparative form the
figures as of the end of such fiscal year and for the previous fiscal year and
accompanied by an opinion addressed to the Company from independent certified
public accountants;
In the event that the Company at any time hereafter shall be
required, by law or by then generally accepted accounting principles to
consolidate its financial statements with those of a subsidiary corporation, the
Company shall thereafter furnish the financial statements required by this
Section 2.1 on a consolidated basis, and the monthly and annual financial
statements specified above shall be furnished with consolidating financial
statements.
2.2 Additional Information. For so long as the Investor is
entitled to receive information under Section 2.1 hereof, the Company shall (i)
furnish to the Investor such information con cerning the Company as the Investor
may from time to time reasonably request; (ii) offer the Investor the right to
visit the properties of the Company at reasonable times, to interview key
employees of the Company at their places of employment at reasonable times and
to examine the books of account of the
-12-
Company and to make copies therefrom; and (iii) furnish the Investor, upon
request, with a complete and correct copy of the minutes of proceedings of the
shareholders or Board of Directors.
2.3 Assignment of Certain Rights. The Investor may assign to
any transferee, other than a competitor of the Company, and after giving notice
to the Company, the rights granted pursuant to Sections 2.1 and 2.2 provided
such transferee acquires at least 250,000 shares of Preferred Stock (or Common
Stock issued upon conversion thereof); provided, further that any Investor may
assign to its constituent partners, former partners or the estate of any such
partners, other than a competitor of the Company, the rights granted pursuant to
Sections 2.1 and 2.2. The total number of shares of Preferred Stock (or Common
Stock issued upon conversion) held by the Investor shall be aggregated with any
affil iated entities in order to determine the Investor's eligibility to receive
rights under this Section 2.
3. Miscellaneous.
3.1 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
3.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on Attachment A, or at such other address as such party
may designate by ten (10) days' advance written notice to the other parties.
3.6 Amendment and Waivers. Except as may be otherwise provided
in Section 1.15, any provision of this Agreement may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), with the written consent of the
Company and the Investors holding a majority of the shares held by all
Investors. Any amendment or waiver effected in accordance with this Section
shall be binding upon all present and future Investors.
-13-
-14-
3.7 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
JENNER TECHNOLOGIES
Date:____________________ By: /s/ ANTHONY E. MAIDA
-----------------------------
Title: CEO
--------------------------
HAYDEN LEASON:
Date:____________________ /s/ HAYDEN LEASON
-----------------
Signature
SERIES A INVESTORS:
Date:____________________ ________________________________
Name
--------------------------------
Signature
-15-
Attachment A to First Amended and Restated Investor Rights Agreement
--------------------------------------------------------------------
<TABLE>
<CAPTION>
Name & Address of Investor List of Registrable Securities
- -------------------------- ------------------------------
<S> <C>
Hayden Leason Series A Preferred Stock - 8,000,000 shares
10 Monte Sol
Palmas Del Mar
Puerto Rico
William B. McClatchy 1982 Trust Series A Preferred Stock - 150,000 shares
William K. Coblentz and Carl Hoag, Co-Trustees
c/o Julie Bouchard
Coblenz, Cahen, McCabe & Breyer
222 Kearney Street, 7th Floor
San Francisco, CA 94108
William B. and Susan McClatchy Series A Preferred Stock - 150,000 shares
1885 Mountain View Drive
Tiburon, CA 94920
Nancy Donnell Stefansky Series A Preferred Stock - 250,000 shares
27255 Arnold Drive
Sonoma, CA 95476
</TABLE>
EXHIBIT 10.14
LEASE AGREEMENT
1. Parties. This lease, dated for reference purposes only, Tuesday,
August 13, 1996, is made by and between Bay Business Centers, Inc., Lessor, and
Jenner Technologies hereinafter called Lessee.
2. Premises. Lessee hereby leases from Lessor the premises described as
2010 Crow Canyon Place, Suite #100, San Ramon, CA 94583, Office #330 & #332.
3. Term. A six month term shall commence on September 1, 1996 and shall
continue until February 1, 1997. Lessee shall give a 60-day notice in writing of
its intent to renew or cancel Lease Agreement, prior to termination date of
February 1, 1997. If a 60-day notice is not rendered, Lessor will consider Lease
Agreement to be renewed for an additional term, at the then going rate. Holdover
- - in the event Lessee holds over beyond the end of the Lease term, the monthly
recurring charges shall be assessed at 150% their monthly rate and the holdover
period shall be for no less than one month.
4. Possession. If Lessor for any reason whatsoever cannot deliver
possession of the leased premises to Lessee at the commencement of the term
hereof, this shall not be void or voidable, nor shall Lessor be liable to Lessee
for any loss or damage resulting therefrom, nor shall the expiration date of the
above term be in any way extended, but in that event, all rent shall be abated
during the period between the commencement of the term, as provided for in
Paragraph 3 hereinabove, and the time Lessor delivers possession. In the event
that Lessor shall permit Lessee to occupy the leased premises prior to the
commencement date of the term, such occupancy shall be subject to all of the
provisions of this Lease Agreement. Such early possession shall not advance the
termination date hereinabove provided.
5. Rent. Lessee agrees to pay Lessor the sum of $1050.00 per month plus
$110.00 per phone set for phone equipment rental per month due on the first day
of each month. Any installment of rent or any other recurring sums due from
Lessee not received by Lessor within five (5) days after such amount is due
shall be assessed a late charge equal to ten percent (10%) of such overdue
amount plus $50.00. Clerical Services and Other Services incurred shall be
invoiced semimonthly on the 15th and last day of each month. Payment for said
services are due and payable within thirty (30) days of billing date. A late
charge equal to two percent (2%) plus $10.00 will be assessed on said services
if payment is not received within thirty (30) days of billing date. If an
installment for rent or invoice for services is overdue more than thirty (30)
days, Lessor has the right to discontinue all services upon the thirty-first
(31st) day of delinquency. Billing inquiries and/or change of address should be
directed towards: Bay Business Centers, Inc., Attn: Accounting Dept., 4900
Hopyard Road, Suite #100, Pleasanton, California 94588. In the event this Lease
Agreement term starts on a day other than the first of the month, the monthly
recurring charges shall be prorated for the current month and collected with the
first full month plus last month.
The monthly rental rate stated herein is predicated on providing office
space and services, as provided in Paragraphs 13 and 14, for 1 person(s).
Additional Reception Service $100.00/each additional person - w/o voice mail
(receiving calls & caller's) $125.00/each additional person - with voice mail
Lessee hereby agrees to notify Lessor in writing no less than thirty
(30) days prior to addition of staff members for which Lessor will provide
services.
6. Prepaid Rent & Opening Charges. Concurrently with Lessee's execution
of this Lease Agreement, Lessee shall pay the Lessor the sum of:
<TABLE>
<CAPTION>
RECURRING CHARGES (1ST & LAST)
- -------------------------------------------------------------------------------------------------------
<S> <C>
Office Rent (1st & last) (recurring charge)............................................. $2100.00
Additional Users (1st & last) (recurring charge)........................................ $0.00
Furniture:
(1st & last) (recurring charge)......................................................... $200.00
Mail Forwarding Service (1st & last) (recurring charge)................................. $0.00
Storage Rental (1st & last) (recurring charge).......................................... $0.00
Additional Voice Mail Box Rental ($25/each/month) (1st & last) (recurring charge)....... $0.00
Voice Mail Paging (1st & last) (recurring charge)....................................... $0.00
Phone Line Service - Dial Tone (1st & last) (recurring charge).......................... $120.00
Phone Equipment Rental (1st & last) (recurring charge).................................. $220.00
Speed Dial (1st & last)(recurring charge)............................................... $0.00
Conference Calling (1st & last) (recurring charge)...................................... $0.00
Call Forwarding (1st & last) (recurring charge)......................................... $0.00
Delayed Call Forwarding (1st & last) (recurring charge)................................. $0.00
Pacific Bell Directory Listing ($2/mo.) (1st & last) (recurring charge)................. $4.00
Copy Pkg. (1st) (recurring charge)...................................................... $0.00
Conference Pkg. (1st) (recurring charge)................................................ $0.00
Administrative Pkg. (1st) (recurring charge)............................................ $0.00
Secretarial Pkg. (1st) (recurring charge)............................................... $0.00
ONE-TIME/INSTALLATION CHARGES
- -----------------------------------------------------------------------------------------
Administrative Start-up Fee (one-time charge)........................................... $125.00
Additional Users Administrative Start-up Fee (one-time charge)..........................
Cleaning Fee ($200/Ofc.-less than 1 yr.) (one-time charge).............................. $200.00
Furniture Move Fee (one-time charge).................................................... $0.00
Furniture Set-Up Fee (one-time charge).................................................. $0.00
Lobby Directory Listing (one-time charge)............................................... $40.00
Key Deposit ($65/set X 2 Key Set(s)) (refundable)....................................... $130.00
Single Key Deposit ($33/key X (refundable)..............................................
Storage Installation (one-time charge).................................................. $0.00
Voice Mail Installation (one-time charge)............................................... $0.00
Voice Mail Paging Installation (one-time charge)........................................ $0.00
Phone Line Installation (one-time charge)............................................... $241.00
Fax/Modem Install (one-time charge)..................................................... $185.00
Phone Equipment Installation (one-time charge).......................................... $370.00
Calling Feature Installation (one-time charge).......................................... $0.00
---------
TOTAL.......................................................................... $3935.00
---------
</TABLE>
*Phone Line Service represents monthly fee for dial tone. Phone Line Usage
(outgoing calls) is a variable charge and will be billed semimonthly, due within
10 days of statement date.
-2-
7. Use. The premises are to be used for sales and administrative
purposes only.
8. Conditions. Lessee shall not disturb, annoy, endanger or
inconvenience other tenants in the building or suite, nor use the premises for
any immoral, unlawful, or sleeping purposes, nor violate any law or ordinance or
commit waste, nuisance or damage upon or about the property.
9. Repairs, Maintenance and Alterations. Lessee shall at all times
during the term hereof, at its sole cost and expense, keep the premises and
every part thereof in good condition and repair, except damage thereto by fire,
earthquake, act of God or the elements. Lessee hereby waives the right to make
repairs at Lessor's expense under any law, statute or ordinance with respect
thereto now or hereafter in effect. Unless otherwise expressly provided herein,
Lessor shall not be required to make any improvements or repairs of any kind or
character on or to the leased premises during the term of this Lease Agreement.
Lessee shall return, upon expiration of this Agreement the premises in their
original configuration, design, and condition to Lessor. Lessee shall, at its
own cost and expense, repair or replace any damage or injury to the leased
premises, or any part thereof, caused by Lessee or Lessee's agents, employees,
invitees, licensees, or visitors; provided, however, if Lessee fails to make
such repairs or replacements promptly, Lessor may, at its option, make such
repairs or replacements, and Lessee shall reimburse the cost thereof to Lessor
on demand, together with interest at the maximum annual rate permitted by law
from the date of such work.
If Lessee vacates the premises and leaves the premises in a condition
requiring painting, carpet cleaning, or other maintenance to restore the
premises to leasable condition, a minimum fee of $200.00 per office will be
assessed and confirmed in the termination meeting (if conducted) or within 30
days of date of vacancy.
Lessee agrees to keep a floor mat under any and all chairs with
rollers/wheels at all times to protect the carpeting.
10. Abandonment. If Lessee abandons or vacates the premises, Lessor may
at its option terminate this Lease Agreement, re-enter the premises and remove
all property.
11. Essence of Time. Time is of the essence of this Lease Agreement and
all provisions hereof.
12. Insurance. Lessee shall indemnify and hold harmless Lessor as
respects to any bodily injury or property damage arising out of their operations
and business conducted on premises. Lessee shall maintain liability insurance in
amounts no less than $300,000 combined single limit for bodily injury and
property damage. Lessee shall provide Lessor with a certificate of insurance as
evidence of the above conditions and Lessor shall be named as an additional
insured.
-3-
13. Services. Included in the monthly rental specified in Paragraph 5
herein, Lessee shall be entitled to the following clerical and administrative
services:
Full-time Receptionist Service Mail Processing Service
(8:30 a.m.-5:00 p.m., Monday-Friday Incoming Mail Sorted
excluding holidays) Outgoing - daily mail 10 pcs.
Telephone Answering Voice Mail 24 hrs./day,
8:30 a.m.-5:00 p.m. 7 days/week
Monday-Friday, by Receptionist, Complimentary 100 Voice Mail Msgs./Box
(excluding holidays) Additional messages @ $.35/ea.
Access to Office, Building, & Copier
24 hrs./day, 7 days/week
Hourly Office Rental/ Access to:
Conference Room Facilities Secretarial Services
By Reservation 8:30 a.m. - 5:00 p.m.
4 Hours/month included Monday-Friday,
(non-cumulative) (excluding holidays)
(Billed as Utilized, see Exhibit B)
Lessee hereby agrees all telephone equipment and line services will be
coordinated by Lessor with Lessor's telephone vendor. Lessee shall not modify
nor change outlets, telephone sets, or jacks.
14. Services & Non-Service Items. Services and non-service items shall
be invoiced semi-monthly on the 15th and last day of each month. Payment for
said services are due and payable within thirty (30) days of billing date. A
finance charge of 2% per month will be assessed for all services and recurring
charges unpaid beyond 30 days of the invoice date.
At the end of a term, all charges and credits will be applied. It is
understood freight bills and vendor charges may take up to 60 days to pass
through Lessee, therefore a 90-day period may be required to reimburse credits
or conclude final account balance.
If collection time is required due to delinquent account status a fee
of $45/hour will be assessed for administrative time at a minimum of $9.00 per
collection contact.
SERVICES
- --------
Secretarial Service Minimum billable unit 1/10 of an hour.
See Exhibit B for Rates
Word Processing (keyboarding) Minimum billable unit 3/10 of an hour.
See Exhibit B for Rates Minimum per page 3/10 of an hour(input).
Editing - Minimum 2/10 of an hour.
-4-
Standard Turnaround - 1-3 pages (24 hrs.) 4 or more pages - turnaround
determined by Bay Business Centers, Inc.
Lessee agrees that during the term of this Agreement and for six (6)
months after its termination will not offer employment to or hire any of the
employees of Lessor. If Lessee does not keep that agreement, Lessee will be
liable to Lessor for damages in the sum of twenty-five percent (25%) of the
annual compensation of each employee involved, it being mutually agreed by
Lessee and Lessor that this provision for liquidated damages is reasonable and
that the actual damage which would be sustained by Lessor as the result of a
failure to keep the agreement would be, from nature of the case, impracticable
or extremely difficult to fix.
Further, Lessee shall not provide, utilize, or sell any services or
non-service items, which are provided by Bay Business Centers, Inc., as listed
on Exhibit B to other tenants or clients of Bay Business Centers, Inc., or for
any other person or company.
Lessee shall not contract with an independent contractor, temporary
personnel agency, or individual for the purpose of providing secretarial, word
processing, or any services Bay Business Centers, Inc. provides.
If Lessee wishes to employ an administrative assistant or clerical
staff member, it is with the understanding an additional office must be leased
from Bay Business Centers, Inc. and prior written approval is obtained from Bay
Business Centers, Inc. for its use.
15. Notices. In every instance where it shall be necessary or desirable
for the Lessee to serve any notice or demand upon the Lessor, such notice or
demand shall be sent by United States "Registered" or "Certified" mail, postage
prepaid, addressed to:
Ms. Marilyn L. Newton
Bay Business Centers, Inc.
2010 Crow Canyon Road, Suite 100
San Ramon, CA 94583
or at such other address of Lessor, as may appear on the records of Lessee. Any
notice or demand to be given by the Lessor to the Lessee shall be effective if
mailed to (Lessee's administrative office):
Mr. Tony Maida
Jenner Technologies
828 Eastbrook Ct.
Danville, CA 94506
Notice mailed as aforesaid shall be deemed to have been served at the time of
postal meter cancellation date.
-5-
16. Occupancy/Use of Premises. Lessee shall not assign this Lease nor
permit the occupancy or use of any part thereof without the written permission
of Lessor.
Lessee will not install or maintain a coffee maker or copier machine in
Lessee's office. Lessee further acknowledges smoking is not permitted within the
suite and must be restricted to outside of the suite.
17. Attorneys Fees. In an event of any legal action or proceeding
brought by either party against the other under this Lease Agreement, the
prevailing party shall be entitled to recover all its costs and expenses,
including without limitation the fees and costs of appeal, if any, of its
attorneys of such action or proceeding in such amount as is reasonable.
LESSEE: LESSOR:
Jenner Technologies Bay Business Centers, Inc.
By: /s/ ANTHONY E. MAIDA By: /s/ MARILYN L. NEWTON
----------------------------- -----------------------
Anthony E. Maida, III Title: President
Chief Executive Officer Name: Marilyn L. Newton
Jenner Technologies
828 Eastbrook Court
Danville, CA 94506
-6-
Exhibit A
[Plan of Premises]
Exhibit B
Minimum time usage is assessed as an "Administrative Assist"* at $2.00/each
Priority Service Charges
- --------------------------------------------------------------------------------
1-4 Hours=Priority 1+50% 4-8 Hours=Priority 2+25% Overtime Required= +100%
<TABLE>
<CAPTION>
Project Classification
====================================================================================================================================
CLASS DESCRIPTION CLASS DESCRIPTION
====================================================================================================================================
<S> <C> <C> <C>
1 Typed or clearly written source document; no edits 2 Typed or written requiring minor edits/single level
required. outline format/minor tabbing.
- ------------------------------------------------------------------------------------------------------------------------------------
3 Difficult to read; major edits required. 4 Technical.
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
CODE SERVICE DESCRIPTION RATE UNITS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AAA Administrative Assistance - Bookkeeping or Mgt. Assistance.......... 30.0 Per Hour
ADT Administrative Assists* (minimum clerical fee)...................... 2.0 Each
AIR Airborne Shipping................................................... 0.0 Cost + 20%
ASV Answering Service................................................... 100.0 Monthly
BIN Binding............................................................. 3.5 Each
SCP Color Prints (Laser)................................................ 2.5 Each
COP Copying............................................................. .1 Each
CRF Conference Room/Flex Ofc. Rental (COD Clients)...................... 25.0 Per Hour
CRC Conference/Flex Ofc. Rental (On-Account Clients).................... 20.0 Per Hour
CSP Coffee by the Pot (for meetings).................................... 10.0 Each
DIR Directory Listing (or directory change)............................. 40.0 Each
DSS Disk Storage (200.000 characters/disk).............................. 20.06 Months
DUP Duplicate Statement................................................. 5.0 Each
EMS Extra Messages (after monthly allowance)............................ .3 Each
FAX Facsimile Service................................................... 1.0 Each Pg.
FMA Furniture Initial Set-up............................................ 50.0 Per Office
FMV Furniture Move...................................................... 0.0 Variable
FNT Furniture Rental.................................................... 0.0 Per Month
FXW Facsimile Service - Word Processing Work TO a Client................ .2 Each Pg.
GRP Graphics............................................................ 55.0 Per Hour
IFM If/Relay Message/Paging (Special Msg. Handling)..................... 2.0 Each
LAM Lamination (Business Card Size or 8 1/2 x 11)....................... 1.5 or 4.00 Each
LMC Long Handwritten Message............................................ 2.0 Each
LPO List/Label Printout................................................. 2.5 Page
MLG Mailings: Parcel/Express/Certified Mail Prep....................... 4.0 Each
MSS Mailing Address Svc................................................. 35.0 Monthly
OLS Overnight/Express Letter Service.................................... 12.5 Each
PCC Phone Call (Outgoing Calls made by BBC Staff)............75/local; 1.25/toll; 2.50/LD Each
PHH Parcel Handling - Parcel Delivery to Office......................... 2.0 Each
POS Postage............................................................. 0.0 Cost + 20%
PRS Presentations - Multiple Font Documents............................. 45.0 Per Hour
SPO Printouts (per page or envelope).................................75/black; 2.50/color Per/Pg.
REN Rent (monthly recurring per contract)............................... 0.0 Variable
SSS Resume & Consultation Services...................................... By Quote Per Service
SCN Scanning............................................................ 10.0 Per Image
SHP Ship via BBC (client uses their Acct. #)............................ 1.0 Each Piece
SCR Secretarial Service - Regular, 24-hour Turnaround................... 22.0 Per Hour
SC2 Secretarial Service - 4-8/hour Turnaround........................... 27.5 Per Hour
SC1 Secretarial Service - 1-4/hour Turnaround........................... 33.0 Per Hour
SCV Secretarial Service - Requiring Overtime............................ 44.0 Per Hour
SPS Spreadsheets........................................................ 40.0 Per Hour
TER Telephone Equip. Rental............................................. 55.0 Per Set/Mo.
UPS UPS Shipment (Parcels).............................................. 0.0 Cost + 20%
VMS Voice Mail Box...................................................... 25.0 Each
WIT Witness Signatures.................................................. 6.0 Each
WCR Word Processing Client - Regular, 24-hour Turnaround................ 30.0 Per Hour
WC2 Word Processing Client - 4-8/hour Turnaround........................ 37.5 Per Hour
WC1 Word Processing Client - 1-4/hour Turnaround........................ 45.0 Per Hour
WCV Word Processing Client - Requiring Overtime......................... 60.0 Per Hour
WPR Word Processing Tenant - Regular, 24-hour Turnaround................ 27.0 Per Hour
WP2 Word Processing Tenant - 4-8/hour Turnaround........................ 33.7 Per Hour
WP1 Word Processing Tenant - 1-4/hour Turnaround........................ 40.5 Per Hour
WPV Word Processing Tenant - Requiring Overtime......................... 54.0 Per Hour
YSS Supplies (see Supplies Price List).................................. 0.0 Variable
</TABLE>
PRICES SUBJECT TO CHANGE AT THE DISCRETION OF BAY BUSINESS CENTERS, INC.
-1-
EXHIBIT 11.1
STATEMENT OF COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1994 1995 1996
----------- ----------- -----------
<S> <C> <C> <C>
Net Loss ........................................... (705,111) (876,866) (2,687,835)
Weighted average shares of Common Stock outstanding 1,398,996 1,410,923 2,453,904
Shares related to staff accounting bulletin topic 4D:
Stock options ................................... 164,008 164,008 164,008
Common Stock .................................... 1,700,443 1,700,443 657,936
Shares used in computing net loss per share ........ 3,263,447 3,275,374 3,275,848
Net loss per share ................................. $ (0.22) $ (0.27) $ (0.82)
Calculation of shares outstanding for computing pro
forma net loss per share:
Shares used in computing net loss per share ..... 3,263,447 3,275,374 3,275,848
Adjusted to reflect the effect of the assumed con-
version of Preferred Stock from the date of
issuance(1) ................................... 1,196,413 1,345,102 1,510,015
Shares used in computing pro forma net loss per share 4,459,860 4,620,476 4,785,863
Pro forma net loss per share ....................... $ (0.16) $ (0.19) $ (0.56)
</TABLE>
- -------------
(1) Series A and B.
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Selected
Financial Data" and "Experts" and to the use of our report dated January 14,
1997 (except Note 7, as to which the date is March , 1997), in the Registration
Statement (Form S-1 ) and related Prospectus of Jenner Technologies, Inc. for
the registration of 2,875,000 shares of its common stock and 2,875,000
redeemable common stock purchase warrants.
Palo Alto, California
March __,1997
- --------------------------------------------------------------------------------
The foregoing consent is in the form that will be signed upon the completion of
the restatement of capital accounts described in Note 7 the financial
statements.
Palo Alto, California /s/ ERNST & YOUNG LLP
February 18, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1428510
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1531024
<PP&E> 35637
<DEPRECIATION> 16153
<TOTAL-ASSETS> 1563392
<CURRENT-LIABILITIES> 213577
<BONDS> 3201985
0
2310400
<COMMON> 619155
<OTHER-SE> 4781726
<TOTAL-LIABILITY-AND-EQUITY> 1563392
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2546848
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140987
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (2687835)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2687835)
<EPS-PRIMARY> (.82)
<EPS-DILUTED> (.82)
</TABLE>
