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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 13, 2000
ICHOR CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware
(State of Incorporation)
000-25132 25-1741849
(Commission File Number) (I.R.S. Employer Identification No.)
17 Dame Street, Dublin 2, Ireland
(Address of principal executive offices, including postal code)
(3531) 679 1688
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
Effective December 13, 2000, ICHOR Corporation ("ICHOR") entered into two
share exchange agreements to, directly and indirectly, acquire
approximately 99.9% of the outstanding shares of Hippocampe S.A.
("Hippocampe") of Lyon, France in consideration of an aggregate of
approximately 33,311,398 shares of common stock and securities convertible
into shares of common stock of ICHOR (the "Transaction"). ICHOR currently
has issued 4,918,770 shares of common stock.
The Transaction was announced by a press release dated December 14, 2000
issued by ICHOR.
Description of the Transaction
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ICHOR has entered into a share exchange agreement ("Agreement A") with
shareholders owning approximately 50.7% of the issued and outstanding
shares of Hippocampe. Pursuant to Agreement A, such Hippocampe
shareholders will, on the closing (the "Closing") of the Transaction,
transfer their Hippocampe shares to ICHOR in consideration of ICHOR
issuing to them shares of common stock of ICHOR.
ICHOR has also entered into a separate share exchange agreement
("Agreement B") with shareholders owning approximately 49.2% of the issued
and outstanding shares of Hippocampe. Pursuant to Agreement B, such
Hippocampe shareholders will, on Closing, transfer their shares of
Hippocampe to a new wholly-owned subsidiary to be established by ICHOR
under the laws of Luxembourg ("LuxCo"). In exchange for their Hippocampe
shares, such Hippocampe shareholders will be issued preferred shares of
LuxCo (the "LuxCo Preferred Shares") which are convertible into shares of
common stock of ICHOR at the option of the holder. In all material
respects, the LuxCo Preferred Shares will have similar rights and
restrictions as shares of common stock of ICHOR, including the right to
receive dividends and the right to vote at shareholder meetings of ICHOR.
The rights and restrictions attaching to the LuxCo Preferred Shares will
be given effect, in part, by certain agreements to be entered at Closing
including: (i) a support agreement between ICHOR and LuxCo providing for
the support by ICHOR of the rights attaching to the LuxCo Preferred
Shares; (ii) a voting and exchange trust agreement among ICHOR, LuxCo and
a trustee providing for the voting rights of the LuxCo Preferred Shares in
ICHOR; and (iii) a shareholder agreement between ICHOR and the holders of
the LuxCo Preferred Shares providing for the support by ICHOR of the
rights attaching to the LuxCo Preferred Shares. Upon Closing, ICHOR will
contribute and transfer to LuxCo the Hippocampe shares that ICHOR receives
from Hippocampe shareholders under Agreement A in consideration for the
issuance to ICHOR by LuxCo of additional common shares of LuxCo.
The aggregate number of shares of common stock of ICHOR issuable upon
Closing and assuming the full conversion of LuxCo Preferred Shares is
approximately 33,311,398 shares.
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Prior to Closing, all of the currently outstanding shares of preferred
stock of ICHOR will be redeemed for cash and/or converted into shares of
common stock of ICHOR (the "Preferred Stock Reorganization"). ICHOR
expects that approximately 3,247,060 shares of common stock of ICHOR will
be issued pursuant to the Preferred Stock Reorganization.
The Transaction is subject to certain conditions customary for
transactions of this nature including, among other things, that: (i) ICHOR
receives shareholder approval to increase its authorized share capital to
a level necessary to complete the Transaction; and (ii) certain agreements
(the "Bank Agreements") made between Hippocampe and MFC Merchant Bank S.A.
("MFC Bank"), a licensed Swiss bank of Geneva, Switzerland, including an
underwriting agreement relating to MFC Bank's services as an advisor in
the Transaction and to raise capital for Hippocampe and a loan agreement
relating to a credit facility provided by MFC Bank to Hippocampe being
duly and validly assigned and transferred to ICHOR.
After giving effect to the Transaction and the Preferred Stock
Reorganization but prior to giving effect to any shares of common stock or
securities convertible into shares of common stock of ICHOR to be issued
pursuant to the Bank Agreements to MFC Bank, Hippocampe shareholders will
own approximately 80% of the issued and outstanding shares of common stock
of ICHOR.
Pursuant to the Bank Agreements, MFC Bank acted as an advisor in the
Transaction and will receive certain compensation in respect thereof,
including 2,017,854 shares of common stock of ICHOR to be issued upon the
Closing. In addition, MFC Bank provided a credit facility to Hippocampe
in connection with which MFC Bank has received certain fees as well as
share purchase warrants which, upon the Closing, will entitle MFC Bank to
purchase up to approximately 6,730,598 shares of common stock of ICHOR,
subject to final adjustment, for a period expiring on July 31, 2003.
MFC Bank is a wholly-owned subsidiary of MFC Bancorp Ltd., which
currently, directly and indirectly, owns approximately 43.7% of the
currently outstanding shares of common stock of ICHOR.
All of the shares of common stock and securities convertible into shares
of common stock of ICHOR acquired by the shareholders of Hippocampe
pursuant to the Transaction will be subject to resale restrictions in
accordance with United States federal and state securities laws.
Description of Hippocampe S.A.
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Hippocampe is a research and development company founded in 1990 under the
laws of France. The key principal of Hippocampe is Dr. Pierre-Francois
Serres, who holds several degrees in biology and human biology and one in
management. Dr. Serres began his career as a professor at the medical
faculty of the University of Lyon in France. From 1975 and prior to
starting Hippocampe, he held various teaching and research positions at
French medical universities and biomedical institutes, among them the
Institut Pasteur in Lyon, France.
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Hippocampe is devoted to fundamental and applied research in the area of
human and veterinary biology and medicine, with a particular emphasis on
humanitarian aspects (i.e., retroviral pathogenesis, such as AIDS,
oncogenesis and transplantation). Hippocampe's current objectives are to
develop vaccines, therapeutic molecules and specific therapies for certain
retroviral diseases or diseases with a viral autoimmune content. The first
targeted products and applications concern AIDS and multiple sclerosis.
Hippocampe has a limited operating history and its products are in an
early stage of development. However, Hippocampe believes it has made a
major discovery with a new and precise molecular mimicry between a
conserved part of GP41 (an HIV transmembrane protein) in a trimeric form
and Interleukine 2 ("IL-2"), the immune system's conductor protein. This
discovery may explain that an HIV infection can trigger an immune response
that turns against the immune system itself. Hippocampe has further found
that the above mimicry exists in three species affected by AIDS (i.e.
human, monkey and feline). This research indicates potential for a major
link that may have a significant impact in developing animal and human
AIDS vaccines and therapeutic molecules in the field of HIV and FIV
infection.
A portion of the research of Dr. Serres was recently published by the
French Academy of Sciences in a paper entitled "Molecular mimicry between
the trimeric ectodomain of the transmembrane protein of immunosuppressive
lentiviruses (HIV-SIV-FIV) and interleukin 2." This paper was
communicated by Dr. Luc Montagnier, an internationally recognized expert
in the AIDS research field. The findings of Dr. Serres were presented at
the Foundation Marcel Merieux International Symposium on Autoimmunity
Induced by Infection or Immunization.
The basic operational strategy of Hippocampe has been to focus its
research program into modules, each with its own scientific interest,
based on novel ideas developed by Hippocampe. These modules are
outsourced to specialized and complementary, public and private
laboratories. Hippocampe organizes the schedule and progress of the
individual research teams to facilitate the overall development of its
research goals. The research teams are authorized to publish their
results in due time and in agreement with Hippocampe. However, Hippocampe
retains all intellectual property rights in the research results and
applies for patent protection of combined research results whenever such
protection is justified.
Hippocampe's policy has been to protect its technology by obtaining base
patents followed by application patents. To date, Hippocampe has
registered two patents in France, each of which has subsequently been
registered pursuant to the Patent Cooperation Treaty (PCT).
Acquired immunodeficiency syndrome (AIDS) is a potentially fatal epidemic
disease caused by an infection by the human immunodeficiency virus (HIV).
According to the UNAIDS Report on the Global HIV/AIDS Epidemic published
in June 2000, the estimated number of persons living with HIV/AIDS at the
end of 1999 was approximately 34 million. This number is expected to
increase significantly in the coming years. The majority of HIV/AIDS
cases are in third world countries.
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Accordingly, Hippocampe believes that there is a significant existing and
future market for animal and human AIDS therapeutic and preventative
vaccines and for therapeutic agents to treat AIDS. However, Hippocampe
faces significant competition for both its therapeutics molecules and its
preventative vaccines. The biopharmaceutical and biotechnology
industries, especially as they relate to the treatment and prevention of
AIDS, are competitive and rapidly evolving industries. If Hippocampe is
successful in developing and approving its therapeutic molecules, it will
compete with existing developed and approved therapies. The U.S.
Department of Health and Human Services Food and Drug Administration (FDA)
has already approved a number of antiviral drugs to treat HIV and AIDS,
many of which have been developed by multinational companies. The field
of preventative vaccines is less highly developed.
Risk Factors
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The Transaction, the business of Hippocampe and any investment in the
shares of common stock of ICHOR are subject to a number of risk factors.
After completion of the Transaction, risk factors applicable to the
business of Hippocampe shall be equally applicable to ICHOR. Such risk
factors include but are not limited to the following:
The Transaction may not close.
The Transaction is subject to certain conditions customary for
transactions of this nature, including but not limited to ICHOR receiving
shareholder approval to increase its authorized share capital to a level
necessary to complete the Transaction. There can be no assurance that
these conditions, including ICHOR receiving such shareholder approval,
will be satisfied or that the Transaction will be completed without
significant delays or at all. If ICHOR and the shareholders of Hippocampe
do not complete the Transaction for any reason, ICHOR may subject itself
to a number of material risks, including but not limited to the following:
(i) the price of the shares of common stock of ICHOR may decline to the
extent that the current market price of shares of common stock of ICHOR
reflects a market assumption that each party will complete the
Transaction; and (ii) ICHOR must pay costs related to the Transaction even
if the Transaction is not completed. In addition, there can be no
assurance that, if the Transaction is completed, the operations of ICHOR
and Hippocampe will be successfully integrated.
The costs of the Transaction are substantial.
The costs to complete the Transaction are substantial and include, among
other things, fees for investment bankers, attorneys and accountants.
As a result of the Transaction, current holders of shares of common stock
of ICHOR will experience immediate and substantial dilution.
The issuance of securities of ICHOR and securities convertible into
securities of ICHOR in connection with the Transaction will reduce
existing shareholders' percentage ownership and voting
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power in ICHOR. The issuance of securities, by reducing the percentage of
equity of ICHOR owned by present shareholders, will reduce such present
shareholders' ability to influence the election of directors or any other
action taken by the holders of shares of common stock of ICHOR and may
reduce per share dividends, if any.
In addition, holders of shares of common stock of ICHOR will experience an
immediate and substantial dilution in net tangible book value per share
and other per share financial information as a result of the Transaction.
Hippocampe has a limited operating history and is expected to continue to
generate losses.
To date, Hippocampe has engaged primarily in research, development and
limited clinical testing and had an accumulated deficit and sustained net
losses in 1997, 1998, 1999 and in the nine months ended September 30,
2000. There can be no assurance that Hippocampe will generate profits in
the foreseeable future, if at all.
Hippocampe's products are in an early stage of development.
All of Hippocampe's products are at an early stage of development. The
successful commercialization of its products will require significant
further research, development, testing and regulatory approvals and
additional investment. If Hippocampe cannot advance its products beyond
the early stages of product development or demonstrate clinical efficacy,
it may never commercialize a product. There can be no assurance that any
of Hippocampe's products in the research or pre-clinical development stage
will yield results that would permit or justify clinical testing or that
products that advance to clinical testing will receive regulatory approval
or be commercialized. In addition, the process of obtaining regulatory
approval is costly, time consuming, uncertain and subject to unanticipated
delays. If Hippocampe is unable to commercialize the current research, or
if it is unable to commercialize the current research without significant
delay, it does not have other products from which to derive revenue.
Hippocampe's products may not achieve market acceptance.
There can be no assurance that any products Hippocampe successfully
develops, if approved for marketing, will achieve market acceptance.
Technological change and competition may render Hippocampe's potential
products obsolete.
The biopharmaceutical and biotechnology industries continue to undergo
rapid change and competition is intense and is expected to increase.
Competitors may succeed in developing technologies and products that are
more effective or affordable than any being developed by Hippocampe or
that would render Hippocampe's technology and products obsolete and
noncompetitive. Many of Hippocampe's competitors have substantially
greater experience, financial and technical resources and production,
marketing and development capabilities than Hippocampe.
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Political or social factors may delay or impair Hippocampe's ability to
market its products.
Products developed for use in addressing the HIV/AIDS epidemic have been
and will continue to be subject to competing and changing political and
social pressures. The political and social response to the HIV/AIDS
epidemic has been highly charged and unpredictable. These pressures can
transcend national barriers. They may delay or cause resistance to
bringing Hippocampe's products to market or limit the pricing of such
products.
Hippocampe may be dependent on third parties for manufacturing, marketing
and sales.
As Hippocampe has no manufacturing facilities, it may be entirely
dependent on third parties to produce its products. In addition, as
Hippocampe has no marketing or sales capabilities, it may be entirely
dependent on third parties to market and sell its products. There can be
no assurance that Hippocampe will be able to locate third parties to
manufacture, market and sell its products, to enter into agreements on
satisfactory terms or to have its products manufactured, marketed and sold
at a sufficiently low cost and in a sufficiently timely manner.
Hippocampe will need additional funds in the future to continue its
operations.
Hippocampe will require substantial future capital in order to continue to
conduct the time consuming research and development, clinical studies and
regulatory activities necessary to bring its potential products to market
and to establish production, marketing and sales capabilities. There can
be no assurance that the cash reserves of Hippocampe or the combined cash
reserves of Hippocampe and ICHOR together with any funding subsequently
received will satisfy capital requirements. In addition, there can be no
assurance that additional funding will be received or on reasonable terms.
Additional funding may significantly dilute shareholders of ICHOR or may
limit Hippocampe's rights to its currently developing technology. If
adequate funds cannot be obtained, Hippocampe may need to curtail
significantly its product development programs and/or relinquish rights to
its technologies or product candidates.
Hippocampe may become subject to product liability claims.
Hippocampe faces an inherent risk of exposure to product liability suits
in connection with vaccines being tested in human clinical trials and
products that may be sold commercially. Hippocampe may become subject to
a product liability suit if its products cause injury or if vaccinated
individuals subsequently become infected with HIV. Regardless of merit or
eventual outcome, product liability claims may result in decreased demand
for a vaccine, injury to the reputation of Hippocampe, withdrawal of
clinical trial volunteers and loss of revenues.
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Hippocampe may face difficulties in the conduct of its proprietary
research programs.
Hippocampe conducts a significant portion of its research and development
activities through proprietary research programs. Any conflict with its
collaborators could reduce its ability to obtain future collaboration
agreements and could negatively influence its relationship with existing
collaborators. Further, disagreements with Hippocampe's collaborators
could develop over rights to Hippocampe's intellectual property. Certain
collaborators could also become competitors in the future.
Hippocampe faces uncertainties related to patents and proprietary
technology.
Hippocampe's success will depend in part on its ability to: (i) obtain
patent protection for its products; (ii) preserve trade secrets; (iii)
prevent third parties from infringing on its patents; and (iv) refrain
from infringing on the patents of other parties, both domestically and
internationally. Hippocampe's present patent positions are highly
uncertain and any future patents it receives for potential products may be
subject to the same uncertainty. In addition, there can be no assurance
that certain claims in the patent application process will not fail or
that they receive such limited approval that the value of any patents
could diminish.
Any patents that Hippocampe procures may require cooperation with other
parties holding related patents. Hippocampe may have difficulty forming a
successful relationship with such other parties.
There can be no assurance that Hippocampe's patents or future patents will
be enforceable and afford adequate protection against competitors. In
addition, there can be no assurance that third parties will not claim that
Hippocampe's technology, current or future products or manufacturing
processes infringe their proprietary rights. Hippocampe may have to
undertake costly litigation to enforce any patents issued or licensed to
it or to determine the scope and validity of another party's proprietary
rights. There can be no assurance that a court of competent jurisdiction
would validate Hippocampe's issued or licensed patents. An adverse
outcome in litigation or an interference or other proceeding in a court or
patent office could subject Hippocampe to significant liabilities to other
parties, require Hippocampe to license disputed rights from other parties
or require Hippocampe to cease using such technology.
Hippocampe is dependent on certain key employees.
Hippocampe is highly dependent on its senior scientific staff,
particularly Dr. Pierre-Francois Serres. Dr. Serres has played a critical
role in the development of Hippocampe and Hippocampe's research and
development activities. The loss of his services may prevent Hippocampe
from achieving its scientific objectives.
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The price of shares of common stock of ICHOR may fluctuate significantly.
In connection with the Transaction, the shares of common stock of ICHOR
may experience significant volatility. Stock markets, in general, have
experienced significant volatility with respect to biopharmaceutical and
biotechnology based stocks. The volatility of biopharmaceutical and
biotechnology based stocks often does not relate to the operating
performance of the companies represented by the stock. Factors such as
announcements of the introduction of new products or services by
Hippocampe or its competitors, market conditions in the biopharmaceutical
and biotechnology sectors, rumors relating to Hippocampe or its
competitors and litigation or public concern as to safety of Hippocampe's
potential products may have a significant impact on the market price of
the shares of common stock of ICHOR.
Forward Looking Statements
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Certain statements included herein are "forward-looking statements" as
defined in the Private Securities Litigation Reform Act of 1995. These
statements appear in a number of places in this report and can be
identified by words such as "estimates", "projects", "expects", "intends",
"believes", "plans", or their negatives or other comparable words.
Forward-looking statements are not guarantees and may involve risks and
uncertainties. Actual results could differ materially from those
expressed or implied in the forward-looking statements. Actual results
may differ materially from those expressed in the forward-looking
statements due to risks facing operations or due to actual facts differing
from the assumptions underlying certain predictions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired.
To be filed by amendment.
(b) Pro forma financial information.
To be filed by amendment.
(c) Exhibits.
Exhibit No. Description
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10.1 Share Exchange Agreement dated for reference
December 13, 2000 between ICHOR Corporation
and certain shareholders of Hippocampe S.A.
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10.2 Share Exchange Agreement dated for reference
December 13, 2000 between ICHOR Corporation
and certain shareholders of Hippocampe S.A.
99.1 Press release dated December 14, 2000 of
ICHOR Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ICHOR CORPORATION
By: /s/ Jin-Soo Choi
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Jin-Soo Choi
President
Date: December 27, 2000
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ICHOR CORPORATION
FORM 8-K
EXHIBIT INDEX
Exhibit Number Description
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10.1 Share Exchange Agreement dated for reference
December 13, 2000 between ICHOR Corporation and
certain shareholders of Hippocampe S.A.
10.2 Share Exchange Agreement dated for reference
December 13, 2000 between ICHOR Corporation and
certain shareholders of Hippocampe S.A.
99.1 Press release dated December 14, 2000 of ICHOR
Corporation.
