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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
IXION BIOTECHNOLOGY, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 2834 59-3174033
(State or Other (Primary Standard (I.R.S. Employer
Jurisdiction of Industrial Identification
No.)
Incorporation or Classification
Organization) Code Number)
12085 Research Drive
Alachua, Florida 32615
904-418-1428
(Address and Telephone Number of Principal Executive Offices and Principal
Place of Business)
Weaver H. Gaines
12085 Research Drive
Alachua, Florida 32615
904-418-1428
(Name, Address and Telephone Number of Agent for Service)
------
Copy to:
Bruce Brashear, Esq.
920 NW 8th Ave., Suite A
Gainesville, FL 32601
352-336-0800
Facsimile No. 352-336-0505
Approximate Date of Proposed Sale to the Public: As soon as practicable
after this Registration Statement becomes effective.
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, 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(d)
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.
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/
<PAGE>
CALCULATION OF REGISTRATION FEE
Title of Each Amount to be Proposed Max Proposed Max Amount of
Class of Registered Offering Aggregate Registration
Securities to Price Per Offering Fee
be Registered Unit (1) Price (1)
Units,
consisting
of 400,000 Units $10.00 $4,000,000 $1,212
(a) One Share
Voting
Common
Stock,
par value
$0.01 per
share
("Common
Stock") 400,000 Shares
(b) .25 Charitable
Benefit
Warrant to
purchase 1
share of
Voting
Common Stock
at $20.00 per
share 100,000 Warrants
Voting Common
Stock purchasable
pursuant to
Warrants 100,000 Shares $20.00 $2,000,000 $606
(1) Estimated solely for purposes of calculating the registration fee.
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.
<PAGE>
IXION BIOTECHNOLOGY, INC.
------
CROSS REFERENCE SHEET
------
Form SB-2 Item Nos. and Caption Prospectus Caption
1. Front of Registration
Statement and Outside
Front Cover of Prospectus Outside Front Cover Page
2. Inside Front and Outside Inside Front and Outside Back
Back Cover Pages of Prospectus Cover Pages
3. Summary Information and Prospectus Summary; Risk
Risk Factors Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Plan of Distribution
6. Dilution Dilution
7. Selling Security-Holders Not Applicable
8. Plan of Distribution Outside Front Cover Page; Plan of
Distribution
9. Legal Proceedings Business - Legal Proceedings
10. Directors, Executive Officers,
Promoters and Control Persons Management
11. Security Ownership of Certain
Beneficial Owners and Management Principal Shareholders
12. Description of Securities Description of Securities; Shares
Eligible For Future Sale
13. Interest of Named Experts and
Counsel Legal Matters; Experts
14. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities Description of Securities
15. Organization Within Last Five
Years Certain Transactions
16. Description of Business Prospectus Summary; Business
17. Management's Discussion and
Analysis or Plan of Operation Management's Discussion and
Analysis of Financial Conditions
and Results of Operations
18. Description of Property Business
19. Certain Relationships and
Related Transactions Certain Transactions
20. Market for Common Equity and
Related Stockholder Matters Description of Securities
21. Executive Compensation Management
22. Financial Statements Financial Statements
23. Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure Not Applicable
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.
Preliminary Prospectus Dated August 29, 1997
400,000 Units
IXION
IXION BIOTECHNOLOGY, INC.
Common Stock, $.01 par value
All of the 400,000 Units (the "Units") are being sold directly by Ixion
Biotechnology, Inc. ("Ixion" or the "Company") at a price of $10.00 per share
(the "Offering" ). Each Unit consists of one share of Ixion Common Stock
($.01 par value) (the Common Stock) and .25 Charitable Benefit Warrant (the
"Charitable Benefit Warrants"). Charitable Benefit Warrants may not be
transferred except to an approved qualified charitable organization. Each
Charitable Benefit Warrant entitles an approved qualified charitable
organization to purchase one share of Common Stock at a price of $20.00 per
share any time until September __, 2007. All others may not exercise except
between September __, 2006, and September __, 2007. The Charitable Benefit
Warrants are detachable from the Common Stock immediately on purchase. Prior
to the Offering, there has been no public market for the Company's Common
Stock; therefore, the public offering price has been determined solely by the
Company. After completion of this Offering, and dependent largely upon the
number of Units sold in the Offering, the Company's shares may be traded on a
stock exchange (no application has been made to any stock exchange) or in the
over-the-counter market, or no active trading market may develop or be
sustained. See "Risk Factors" and "Shares Eligible for Future Sale."
The Offering is being made directly by the Company. There is no minimum
number of Units to be sold in the Offering, and all funds received will go
immediately to the Company. See "Use of Proceeds." The Offering will be
terminated upon the earliest of: the sale of all Units, twelve months after
the date of this Prospectus (unless extended), or the date on which the
Company decides to close the Offering. A minimum purchase of 100 Units
($1,000) is required. The Company reserves the right to reject any Unit
Purchase Agreement in full or in part. See "Plan of Distribution."
The Company is a development stage, biotechnology company which has
incurred operating losses since its inception. As of March 31, 1997, the
Company had an accumulated deficit of $1,341,906. The Company expects
substantial additional operating losses in the further development and
commercialization of its products.
THE SECURITIES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
ONLY INVESTORS WHO CAN BEAR THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT SHOULD
INVEST. FOR A DESCRIPTION OF CERTAIN RISKS OF AN INVESTMENT IN THE COMPANY
AND IMMEDIATE SUBSTANTIAL DILUTION, SEE "RISK FACTORS" (PAGE 7) AND "DILUTION"
(PAGE 15)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Price to the Public Underwriting Discounts Proceeds to
Issuer
and Commissions (1) (2)
Per Unit $10.00 $.50 $9.50
Offering $4,000,000 $200,000 $3,800,000
(1) The Company plans to sell the Units directly to investors through a
designated executive officer who shall not receive any commission and has not
retained any underwriters, brokers, or placement agents in connection with the
Offering. However, the Company reserves the right to use brokers, dealers or
placement agents and could pay commissions equal to as much as 10%, not to
exceed $200,000 or 5% of gross proceeds in the aggregate. See "Plan of
Distribution."
(2) Before deducting expenses of the Offering, estimated at $221,712,
payable by the Company.
The date of this Prospectus is August ___. 1997.
<PAGE>
No 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. This Prospectus does not constitute an offer
to sell or the solicitation of any offer to buy any securities offered hereby
in any jurisdiction to any person to whom it is unlawful to make such offer
in such jurisdiction. This Prospectus does not constitute an offer to sell or
a solicitation of an offer to buy any security other than the Units offered
hereby. Neither the delivery of this Prospectus, nor any sale made pursuant
hereto shall, under any circumstances, create any impression that the
information herein is correct as of any time subsequent to the date hereof or
that there has been no change in the affairs of the Company since such date.
This Prospectus is available in an electronic format at
<http:\\www.ixion-biotech.com> upon appropriate request from a resident of
those states in which this Offering may lawfully be made. The Company will
also transmit promptly, without charge, a paper copy of this Prospectus to any
such resident upon receipt of a request.
TABLE OF CONTENTS
Page
Page
Reference Data 2 Business
23
Summary 3 Management
38
Risk Factors 6 Certain Transactions
43
Special Note Regarding Forward Principal Shareholders
45
Looking Statements 14 Description of Securities
45
Use of Proceeds 15 Certain Federal Income Tax
Dilution 16 Consequences
53
Dividend Policy 16 Shares Eligible for Future Sale
47
Capitalization 17 Plan of Distribution
48
Selected Financial Data 18 Legal Matters
49
Management's Discussion and Experts
49
Analysis of Financial Available Information
49
Condition and Results of Unit Purchase Agreement
58
Operations 19 Index to Financial Statements F-
1
Until , 1997 (90 days after the date of this
Prospectus) all dealers effecting transactions in the registered securities,
whether or not participating in this distribution, may be required to deliver
a Prospectus. This is in addition to the obligation of dealers to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
REFERENCE DATA
Upon the date of this Prospectus, the Company became subject to the
informational filing requirements of the Securities Exchange Act of 1934, as
amended ("Exchange Act") for its current fiscal year. Upon completion of this
Offering, the Company may be required to file annual and quarterly reports.
The Company intends to furnish its shareholders with annual reports
containing financial statements audited by an independent public accounting
firm after the end of its fiscal year. The Company's fiscal year ends on
December 31. In addition, the Company will send shareholders quarterly
reports with unaudited financial information for the first three quarters of
each fiscal year.
The Company was incorporated in Delaware in March 1993. Its executive
offices are located at 12085 Research Drive, Alachua, FL 32615, its telephone
number is 904-418-1428, and its facsimile number is 904-462-0875. The
Company's home page is <http:\\www.ixion-biotech.com>. Materials available at
or linked to the Company's web site are not incorporated by reference into
this Prospectus.
<PAGE>
SUMMARY
The following summary is qualified in its entirety by more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus and, accordingly, should be read in conjunction with that
information. Prospective investors should carefully consider the information
set forth under the heading "Risk Factors."
The Company
Ixion Biotechnology, Inc. ("Ixion" or the "Company"), is a development
stage, discovery research biotechnology company, with several product
candidates in development. The Company is the holder of world-wide exclusive
licenses to patents and pending patents in two key areas: diabetes and
oxalate-related disorders. Ixion has executive offices and development
laboratories (including small scale fermentation, cell culture, and
purification capabilities) at the Biotechnology Development Institute, a small
business incubator operated by the Biotechnology Program at the University of
Florida.
Ixion is developing diabetes products based on its Islet Progenitor/Stem
Cell ("IPSC") technology, including a proprietary line of in vitro (in test
tube) islet stem cells for use in cell transplantation therapy. This
development program is aimed at optimizing the growth of functioning islets or
islet progenitors in vitro from IPSCs which Ixion has established in cell
cultures. The Company believes that successful islet transplantation therapy
will provide better management of diabetes than conventional treatment with
insulin and other metabolic regulators. Conventional treatment can result in
hyper- and hypo-glycemic episodes which are a major cause of diabetic
complications. Ixion's technology is intended to ameliorate this condition by
implanting functional islets into the body in order to materially improve
control of blood glucose levels.
In addition to developing its cell transplantation therapy, Ixion has an
ongoing discovery program to identify and characterize IPSCs as well as novel
growth factors associated with them. The goal of this program is to discover
factors important in islet cell differentiation and to identify stem cell
markers to which the Company hopes to produce antibodies useful in stem cell
isolation. All of the Company's potential diabetes products are in the
discovery research stage.
Diabetes is a chronic, complex metabolic disease. Type I (often referred
to as Insulin Dependent Diabetes or IDD) is characterized by an inability to
produce insulin due to the destruction of the insulin-producing cells of the
pancreatic islets of Langerhans. Type I diabetes also leads to many serious
conditions ranging from death from diabetic coma or insulin shock, to end
stage renal disease, blindness, amputations, nerve damage, and cardiovascular
and periodontal disease. Over 13 million people in the United States have
diabetes, of whom five to ten percent (or about one million patients) have
Type I, the most severe form of the disease, and must take insulin. An
additional one and one-half million Type II patients also take insulin.
Annual expenditures on all forms of diabetes are $112 billion, exceeding
expenditures on cancer. The Company estimates that approximately 500,000
patients in the United States could benefit from IPSC-based therapy. These
patients currently spend approximately $10 billion annually in treatment of
their diabetes.
The Company is also developing products based on its oxalate technology
for the diagnosis and treatment of oxalate-related diseases. Excess oxalate
from dietary and metabolic sources plays a role in a variety of disorders
including kidney stones, hyperoxaluria, cardiomyopathy, cardiac conductance
disorders, cystic fibrosis, Crohn's disease, renal failure and toxic death,
and vulvodynia. The anaerobic intestinal bacteria, Oxalobacter formigenes,
produces enzymes responsible for oxalate degradation in healthy people, and
inadequate colonies of them result in reduced ability to degrade oxalate.
There are approximately one million kidney stone incidents annually in
the United States. Annual expenditures on kidney stone incidents exceed $1.8
billion. There are approximately 25,000 cystic fibrosis patients in the
United States; these patients are at materially increased risk of kidney
stones as a result of excess oxalate. There are from 5,000 to 16,000 new
cases of Inflammatory Bowel Disease annually, resulting in 100,000
hospitalizations, 60% from Crohn's Disease. Vulvodynia, a chronic
multifactorial disorder, believed to be in some degree oxalate-related,
results in painful and debilitating symptoms affecting the tissue surrounding
the vagina and urethra. There are no population studies of the incidence or
prevalence of vulvodynia, but estimates range as high as 150,000 to 200,000
U.S. women with this condition. Very few effective treatments, if any, exist
for these disorders.
The most developed product candidate in Ixion's development pipeline is a
combination diagnostic and therapy for the management of oxalate-related
disorders.
The diagnostic component of the Company's oxalate-related disease
management product is a DNA probe for the rapid and sensitive detection of
human O. formigenes (the "HOF Probe"). The current tests for O. formigenes
are laborious, time consuming, and unreliable, and are limited by (1) the
difficulties of anaerobic culture methods, (2) the inability to standardize
and accurately quantitate the presence of the bacteria, and (3) the fact that
the tests cannot be automated. In addition, the current tests are not
sensitive and are poorly suited to a clinical setting. The HOF Probe, on the
other hand, can accurately and reliably detect very small numbers of O.
formigenes, is quantitative, and is capable of automation.
The therapeutic component of the Company's oxalate-related disease
management product is an orally administered product consisting of two enzymes
normally found in O. formigenes and responsible for oxalate degradation ("IxC-
162"). The Company believes that the administration of these enzymes will
greatly diminish the recurrence of calcium oxalate kidney stones and will have
positive therapeutic effects on other oxalate-related disorders.
The Company intends to file an Investigational New Drug application with
the Food and Drug Administration for its IxC-162 enzyme therapy for oxalate-
related diseases and an application under Section 510(k) of the Food, Drug,
and Cosmetic Act for the HOF Probe, both within 12 months from the date of
this Prospectus. See "Business - Government Regulation."
Ixion is in the development stage, has earned only limited revenues, the
majority of which have been research and development payments, and has
incurred accumulated deficits of approximately $1,341,906 from its inception
through March 31, 1997. See "Risk Factors."
The Offering
Securities offered 400,000 Units, each Unit consisting of one share
of Common Stock and 0.25 Charitable Benefit
Warrant. The Common Stock will be immediately
separated from the Charitable Benefit Warrants,
and will be immediately transferable. The
Charitable Benefit Warrants are not exercisable by
the purchaser of Units until September __, 2006,
nor are they transferrable, except at the
registered holder's election at any time from the
date of issuance and prior to the close of
business
on September ___, 2007, to an approved qualified
charitable organization ("Approved Qualified
Charitable Organization"). Each Charitable
Benefit
Warrant entitles an Approved Qualified Charitable
Organization to purchase one share of Common Stock
at $20.00 per share from the date of issuance
through September ___, 2007. See "Description
of Securities."
Shares outstanding before
the Offering (1) 2,464,544
Shares outstanding after
the offering (1) (2) 2,864,544
Use of Proceeds Net proceeds, after deduction of offering expenses
is estimated at $3,778,288 if all Units are sold;
$2,778,288 if 75% of the Units are sold;
$1,778,288
if 50% of the Units are sold; and $778,288 if 25%
of the Units are sold. The Company has broad
discretion in the use of proceeds, but expects to
use substantially all of such proceeds to fund
research and product development programs and for
general corporate purposes. There is no minimum
number of Units to be sold, and no escrow account.
Subscriptions will be paid directly to the
Company.
Risk Factors The Units offered hereby are speculative and
involve a high degree of risk, immediate
substantial dilution and should not be purchased
by
investors who cannot afford the loss of their
entire investment. See "Risk Factors" and
"Dilution."
(1) Excludes 43,900 shares reserved for issuance pursuant to the
exercise of outstanding stock options, 6,025of which are exercisable; 20,630
shares reserved for issuance pursuant to outstanding warrants; 232,100 shares
reserved for issuance to employees and 49,000 reserved for issuance to
directors and members of the Scientific Advisory Board pursuant to options
available for grant under the Company's 1994 Stock Option Plan; 18,000 shares
reserved for issuance under the Company's 1994 Board Retainer Plan; and up to
323,557 shares issuable upon conversion of the Company's Unsecured Convertible
Notes.
(2) Assumes all Units offered are purchased.
Summary Financial Data
<TABLE>
<CAPTION>
Year Ended
Three Months Ended
December 31,
March 31,
Statement of Operations Data: 1995 1996 1996
1997
(unaudited)
<S> <C> <C> <C>
<C>
Total Revenues $ 8,122 $ 171,205 $
1,416 $ 92,646
Total Expenses 382,334 705,788
106,753 256,203
Net Loss $ (374,212) $ (534,583)
$(105,337) $(163,557)
Net Loss per Share $ (0.18) $ (0.22) $
(0.04) $ (0.07)
Weighted Average Common and
Common Equivalent Shares 2,025,975 2,411,275
2,373,000 2,449,533
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data (unaudited)
March 31, 1997
Unaudited
Actual
As Adjusted (1)
<S> <C>
<C>
Cash and cash equivalents $ 373,880
$4,152,168
Working capital 352,623
4,119,281
Total Assets 632,017
4,410,305
Total Liabilities 1,309,655
1,309,655
Total Capital (Deficiency) (677,637)
3,100,650
</TABLE>
(1) Adjusted to give effect to the sale of all the Units offered hereby,
net of offering expenses. There is no assurance all Units will be sold.
<PAGE>
RISK FACTORS
An investment in the securities being offered by this Prospectus is
highly speculative, involves a high degree of risk, and should be considered
only by persons who can afford to lose the entire investment. In addition to
the other information contained in this Prospectus, prospective investors
should carefully consider the following risk factors before purchasing any of
the Units.
Early Stage of the Company; Accumulated Deficit. The Company is in the
development stage, and has realized only limited revenues, most of which have
derived from payments from Genetics Institute, Inc., a subsidiary of American
Home Products Corp., in connection with contract research and development
under a sponsored research agreement. No revenues have been generated from
product sales. The Company will be required to do significant research,
development, testing, and regulatory compliance activities which, together
with projected general and administrative expenses, are expected to result in
material and increasing operating losses for the foreseeable future. There can
be no assurance that the Company will successfully complete the transition
from a development stage company to successful operations or profitability.
At March 31, 1997, the Company had an accumulated deficit during the
development stage of $1,341,906.
Potential investors should be aware of the problems, delays, expenses,
and difficulties encountered by any company in the development stage, many of
which may be beyond the Company's control. These include, but are not limited
to, unanticipated problems and additional costs relating to development,
testing, regulatory compliance, production, marketing, and competition.
Absence of Products; No Commercialization of Products Expected in Near
Future. The Company's product candidates are in an early stage of
development. The Company has not completed the development of any products
and, accordingly, has not received any regulatory approvals or commenced
marketing activities. No revenues have been generated from the sale of its
products. The Company's product candidates will require significant
additional development, preclinical and clinical trials, regulatory approval,
and additional investment prior to commercialization. The Company may be
unable to market any products for several years. Furthermore, it will be a
number of years, if ever, before the Company will recognize significant
revenues from product sales or royalties. In addition, the Company's product
candidates are subject to the risks of failure inherent in the development of
products based on innovative technologies. Accordingly, there can be no
assurance that the Company's research and development efforts will be
successful, that any of the Company's product candidates will prove to be
safe, effective, and non-toxic in clinical trials, that any commercially
successful products will be developed, that the proprietary or patent rights
of others will not preclude the Company from marketing its product candidates,
or that others will not develop competitive or superior products. As a result
of the early stage of development of product candidates and the extensive
testing and regulatory review process that such product candidates must
undergo, the Company cannot predict with certainty when it will be able to
market any of its products, if at all. The Company's product development
efforts are based on unproven scientific approaches. There is, therefore,
substantial risk that these approaches may not prove to be successful. See
"Business - Product Development."
Uncertainty Associated with Pre-clinical and Clinical Testing. Before
obtaining regulatory approvals for the commercial sale of any of the Company's
products, the products will be subject to extensive preclinical and clinical
trials to demonstrate their safety and efficacy in humans. The Company
intends to employ third parties to conduct clinical trials of its products
because it has no experience in conducting clinical trials. Preclinical
studies have been commenced with regard to two of the Company's oxalate
products; however, no clinical trials have been commenced with respect to any
of the Company's potential products. Furthermore, there can be no assurance
that preclinical or clinical trials of any of the Company's products will
demonstrate the safety and efficacy of such product at all or to the extent
necessary to obtain regulatory approvals. Companies in the biotechnology
industry have suffered significant setbacks in advanced clinical trials, even
after demonstrating promising results in earlier trials. The failure to
adequately demonstrate the safety and efficacy of a product candidate under
development could delay or prevent regulatory approval of the product
candidate and would have a material adverse effect on the Company's business,
operating results, and financial condition. See "Business - Government
Regulation."
Need for Additional Financing. Based on its current operating plan, the
Company expects that the net proceeds of this Offering, assuming the sale of
all the Units offered hereby, together with contract research revenue and
possible grant income from grant applications made or to be made, will be
adequate to satisfy its planned operating requirements for approximately 15
months, but will not be sufficient to fund the Company's operations to the
point of introduction of a commercially successful product.
The Company will require significant levels of additional capital and its
future capital requirements will depend on many factors, including the degree
of success of the present Offering, the costs involved in future capital
raising activities, continued scientific progress in its research and
development programs, the magnitude of such programs, the potential addition
of new programs, the progress of preclinical and clinical testing, the time
and costs involved in obtaining regulatory approvals, the costs involved in
preparing, filing, prosecuting and enforcing patent claims, competing
technological and market developments, the establishment of collaborative
agreements, costs of commercialization activities, and the demand for the
Company's products, if and when approved. Ixion intends to commence
additional financing activities shortly after the closing of this Offering,
and it intends to seek further funding through additional arrangements with
corporate partners, through public or private sales of debt or equity, or
through other sources. Future financings may result in the issuance of
securities which are senior to the Shares or result in substantial additional
dilution of shareholders. There can be no assurance that additional funding
will be available on acceptable terms, if at all. If adequate funds are not
available, the Company may be required to curtail significantly or defer one
or more of its research and development programs or to obtain funds through
arrangements that may require the Company to relinquish certain technological
or product rights. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Liquidity and Capital Resources" and
"Use of Proceeds."
No Minimum Amount for This Offering. Because there is no minimum amount
of Units required to be sold in the Offering, all the cash received will go
directly to the Company to be used as described in "Use of Proceeds." If only
a few Units are sold, the result could be that all the proceeds will be used
to pay the expenses of the Offering.
Management's Broad Discretion in Application of Proceeds. The Company
intends to use the proceeds of the Offering to pay the costs of the Offering
and the balance will be added to the Company's working capital where it will
be available for general corporate purposes, including the funding of the
Company's research and development activities. As of the date of this
Prospectus, the Company cannot specify with certainty the particular uses for
the net proceeds to be added to its working capital. Accordingly, management
of the Company will have broad discretion as to the application of the net
proceeds of the Offering. See "Use of Proceeds" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations - Product
Research and Development Plan."
Earnings Inadequate to Pay Fixed Charges. Earnings are, and will for
the foreseeable future remain, inadequate to cover fixed charges, including
interest on the Company's 10% Unsecured Convertible Notes. Payment of
principal on the 10% Unsecured Convertible Notes and the Unsecured Variable
Convertible Notes will be dependent on the Company's ability to raise
additional funds through the sale of its securities, corporate alliances, or
otherwise.
Dependence on Key Personnel and Relationships. Ixion is dependent on its
executive officers, consultants, and its scientific advisors, especially Dr.
Ammon Peck, the Company's Chief Scientist and Chairman of the Scientific
Advisory Board. The Company has only one full-time executive, Weaver H.
Gaines, Chairman and Chief Executive Officer. Three of the Company's officers
- - David C. Peck, President and Chief Financial Officer, John L. Tedesco, Vice
President - Operations and Regulatory Affairs, and Kimberly A. Ramsey,
Controller, are consultants who devote substantial time to other employers.
Ixion has an employment contract with Mr. Gaines, an exclusive consulting
agreement with Dr. Peck, and consulting agreements with Messrs. Tedesco and
David Peck. The agreements of Dr. Peck, Mr. Gaines, Mr. Peck, and Mr. Tedesco
all contain non-compete provisions. See "Management - Consulting Agreement
with Dr. Peck," "Management - Consulting Agreement with Brandywine
Consultants, Inc.," and "Management - Employment Agreements." The loss of any
individuals on which the Company is dependent could have a material adverse
effect on the Company. Ixion has a key person life insurance policy in the
face amount of $500,000 on Dr. Peck.
Competition among pharmaceutical and biotechnology companies for
qualified employees is intense, and the loss of qualified employees, or an
inability to attract, retain, and motivate additional highly skilled employees
required for the expansion of the Company's activities, could adversely affect
its business and prospects. Gainesville, Florida is a developing area for
biotechnology, and to date there are few companies located there. This fact
is an inhibition on both recruiting and retaining personnel. There can be no
assurance that the Company will be able to retain its existing personnel or to
find and attract additional qualified and experienced employees.
Individuals whom the Company has targeted to be its scientific
collaborators and its current and proposed scientific advisors are employed by
employers other than the Company, and some have consulting or other advisory
arrangements with other entities that may conflict or compete with their
obligations to the Company. See "Business - Scientific Advisory Board."
Reliance on Relationships with the University of Florida. The Company
has sought to maintain a close and favorable relationship with the University
of Florida since 1993 when the Company was founded. The Company expects to
benefit, and has already benefited, from its relationship with the University
of Florida, in particular from the basic research performed. This
relationship includes certain contractual arrangements, particularly the
License Agreement for Islet Progenitor/Stem Cells and the License Agreement
for oxalate technology. Negotiations have also commenced to license other
technologies. In addition, the Company is an affiliate of the Biotechnology
Program of the University, which provides certain business support services to
the Company, it has its labs and offices at the Biotechnology Development
Institute, a University facility, and its Chief Scientist and two members of
its Scientific Advisory Board are faculty members at the University. See
"Business - Facilities" and "Business - Scientific Advisory Board." There can
be no assurance that disputes or disagreements will not cause the favorable
relationship to deteriorate. A deterioration in the relationship between the
Company and the University of Florida could have a material adverse effect on
the Company. In particular, the Company could be forced to expand
substantially its research facilities and staff to replace or supplement the
research currently performed by researchers at the University of Florida.
Additionally, if the University of Florida were to suffer financial or
operating setbacks in the future, such as in financing, research staff,
research efforts, facilities or management, such setbacks could have a
material adverse impact on the Company's future technology. Moreover, the
Company has no input into or control over the direction or content of research
undertaken by the University of Florida. Accordingly, no assurance can be
given that discoveries made at the University of Florida, if any, will be
capable of being developed or marketed, will fall within the Company's areas
of expertise or interest, or will be available to the Company on acceptable
terms. See "Business - Business Strategy," "Business - Relationship with the
University of Florida," and "Business - Licensed Technology."
State of Florida and University of Florida Conflicts of Interest Laws and
Rules. The Company's Chief Scientist and two members of its Scientific
Advisory Board are employees of the Florida State University System, and, as a
result, they (and consequently the Company) are subject to Florida statutes
and University policy regarding conflicts of interest. In order for the
Company to conduct business with the University (including its license
agreements, future cooperative research and development agreements, and other
activities), it is necessary to obtain and maintain an annual exemption from
the application of the Florida conflict of interest statutes for its Chief
Scientist, and to obtain annual approval for outside activities for the
Florida members of its Scientific Advisory Board. If the University were to
decline to approve the outside activities of the Company's Chief Scientist, or
the Florida members of its Scientific Advisory Board, or were to change the
terms of its conflicts of interest policy, it could have a material adverse
effect on the Company. See "Business - Government Regulation."
Dependence on Licensed Technology. The Company's development and
commercialization rights for its proposed products are derived from its
license agreements with the University of Florida and others. To date, the
Company owns no patents outright. The Company's rights under license
agreements are subject to early termination under certain circumstances,
including failure to pay royalties or other material breach by the Company or
bankruptcy of the Company, among others. In the event that the license
agreements terminate for any reason, the Company's rights to manufacture and
market products derived from those licenses would terminate. See "Business -
Licensed Technology."
Ethical, Legal, and Social Implications of Islet Progenitor/Stem Cell
Therapies. The Company's Islet Progenitor/Stem Cell ("IPSC") program may
involve the use of IPSCs that would be derived from cloned human materials,
and therefore may raise certain ethical, legal, and social issues regarding
the appropriate utilization of this technique. The cloning of human tissue in
scientific research is an issue of national interest. Many research
institutions have adopted policies regarding the ethical uses of cloning, and
state and federal legislatures are considering legislation regarding cloned
human materials. These policies may have the effect of limiting the scope of
research conducted in this area, resulting in reduced scientific progress.
The inability of the Company to conduct research on IPSCs due to such factors
as government regulation or otherwise could have a material adverse effect on
the program. In the event the Company's research related to IPSC-based
therapies becomes the subject of adverse commentary or publicity, the
Company's name and goodwill could be adversely affected.
Intense Competition. The biotechnology and pharmaceutical industries
are intensely competitive and subject to rapid and significant technological
change. Competitors of the Company are numerous and include, among others,
major, multinational pharmaceutical and chemical companies, specialized
biotechnology firms, and universities and other research institutions. Many
of these competitors have greater financial and other resources, including
larger research and development staffs, than the Company. Acquisitions of
competing companies and potential competitors by large pharmaceutical
companies or others could enhance financial, marketing and other resources
available to such competitors. As a result of academic and government
institutions becoming increasingly aware of the commercial value of their
research findings, such institutions may be more likely to enter into
exclusive licensing agreements with commercial enterprises, including
competitors of the Company, to market commercial products. There can be no
assurance that the Company's competitors will not succeed in developing
technologies and products that are more effective or less costly than any
which are being developed by the Company or which would render the Company's
technology and future drugs obsolete and noncompetitive.
In addition, some of the Company's competitors have greater experience
than the Company in conducting preclinical and clinical trials and obtaining
U.S. Food and Drug Administration ("FDA") and other regulatory approvals.
Accordingly, the Company's competitors may succeed in obtaining FDA or other
regulatory approvals for competitive product candidates more rapidly than the
Company. Companies that complete clinical trials, obtain required regulatory
agency approvals, and commence commercial sale of their drugs before their
competitors may achieve a significant competitive advantage, including certain
patent and marketing exclusivity rights. There can be no assurance that
products resulting from the Company's research and development efforts will be
able to compete successfully with competitors' existing products or products
under development or that they will obtain regulatory approval in the United
States or elsewhere. See "Business - Competition."
Uncertainty Regarding Patents and Proprietary Rights. The Company's
success will depend in part on its ability to obtain U.S. and foreign patent
protection for its product candidates and processes, to protect its trade
secrets, and to avoid infringing the proprietary rights of others. Because of
the length of time and expense associated with bringing new drug or medical
device candidates through the development and regulatory approval process to
the marketplace, the Company stresses the considerable importance of obtaining
patent and trade secret protection for its new technologies, products, and
processes. One U. S. patent has been issued concerning certain of the
Company's oxalate-based claims and certain claims pertaining to the IPSC
technology have been allowed by the U. S. Patent and Trademark Office ("PTO");
however, there can be no assurance that any additional patents will be issued
covering any of the patent applications licensed to the Company. Further,
there can be no assurance that any rights the Company may have under issued
patents will provide the Company with significant protection against
competitive products or otherwise be commercially viable. Legal standards
relating to the validity of patents covering pharmaceutical and
biotechnological inventions and the scope of claims made under such patents
are still developing. There is no consistent policy regarding the breadth of
claims allowed in biotechnology patents. The patent position of a
biotechnology firm is highly uncertain and involves complex legal and factual
questions. There can be no assurance that any existing or future patents
issued to, or licensed by, the Company will not subsequently be challenged,
infringed upon, invalidated, or circumvented by others. In addition, patents
may have been granted, or may be granted, covering products or processes that
are necessary or useful to the development of the Company's products. If the
Company's product candidates or processes are found to infringe upon the
patents, or otherwise impermissibly utilize the intellectual property of
others, the Company's development, manufacture, and sale of such products
could be severely restricted or prohibited. In such event, the Company may be
required to obtain licenses from third parties to utilize the patents or
proprietary rights of others. There can be no assurance that the Company will
be able to obtain such licenses on acceptable terms, or at all.
A number of pharmaceutical companies, biotechnology companies,
universities and research institutions, and individuals have filed patent
applications or received patents to technologies that are similar to the
technologies licensed by the Company. In addition, there can be no assurance
that the Company is aware of all patents or patent applications that may
materially affect the Company's ability to make, use, or sell any products.
Any conflicts resulting from third party patent applications and patents could
significantly reduce the coverage of the patents or patent applications
licensed to the Company and limit the ability of the Company to obtain
meaningful patent protection. If patents are issued to other companies that
contain competitive or conflicting claims, the Company may be required to
obtain licenses to these patents or to develop or obtain alternative
technology. There can be no assurance that the Company will be able to obtain
any such license on acceptable terms or at all. If such licenses are not
obtained, the Company could be delayed in or prevented from the development or
commercialization of its product candidates, which would have a material
adverse effect on the Company. See "Business - Licensed Technology."
In addition to patent protection, the Company relies on trade secrets,
proprietary know-how and technological advances which it seeks to protect, in
part, by confidentiality agreements with its collaborators, employees, and
consultants. There can be no assurance that these confidentiality agreements
will not be breached, that the Company would have adequate remedies for any
such breach, or that the Company's trade secrets, proprietary know-how, and
technological advances will not otherwise become known or be independently
discovered by others.
Dependence on Reimbursement. The Company's ability to commercialize its
planned products successfully will depend in part on the extent to which
reimbursement for the cost of such products and related treatments will be
available from government health administration authorities, such as the
Health Care Financing Administration, private health insurers, managed care
plans, and other organizations. Government and other third-party payors are
increasingly attempting to contain health care costs, in part by challenging
the price or benefit of medical products and services. Products with long-term
benefits but initial short-term costs may not be acceptable to managed care
plans or others with short-term payback requirements. Thus, significant
uncertainty exists as to the reimbursement status of newly approved health
care products, and there can be no assurance that adequate third-party
coverage will be available to enable the Company to maintain price levels
sufficient to realize an appropriate return on its investment in product
development. If adequate coverage and reimbursement levels are not provided
by government and third-party payors for use of the Company's planned
products, the ability to market those products would be adversely affected.
No Assurance of Market Acceptance for Proposed Products. There can be no
assurance that any products successfully developed by the Company,
independently or with its collaborative partners, if approved for marketing,
will achieve market acceptance. The degree of market acceptance of any
products developed by the Company will depend on a number of factors,
including the establishment and demonstration of the clinical efficacy and
safety of the Company's products, their potential advantage over existing
therapies or diagnostics, and reimbursement policies of government and
third-party payors. There is no assurance that physicians, patients,
independent laboratories, or the medical community in general will accept and
utilize any products that may be developed by the Company.
Government Regulation; No Assurance of Regulatory Approval. The
Company's activities are subject to extensive regulation by the FDA and health
authorities in foreign countries. Regulatory approval for the Company's
planned products (other than those for research rather than diagnostic or
therapeutic use), will be required before such products may be marketed. The
process of obtaining regulatory authorization involves, among other things,
lengthy and detailed laboratory and clinical testing, manufacturing
validation, and other complex and extensive procedures. The approval process
is costly, time-consuming, and often subject to unanticipated delays. In the
United States, the FDA has discretion in the approval process, and it is not
possible to predict at what point, or whether, the FDA will be satisfied with
the quality or quantity of information submitted by the Company to support its
applications for marketing approval. There can be no assurance that the FDA
will not require additional information or additional clinical trials which
could substantially delay approval of applications. Moreover, there can be no
assurance that FDA approval will cover the clinical indications for which the
Company intends to seek approval, or will not contain significant limitations
in the form of, for example, warnings, precautions, or contra-indications with
respect to conditions of use. There can be no assurance that approvals for
any of the Company's products, processes, or facilities will be granted on a
timely basis, if at all. Any failure to obtain, or any delay in obtaining,
such approvals would materially and adversely affect the Company. Further,
even if such regulatory authorizations are obtained, a marketed product and
its manufacturer are subject to continuing regulatory requirements and review,
and later discovery of previously unknown problems with a product or
manufacturer, or failure to comply with manufacturing or labeling
requirements, may result in restrictions on such product or enforcement action
against the manufacturer, including withdrawal of the product from the market.
See "Business - Government Regulation."
Risk of Product Liability; Insurance. The use of any products produced
by the Company could expose the Company to product liability claims. The
Company currently carries no product liability insurance, but intends to
acquire such insurance prior to selling any of its licensed products for
commercial use. There can be no assurance that the Company will be able to
obtain or maintain such insurance, or if obtained, that sufficient coverage
can be acquired at a reasonable cost. An inability to obtain or maintain
insurance at acceptable cost or otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of the
Company's planned products, including its research use only products. A
product liability claim or recall could have a material adverse effect on the
business or the financial condition of the Company.
Absence of Public Trading Market for Securities; Valuation. There is no
public market for the Common Stock, and it is unlikely that any such market
will develop after the Offering. There is no public market for the Charitable
Benefit Warrants. By the terms of such Warrants, they will not be tradable
following the Offering. The Company does not currently meet the requirements
for listing on an organized stock exchange or quotation of over-the-counter
market maker trades on the Nasdaq market. After completion of the Offering,
the Company may apply for a listing on a United States regional exchange, if
the Company meets certain numerical listing requirements. However, there can
be no assurance that the Company will be listed or that a market will develop
or be sustained. If it does not, the Company has been advised that a
registered securities broker-dealer may provide an order matching service for
persons wishing to buy or sell shares, upon completion of the Offering.
However, there is currently no agreement between the Company and such a
registered securities broker-dealer. The Company may, in the future, seek to
provide a passive, bulletin board system on the Internet providing information
to buyers and sellers of the Company's Common Stock to facilitate trading. In
the absence of a public trading market, purchasers may be unable to resell the
Common Stock for an extended period of time, if at all. See "Plan of
Distribution."
Development stage biotechnology valuations are rarely based upon
traditional financial standards, like earnings multiple, current yield, or
book value. In fact, the perception of the future value of the proprietary
science, and any possible applications deriving from it, together with
relative illiquidity and momentum often form the basis of stock performance
in this industry. There is great risk that external perceptions will change
over time, subsequently affecting the Company's ability to fund its
operations. Thus, future trading prices, if any, of the Company's securities
will depend on many factors, including, among others, those mentioned above,
together with prevailing interest rates, the Company's operating results,
preclinical and clinical trial results, scientific defections, personnel
turnover at corporate partners, general conditions in the biotechnology
industry, announcements of discoveries of new products by the Company, its
competitors, and others, and the market for similar securities, which market
is subject to various pressures, including, but not limited to, fluctuating
interest rates. In addition, the stock market is subject to price and volume
fluctuations unrelated to the operating performance of the Company.
Determination of Offering Price. The Company has unilaterally and
arbitrarily determined the offering price of the Units. Among the factors
considered in determining such price were offering prices of recent
biotechnology initial public offerings, the Company's capital requirements,
the percentage of ownership to be held by investors following the Offering,
the prospects for the Company's business and the biotechnology industry, the
assessment of the present early stage of the Company's development, the
prospects for initiation or growth of the Company's revenues, and the current
state of the economy in the United States. The offering price does not
necessarily bear any relationship to the Company's assets, book value,
earnings history, or other investment criteria and should not be considered
an indication of the actual value of the Company's securities. See "Plan of
Distribution."
Control by Management and Existing Shareholders. At July 1, 1997, the
current officers, directors, and members of their families sharing their
household own or have rights to acquire within the next 60 days, directly or
beneficially, 1,658,021 shares of Common Stock representing approximately 67%
of the outstanding shares of the Company's Common Stock. Following the
Offering, such persons will own approximately 57% of the Company's Common
Stock, and are and will be, able to control all matters requiring approval by
the stockholders of the Company, including the election of Directors. Such
concentration of ownership may also have the effect of delaying or preventing
a change in control of the Company that may be favored by other stockholders.
See "Management" and "Principal Shareholders."
Possible Adverse Impact of Shares Available for Future Sale. Sales of
substantial amounts of Common Stock (including shares issued upon the exercise
of outstanding options and warrants or upon the conversion of the Unsecured
Convertible Notes) in the public market, if any, after this Offering or the
prospect of such sales could adversely affect any market price of the Common
Stock and may have a material adverse effect on the Company's ability to raise
any necessary capital to fund its future operations. Upon completion of this
Offering, assuming all Units are sold, the Company will have 2,864,544 shares
of Common Stock outstanding. The 400,000 shares included in the Units offered
hereby will be freely tradable without restriction or further registration
under the Securities Act of 1933, as amended (the "Securities Act"), except
for any shares held by "affiliates" of the Company within the meaning of the
Securities Act which will be subject to the resale limitations of Rule 144
promulgated under the Securities Act ("Rule 144"). The remaining 2,464,544
shares are "restricted" securities that may be sold only if registered under
the Securities Act, or sold in accordance with an applicable exemption from
registration, such as Rule 144. The officers and directors, who together hold
1,628,544 shares of Common Stock, and rights to purchase an additional 39,452
shares of Common Stock, have agreed not to sell directly or indirectly, any
Common Stock for a period of 180 days from the date of this Prospectus (the
"Lock-up Agreements"). Commencing on the expiration of the Lock-up
Agreements, 1,628,544 shares of Common Stock will be eligible for sale in the
public market, if any, subject to compliance with Rule 144. In addition,
holders of 1,051,544 shares of Common Stock, and holders of warrants and
Unsecured Convertible Notes convertible into a maximum of an additional
340,917 shares of Common Stock, will be entitled to certain registration
rights with respect to such shares. If such holders, by exercising their
registration rights, cause a large number of shares to be registered and sold
in the public market, if any, such sales could have a material adverse effect
on the market price of the Common Stock. In addition, any demand of such
holders to include such shares in Company-initiated registration statements
could have an adverse effect on the Company's ability to raise needed capital.
See "Shares Eligible for Future Sale - Registration Rights."
Immediate and Substantial Dilution. This Offering involves an immediate
and substantial dilution between the initial public offering price of $10.00
per share and the pro forma net tangible book value per share of Common Stock
after the Offering. Such dilution will amount to $8.98 (90%) if all Units are
sold; $9.30 (93%) if 75% of the Units are sold; $9.65 (97%) if 50% of the
Units are sold; and $10.03 (100%) if 25% of the Units are sold. Dilution will
be increased to the extent that the holders of outstanding options, warrants,
and Unsecured Convertible Notes who have rights to acquire Common Stock at
prices below the public offering price exercise such rights. See "Dilution."
Dividends. Ixion has never paid any cash dividends and does not intend
to pay any cash dividends on its Common Stock in the foreseeable future.
Limited Experience in Sales and Marketing. The Company has no
significant experience in pharmaceutical sales, marketing, or distribution.
To market any of its products directly, the Company must develop a substantial
marketing and sales force with technical expertise and supporting distribution
capability. Alternatively, the Company intends, for certain product
candidates, to obtain the assistance of companies with established
distributions systems and direct sales forces. There can be no assurance that
the Company will be able to establish sales and distribution capabilities,
will be able to enter into licensing or other agreements with established
companies, or will be successful in gaining market acceptance for its
products. See "Business - Business Strategy" and "Business - Manufacturing
and Marketing."
Absence of Manufacturing Facilities or Personnel; Dependence on Others.
The Company owns no manufacturing facilities or equipment, and employs no
direct manufacturing personnel. The Company anticipates using third parties
to manufacture its products on a contract basis. There can be no assurance
that the Company will be able to obtain such manufacturing services on
reasonable terms. Having obtained such services, the Company would be
dependent on its ability to manage all parties who may hereafter conduct
manufacturing for it. See "Business - Business Strategy" and "Business -
Facilities."
Limitation on Liability of Directors and Officers. As permitted by
Delaware law, the Certificate of Incorporation provides that no director of
the Company will be liable for money damages for breach of fiduciary duty as a
director, except (i) for any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) for acts or omissions not in good faith or
involving intentional misconduct or a knowing violation of law, (iii) for
approval of certain unlawful dividends or stock purchases or redemptions, and
(iv) for any transaction from which the director derived an improper personal
benefit. See "Description of Securities."
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements herein regarding the dates on which the Company anticipates
commencing clinical trials or filing of an Investigational New Drug Exemption
Application ("IND") or application under Section 510(k) of the Food, Drug, and
Cosmetic Act with respect to its product candidates, constitute
forward-looking statements under the federal securities laws. Such statements
are subject to certain risks and uncertainties that could cause the actual
timing of such clinical trials or filings to differ materially from those
projected. With respect to such dates, the Company's management team has made
certain assumptions regarding, among other things, the successful and timely
completion of preclinical tests, the approval of INDs for each of the
Company's drug candidates by the FDA, the availability of Section 510(k) for
its device candidates, the availability of adequate clinical supplies, the
absence of delays in patient enrollment, and the availability of the capital
resources necessary to complete the preclinical tests and conduct the clinical
trials. The Company's ability to commence clinical trials or file an IND or
510(k) on the dates anticipated is subject to certain risks, including the
risks discussed under "Risk Factors." Undue reliance should not be placed on
the dates on which the Company anticipates filing an IND or 510(k) or
commencing clinical trials with respect to any of its product candidates.
Statements herein regarding the Company's research and development plans also
constitute forward looking statements under the federal securities laws.
Actual research and development activities may vary significantly from the
current plans depending on numerous factors including changes in the costs of
such activities from current estimates, the results of the programs, the
results of clinical studies referred to above, the timing of regulatory
submissions, technological advances, determinations as to commercial
potential, and the status of competitive products.
All of the above estimates are based on the current expectations of the
Company's management team, which may change in the future due to a large
number of potential events, including unanticipated future developments.
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units, after
deduction of estimated offering expenses, is set forth in the table below.
The following table sets forth the Company's anticipated use of proceeds at
each level of Units sold. There is no minimum number of Units which must be
sold in the Offering, and all funds will be paid directly to the Company.
The Company intends to use a majority of the net proceeds (regardless of
the number of Units sold) to fund the Company's general corporate operations
and research and development activities, including product characterization,
method development, testing (including toxicology), cell line
characterization, process development, clinical lot manufacturing, stability
research protocols, and preclinical studies for the Company's proposed
products. The amounts and timing of expenditures for each purpose is subject
to the broad discretion of the management and will depend on the progress of
the Company's research and development programs, technological advances,
determinations as to commercial potential, the terms of any collaborative
arrangements entered into by the Company for development and licensing,
regulatory approvals, and other factors, many of which are beyond the
Company's control.
<TABLE>
<CAPTION>
400,000 300,000 200,000
100,000
Units Sold Units Sold Units Sold
Units Sold
(100%) (75%) (50%)
(25%)
<S> <C> <C> <C>
<C>
Gross Proceeds from
Offering $4,000,000 $3,000,000 $2,000,000
$1,000,000
Less Offering Expenses 221,712 221,712 221,712
221,712
(5.5%) (7.4%) (11.1%)
(22.2%)
Maximum commissions 200,000 150,000 100,000
50,000
Net proceeds from Offering $3,778,288 $2,778,288 $1,778,228
$ 778,288
Use of Net Proceeds
R&D, IPSCs $ 750,000 $ 650,000 $ 500,000
$ 200,000
R&D, Oxalate 2,048,100 1,338,100 770,500
270,500
Capital Equipment 40,000 30,000 20,000
10,000
Patents 150,000 150,000 125,000
100,000
General Corporate 790,188 610,188 362,788
197,788
</TABLE>
The foregoing represents the Company's best estimate of its allocation of
the proceeds of this Offering, based upon the current state of the Company's
business operations and its current plans. In the opinion of management, in
the event 100% of the Units offered are sold, the net proceeds of this
Offering, together with anticipated revenues from operations, will satisfy the
Company's planned operating requirements for at least 15 months.
Until required for operations, the Company's policy is to invest its cash
reserves in bank deposits, certificates of deposit, commercial paper,
corporate notes, U.S. government instruments, and other investment-grade
quality instruments.
<PAGE>
DILUTION
As of March 31, 1997, the Company's Common Stock had a deficit in net
tangible book value of $(851,878) or approximately $(.35) per share. The
following table sets forth the difference between the price to be paid by new
shareholders and the negative net tangible book value per share at March 31,
1997, as adjusted to give effect to the Offering.
<TABLE>
<CAPTION>
400,000 300,000 200,000
100,000
Units Sold Units Sold Units Sold
Units Sold
<S> <C> <C> <C>
<C>
Assuming a public offering $ 10.00 $ 10.00 $ 10.00
$ 10.00
price of
Net proceeds to Company $3,778,288 $2,778,288 $1,778,288
$778,288
Net tangible book deficit
per share for existing
shareholders before
Offering (1) $ (.35) $ (.35) $ (.35)
$ (.35)
Increase per share
attributable to payment
for shares purchased by
new investors $ 1.37 $ 1.04 $ 0.69
$ 0.32
Pro forma net tangible
book value (deficit)
after Offering (1) $ 1.02 $ 0.70 $ 0.35
$ (0.03)
Dilution per share to
new investors (2)(3) $ 8.98 $ 9.30 $ 9.65
$ 10.03
</TABLE>
______________________
(1) "Net tangible book deficit per share" is determined by dividing the
number of shares of Common Stock outstanding into the tangible net deficit of
the Company (tangible assets less total liabilities).
(2) "Dilution" means the difference between the public offering price per
share and the net tangible book value (deficit) per share of Common Stock
after giving effect to the Offering.
(3) Does not include the effects of any options or warrants or conversion
of the Company's Unsecured Convertible Notes.
The Company was initially capitalized by a sale of Common Stock to its
founders. Subsequently, the Company has completed two private placements of
Common Stock and a private placement of Unsecured Convertible Notes. The
following table sets forth the difference between the Company's officers,
directors, promoters, and affiliates thereof, and purchasers of the Units in
the Offering with respect to the number of shares purchased from the Company
(or which such persons have the right to purchase), the total cash
consideration paid (or to be paid), and the average price per share. The
table assumes that all of the Units offered hereby are sold.
<TABLE>
<CAPTION>
Shares Issued(1) Total Consideration(1)
Average Price
Number Percent2 Amount
Percent2 Per Share
<S> <C> <C> <C> <C>
<C>
Officers, directors,
promoters
and affiliates 1,827,996 63% $ 268,323 5.3%
$ 0.15
New Investors 400,000 14% $4,000,000 79%
$ 10.00
</TABLE>
_____________________
(1) Includes 39,452 shares which may be issued to officers, directors,
promoters, and affiliates upon exercise of stock options or conversion of
Unsecured Convertible Notes, 29,477 of which are issuable within 60 days, and
the payment of the exercise or conversion price relating thereto and assumes
the sale of all Units offered hereby.
(2) Shares purchased (or with rights to purchase) divided by the sum of
total shares outstanding after offering, plus all shares officers, directors,
and promoters have rights to purchase.
<PAGE>
DIVIDEND POLICY
The Company has never declared or paid any cash dividends on its Common
Stock and does not intend to pay any cash dividends on its Common Stock for
the foreseeable future.
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997, and as adjusted to reflect the receipt of the net proceeds
from the issuance and sale by the Company of the Units offered hereby at an
assumed initial offering price of $10.00 per Unit. This table should be read
in conjunction with the Company's financial statements and notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
March 31,
1997
As
Adjusted
400,000 300,000
200,000 100,000
Actual Units Sold Units Sold
Units Sold Units Sold
Debt:
<S> <C> <C> <C>
<C> <C>
Short-term debt including
current portion of long-
term debt $ 65,378 $ 65,378 $ 65,378
$ 65,378 $ 65,378
Long-term debt less
current portion (1) 1,244,277 1,244,277 1,244,277
1,244,277 1,244,277
Stockholders' Equity
(Deficiency):
Common Stock, $0.01 par
value, 4,000,000 shares
authorized, 2,454,544shares
issued and outstanding,
2,864,544 (100% sold),
2,764,544(75% sold),
2,664,544 (50% sold), or
2,564,544 (25% sold), as
adjusted (2) 24,545 28,645 27,645
26,645 25,645
Additional paid-in capital 828,198 4,602,486 3,603,486
2,604,486 1,605,486
Common stock warrants
outstanding 21,631 21,631 21,631
21,631 21,631
Note receivable from
shareholder (6,000) (6,000) (6,000)
(6,000) (6,000)
Deficit accumulated
during the development
stage (1,341,906) (1,341,906) (1,341,906)
(1,341,906) (1,341,906)
Less unearned compensation (204,106) (204,106) (204,106)
(204,106) (204,106)
Total capital (deficiency) $ (677,637) $ 3,100,750 $ 2,100,750
$ 1,100,750 $ 100,750
</TABLE>
(1) Includes deferred fees and deferred salaries, including accrued
interest, payable to related parties.
(2) Excludes 43,900 shares reserved for issuance pursuant to the exercise
of outstanding stock options, 6,025 of which are exercisable, 20,630 shares
reserved for issuance pursuant to outstanding warrants, 232,100 shares
reserved for issuance to employees and 49,000 reserved for issuance to
directors and members of the Scientific Advisory Committee pursuant to options
available for grant under the Company's 1994 Stock Option Plan, 18,000 shares
reserved for issuance under the Company's 1994 Board Retainer Plan, and up to
323,557 shares issuable upon conversion of the Company's Unsecured Convertible
Notes.
<PAGE>
SELECTED FINANCIAL DATA
The selected financial data set forth below with respect to the Company's
Statements of Operations for the years ended December 31, 1995 and 1996 are
derived from the audited financial statements included elsewhere in this
Prospectus. The selected financial data at March 31, 1996 and 1997, for the
three months ended March 31, 1996 and 1997, and for the period March 25, 1993
(Date of Inception) through March 31, 1997, are derived from the Company's
unaudited financial statements included elsewhere in this Prospectus and
include, in the opinion of the Company, all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the Company's
financial position at those dates and results of operations for those periods.
Operating results for the three months ended March 31, 1997 are not
necessarily indicative of the results for any future period. The data set
forth below should be read in conjunction with the Company's financial
statements, related notes thereto, and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
Prospectus.
<TABLE>
<CAPTION>
For the Period
March 25,
1993 (Date of
Inception)
For the Three Months
through Year Ended
Ended
March 31 December 31
March 31,
Statement of Operations Data: 1997 1995 1996
1996 1997
Revenues: (unaudited)
(unaudited)
<S> <C> <C> <C>
<C> <C>
Income under research
agreement $ 226,391 - $ 139,079
- - $ 87,312
Income from SBIR Grant 20,000 - 20,000
- - -
Interest income 17,255 5,060 7,760
599 4,435
Other income 11,714 3,062 4,366
818 899
Total revenues 275,360 8,122 171,205
1,416 92,646
Expenses:
Operating, general and
administrative 868,934 230,423 276,642
61,362 107,396
Research and development 667,033 130,984 392,010
39,612 135,653
Interest 81,299 20,927 37,136
5,779 13,154
Total expenses 1,617,266 382,334 705,788
106,753 256,203
Net Loss $(1,341,906) $ (374,212) $ (584,583) $
(105,337) $ (163,557)
Net Loss per Common Share $ (0.18) $ (0.22) $
(0.04) $ (0.07)
Weighted Average Common Shares 2,025,975 2,411,275
2,373,000 2,449,533
</TABLE>
<TABLE>
<CAPTION>
Balance Sheet Data:
March 31,
(unaudited)
1996
1997
<S> <C>
<C>
Cash and cash equivalents 21,880
373,880
Working capital 307,295
352,623
Total Assets 131,229
632,017
Total Liabilities 437,524
1,309,655
Total Capital Deficiency (131,229)
(677,637)
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and the related Notes thereto included elsewhere in
this Prospectus. This Prospectus contains forward-looking statements which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors" and in "Special Note Regarding Forward-
Looking Statements."
Overview
The Company is a development stage, biotechnology company. The Company
is considered to be in the development stage because it is devoting
substantially all of its efforts to establishing its business and its planned
principal operations have not commenced.
Since its inception in March of 1993, the Company's efforts have been
principally devoted to research and development, securing patent protection,
and raising capital. The Company has not received any revenues from the sale
of products, and does not expect any of its product candidates to be
commercially available for at least the next two to five years. From
inception through March 31, 1997, the Company has sustained cumulative losses
of $1,341,906. These losses have resulted primarily from expenditures
incurred in connection with general and administrative activities, research
and development, patent preparation and prosecution, and interest.
The Company expects to continue to incur substantial research and
development costs in the future resulting from ongoing research and
development programs, manufacturing of products for use in clinical trials and
preclinical and clinical testing of the Company's products. The Company also
expects that general and administrative costs, including patent and regulatory
costs, necessary to support clinical trials, research and development,
manufacturing, and the creation of a marketing and sales organization, if
warranted, will increase in the future. Accordingly, the Company expects to
incur increasing operating losses for the foreseeable future. There can be
no assurance that the Company will ever achieve profitable operations.
To date, the Company has not marketed, or generated revenues from the
commercialization of, any products. The Company's current drug candidates are
not expected to be commercially available for several years.
The Company has only a limited operating history upon which an evaluation
of the Company and its prospects can be based. The risks, expenses and
difficulties encountered by companies at an early stage of development must be
considered when evaluating the Company's prospects. To address these risks,
the Company must, among other things, successfully develop and commercialize
its product candidates, secure all necessary proprietary rights, respond to
competitive developments, and continue to attract, retain and motivate
qualified persons. There can be no assurance that the Company will be
successful in addressing these risks. See "Risk Factors - Early Stage of the
Company; Accumulated Deficit."
The operating expenses of the Company will depend on several factors,
including the level of research and development expenses. Research and
development expenses will depend on the progress and results of the Company's
product development efforts, which the Company cannot predict. Management may
in some cases be able to control the timing of development expenses in part by
accelerating or decelerating preclinical testing and clinical trial
activities. As a result of these factors, the Company believes that period-to-
period comparisons in the future are not necessarily meaningful and should not
be relied upon as an indication of future performance. Due to all of the
foregoing factors, it is possible that the Company's operating results will be
below the expectations of market analysts, if any, and investors. In such
event, the prevailing market price, if any, of the Common Stock would likely
be materially adversely affected. See "Risk Factors - Absence of Public
Trading Market for Securities; Valuation."
Results of Operations
Three Months Ended March 31, 1996 and 1997
The Company revenues under research agreements increased from none in the
first three months of 1996 to $87,312 in the first three months of 1997, due
entirely to recognition and receipt of income from a research support
agreement with Genetics Institute, Inc. Revenues under the Genetics Institute
agreement are expected to cease at the end of the agreement in 1997. Income
of approximately $73,000 under the Company's SBIR grant is expected during
1997.
Interest income increased 640% from $599 in the first quarter of 1996 to
$4,435 in the same period in 1997. This increase was attributable to the
investment of the proceeds from the sale of Unsecured Convertible Notes in the
last quarter of 1996. Interest income will decline as these funds are used
for operating expenses.
Operating, general and administrative expenses increased 75% from $61,362
in the first three months of 1996 to $107,396 in the first three months of
1997. These increased expenses reflect increased personnel, including a
secretary hired in June 1996 and the employment of a Vice President -
Operations and Regulatory Affairs in December 1996. The Company expects its
general and administrative expense to continue to increase during the
remainder of 1997 and 1998 as a result of the forgoing increases in personnel
who will be employed for the full year of 1997 as well as the hiring of
additional personnel.
Research and development expenditures consist primarily of payroll-
related expenses of research and development personnel, laboratory supplies,
animal supplies, laboratory rent, depreciation on laboratory equipment,
development activities, payments for sponsored research, and payments to
scientific and regulatory consultants. Research and development expenses
increased 242% from $39,612 in the first quarter of 1996 to $135,653 in the
first quarter of 1997, primarily as a result of additional research personnel
and increased research activities. The Company anticipates that its research
and development expenses will increase during the next 12 months as the
Company continues to fund research and development programs and preclinical
and clinical testing for its product candidates and technologies under
development.
Interest expense increased 128% from $5,779 in the first three months of
1996 to $13,154 in the first three months of 1997 due primarily to interest
paid on the Company's Unsecured Convertible Debt, issued in the last quarter
of 1996, and the compounding of interest on deferred fees and salaries,
including deferred interest, payable to related parties. See "Management -
Deferred Compensation Plan." Interest will continue to increase during 1997
as a result of the Unsecured Convertible Notes' being outstanding for the
entire year, and as a result of the compounding of interest on deferred fees
and salaries accounts.
Years Ended December 31, 1995 and 1996
The Company recognized contract research and development revenues of
$159,076 for the first time in the year ended December 31, 1996. This revenue
consisted of a portion of the $200,000 payment under a research support
agreement between the Company and Genetics Institute, Inc. (received upon
execution of the agreement), which the Company is recognizing, ratably over
the 12-month life of the research project. Revenues also included funds
received under a grant from the National Institutes of Health under the Small
Business Innovation Research ("SBIR") Program. Prior to this, the Company's
only revenues had been from interest income and nominal consulting fees for
services rendered by Ixion personnel to the Biotechnology Development
Institute. Revenues under the Genetics Institute Agreement are expected to
cease in 1997. Payments of up to $73,000 under the SBIR will continue in
1997, but will terminate not later than October 1997.
Other income increased 43% from $3,062 in 1995 to $4,366 in 1996 due
primarily to an increase in consulting fees for services rendered by Ixion
personnel to the Biotechnology Development Institute.
Operating, general and administrative expenses increased 20% from
$230,423 in 1995 to $276,642 in 1996, primarily due to additions to the
Company's personnel.
Research and development expenses increased 199% from $130,984 in 1995 to
$392,010 in 1996. This increase was primarily attributable to increases in
research personnel and the scale of research operations during the year. The
Company recorded non-cash compensation expense in the amount of $139,295 in
1996 related to the issuance of compensatory options and restricted stock.
Interest expense increased 77% from $20,927 in 1995 to $37,136 in 1996,
due primarily to additions to deferred fees and salaries, including deferred
interest payable to related parties, arising from the deferral of fees and
salaries in 1993, 1994, 1995, and 1996 by Company officers and consultants,
and the compounding of deferred interest in those accounts, and to the
interest on the Company's Unsecured Convertible Notes issued in the last
quarter of 1996.
Liquidity and Capital Resources
In September 1996, the Company completed a private placement transaction
in which it sold Unsecured Convertible Notes for an aggregate gross
consideration of $787,270. In addition on April, 16, 1996, the Chairman and
Chief Executive Officer and the President of the Company each entered into an
agreement to extend the Company up to $25,000 in the form of a bridge loan.
Interest on the loan is at 8% but can be reset annually, at the election of
either party, to the prime rate in effect on January 1 of any given year, plus
3%. Under these agreements, the Company borrowed a total of $32,100, all of
which was repaid in cash by the Company on June 14, 1996. In addition, the
Chairman, on June 21, 1996, agreed to increase his loan commitment to an
amount up to $150,000, if necessary, to enable the Company to continue
operations. These facilities are available to the Company, but no amounts are
outstanding at March 31, 1997. The Company does not have any bank financing
arrangements. The Company's long-term indebtedness consists primarily of
deferred fees and salaries payable to related individuals and a chattel
mortgage agreement.
At March 31, 1997, the Company had $373,880 in cash and cash
equivalents, and working capital of $352,623.
On January 1, 1996, the Company purchased laboratory equipment pursuant
to a chattel mortgage agreement in the amount of $32,309. The agreement calls
for monthly payments of $897, commencing August 1, 1996. The Company
anticipates making capital expenditures of approximately $40,000 for the year
ended December 31, 1997, primarily for acquisitions of additional laboratory
and office equipment.
For the period March 25, 1993 (date of inception) through March 31, 1997,
the Company capitalized costs of $164,454 associated with the prosecution of
various patent applications. As further research continues and the Company
acquires additional patent rights, management expects the patents pending
asset to increase.
The Company has incurred negative cash flows from operations since its
inception, and has expended and expects to continue to expend in the future,
substantial funds to complete its planned product development efforts,
commence clinical trials, and diversify its technology. The Company's future
capital requirements and the adequacy of available funds will depend on
numerous factors, including the successful commercialization of its HOF Probe
and IxC-162, progress in its product development efforts, the magnitude and
scope of such efforts, progress with preclinical studies and clinical trials,
the cost of contract manufacturing and research organizations, cost of filing,
prosecuting, defending and enforcing patent claims and other intellectual
property rights, competing technological and market developments, and the
development of strategic alliances for the development and marketing of its
products. The Company believes that funds generated from the Company's
operations, together with its existing capital resources would be sufficient
to meet operating requirements at historical operating levels through December
31, 1998. However, the Company requires the proceeds of this Offering and
interest thereon to meet its planned operating requirements (which accelerate
product development when compared to historical operating levels) through that
date. In the event the Company's plans change or its assumptions change or
prove to be inaccurate or the proceeds of the Offering prove to be
insufficient to fund operations (due to unanticipated expenses, delays,
problems or otherwise), the Company could be required to seek additional
financing sooner than currently anticipated. In addition, the
Company will be required to obtain additional funds in any event through
equity or debt financing, strategic alliances with corporate partners and
others, or through other sources in order to bring its products through
regulatory approval to commercialization. The terms and prices of any equity
or debt financings may be significantly more favorable than those of the Units
sold in this offering. The Company does not have any material committed
sources of additional financing, and there can be no assurance that additional
funding, if necessary, will be available on acceptable terms, if at all. If
adequate funds are not available, the Company may be required to delay, scale-
back, or eliminate certain aspects of its operations or attempt to obtain
funds through arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies,
product candidates, products, or potential markets. If adequate funds are not
available, the Company's business, financial condition, and results of
operations will be materially and adversely affected.
Until required for operations, the Company's policy is to invest its cash
reserves in bank deposits, certificates of deposit, commercial paper,
corporate notes, U.S. government instruments and other investment-grade
quality instruments.
Product Research and Development Plan
The Company's plan of operation for the 12 months following completion
of this Offering will consist primarily of research and development and
related activities including:
further development of the Company's IPSC research programs aimed at
proprietary populations of functioning islets for transplantation into
diabetic patients;
continuing the funding of the ongoing discovery program in which the
Company intends to identify and characterize novel growth factors
associated with the IPSCs, to discover factors important in islet cell
differentiation and possible regulation of diabetes and to identify stem
cell markers to which the Company hopes to produce antibodies useful in
stem cell isolation;
further preclinical development of the Company's diagnostic HOF Probe
for Oxalobacter formigenes detection, and if successful, the initiation
of clinical trials;
further development of IxC-162, including formulation, product
characterization, method development, testing (including toxicology),
cell line characterization, process development, clinical lot
manufacturing, stability, research protocols, and preclinical studies
for the Company's proposed products, primarily its oxalate-related
products;
continuing the prosecution and filing of patent applications; and
hiring additional employees.
The actual research and development and related activities of the Company
may vary significantly from current plans depending on numerous factors,
including changes in the costs of such activities from current estimates, the
results of the Company's research and development programs, the results of
clinical studies, the timing of regulatory submissions, technological
advances, determinations as to commercial potential and the status of
competitive products. The focus and direction of the Company's operations
will also be dependent upon the establishment of collaborative arrangements
with other companies, and other factors.
There can be no assurance that the Company will be able to commercialize
its technologies, or that profitability will ever be achieved. The Company
expects that its operating results will fluctuate significantly from quarter
to quarter in the future and will depend on a number of factors, many of which
are outside the Company's control.
Recent Accounting Pronouncements
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings Per Share. This statement, which is effective for
the Company's annual report for the year ended December 31, 1997, establishes
new requirements for the calculation, presentation, and disclosure of earnings
per share. The Company estimates that earnings per share presented in
accordance with Statement No. 128 would not differ materially from what is
currently presented.
<PAGE>
BUSINESS
The Company
Ixion Biotechnology, Inc. ("Ixion" or the "Company"), is a development
stage, discovery research biotechnology company, with several product
candidates in development. The Company is the holder of world-wide exclusive
licenses to patents and pending patents in two key areas: diabetes and
oxalate-related disorders. Ixion has executive offices and development
laboratories (including small scale fermentation, cell culture, and
purification capabilities) at the Biotechnology Development Institute, a small
business incubator operated by the Biotechnology Program at the University of
Florida.
Ixion is developing diabetes products based on its Islet Progenitor/Stem
Cell ("IPSC") technology, including a proprietary line of in vitro (in test
tube) islet stem cells for use in cell transplantation therapy. This
development program is aimed at optimizing the growth of functioning islets or
islet progenitors in vitro from IPSCs which Ixion has established in cell
cultures. The Company believes that successful islet transplantation therapy
will provide better management of diabetes than conventional treatment with
insulin and other metabolic regulators. Conventional treatment can result in
hyper- and hypo-glycemic episodes which are a major cause of diabetic
complications. Ixion's technology is intended to ameliorate this condition by
implanting functional islets into the body in order to materially improve
control of blood glucose levels.
In addition to developing its cell transplantation therapy, Ixion has an
ongoing discovery program to identify and characterize IPSCs as well as novel
growth factors associated with them. The goal of this program is to discover
factors important in islet cell differentiation and to identify stem cell
markers to which the Company hopes to produce antibodies useful in stem cell
isolation. All of the Company's potential diabetes products are in the
discovery research stage.
Diabetes is a chronic, complex metabolic disease. Type I (often referred
to as Insulin Dependent Diabetes or IDD) is characterized by an inability to
produce insulin due to the destruction of the insulin-producing cells of the
pancreatic islets of Langerhans. Type I diabetes also leads to many serious
conditions ranging from death from diabetic coma or insulin shock, to end
stage renal disease, blindness, amputations, nerve damage, and cardiovascular
and periodontal disease. Over 13 million people in the United States have
diabetes, of whom five to ten percent (or about one million patients) have
Type I, the most severe form of the disease, and must take insulin. An
additional one and one-half million Type II patients also take insulin.
Annual expenditures on all forms of diabetes are $112 billion, exceeding
expenditures on cancer. The Company estimates that approximately 500,000
patients in the United States could benefit from IPSC-based therapy. These
patients currently spend approximately $10 billion annually in treatment of
their diabetes.
The Company is also developing products based on its oxalate technology
for the diagnosis and treatment of oxalate-related diseases. Excess oxalate
from dietary and metabolic sources plays a role in a variety of disorders
including kidney stones, hyperoxaluria, cardiomyopathy, cardiac conductance
disorders, cystic fibrosis, Crohn's disease, renal failure and toxic death,
and vulvodynia. The anaerobic intestinal bacteria, Oxalobacter formigenes,
produces enzymes responsible for oxalate degradation in healthy people, and
inadequate colonies of them result in reduced ability to degrade oxalate.
There are approximately one million kidney stone incidents annually in
the United States. Annual expenditures on kidney stone incidents exceed $1.8
billion. There are approximately 25,000 cystic fibrosis patients in the
United States; these patients are at materially increased risk of kidney
stones as a result of excess oxalate. There are from 5,000 to 16,000 new
cases of Inflammatory Bowel Disease annually, resulting in 100,000
hospitalizations, 60% from Crohn's Disease. Vulvodynia, a chronic
multifactorial disorder, believed to be in some degree oxalate-related,
results in painful and debilitating symptoms affecting the tissue surrounding
the vagina and urethra. There are no population studies of the incidence or
prevalence of vulvodynia, but estimates range as high as 150,000 to 200,000
U.S. women with this condition. Very few effective treatments, if any, exist
for these disorders.
The most developed product candidate in Ixion's development pipeline is a
combination diagnostic and therapy for the management of oxalate-related
disorders.
The diagnostic component of the Company's oxalate-related disease
management product is a DNA probe for the rapid and sensitive detection of
human O. formigenes (the "HOF Probe"). The current tests for O. formigenes
are laborious, time consuming, and unreliable, and are limited by (1) the
difficulties of anaerobic culture methods, (2) the inability to standardize
and accurately quantitate the presence of the bacteria, and (3) the fact that
the tests cannot be automated. In addition, the current tests are not
sensitive and are poorly suited to a clinical setting. The HOF Probe, on the
other hand, can accurately and reliably detect very small numbers of O.
formigenes, is quantitative, and is capable of automation.
The therapeutic component of the Company's oxalate-related disease
management product is an orally administered product consisting of two enzymes
normally found in O. formigenes and responsible for oxalate degradation ("IxC-
162"). The Company believes that the administration of these enzymes will
greatly diminish the recurrence of calcium oxalate kidney stones and will have
positive therapeutic effects on other oxalate-related disorders.
The Company intends to file an Investigational New Drug application with
the Food and Drug Administration for its IxC-162 enzyme therapy for oxalate-
related diseases and an application under Section 510(k) of the Food, Drug,
and Cosmetic Act for the HOF Probe, both within 12 months from the date of
this Prospectus. See "Business - Government Regulation."
Ixion is in the development stage, has earned only limited revenues, the
majority of which have been research and development payments, and has
incurred accumulated deficits of approximately $1,341,906 from its inception
through March 31, 1997. See "Risk Factors."
Industry Description and Outlook
In 1996, the U.S. biotechnology industry was composed of approximately
1,300 companies, public and private. Sales for the industry as a whole
increased by 16.0% to $10.8 billion. The public market for biotechnology
financing was robust during 1996 with the industry raising about $4.5 billion
compared to $2.2 billion in 1995. Total financings (excluding milestone
payments and equity purchases by corporate partners) amounted to $7.5 billion.
For the first six months of 1997, financings have declined to about half of
the 1996 level. The biotechnology industry is part of the broader health care
industry in the United States, which accounts for approximately 14% of the
country's gross domestic product, or approximately $1 trillion.
Diabetes. Diabetes is the world's most common metabolic disease. In
1996, there were over 13 million diabetics in the United States. There are 21
million diabetics in Europe and as many as 90 million worldwide. Type I
patients compose from 5% to 10% of the total number of diabetics in the U.S.,
or approximately one million patients. An additional 1.5 million Type II
diabetics also take insulin. There are approximately 500,000 to 600,000 new
patients annually in the U.S., of which 35,000 to 50,000 are Type I diabetics.
Approximately 25 percent of the new Type II patients (or approximately
110,000) will also take insulin.
Data derived from the National Medical Expenditure Survey database
indicates that in 1995, diabetes accounted for over 10% of total U.S. health
care expenditures, or approximately $112 billion. In 1992, the American
Diabetes Association estimated that another $47 billion was spent in indirect
costs, such as lost wages. Other sources have estimated that indirect costs
may actually exceed the direct costs. Complications of the disease include
amputations of toes and feet, blindness, ulcers, nerve damage and
cardiovascular, periodontal, and kidney disease. Approximately 30% to 40% of
people with Type I diabetes will develop diabetic nephropathy leading to
kidney dialysis and renal transplants. Overall, diabetes is the fourth
leading cause of death in the U.S.
Current therapies, including insulin shots, amylin therapy, or oral
hypoglycemic medication modulate blood glucose, but cannot consistently
maintain the diabetic's blood glucose at normal levels. The Diabetes Control
and Complications trial, a nine-year NIH study, demonstrated that maintaining
blood glucose at normal levels reduces by approximately 60% the risk of
development and progression of diabetes complications. However, there is no
therapy which supplies insulin in response to changes in blood glucose with
the speed and precision of functioning islets. The Company believes that
approximately 500,000 insulin dependent diabetics are candidates for islet
transplantation and that successful transplantation of islets capable of
providing constant glucose control will ameliorate the complications of the
disease. Such transplant candidates in the United States spend not less than
$10 billion on direct care expenditures annually. It should be noted,
however, that transplant therapy is an early stage procedure and results, as
is common for early stage procedures, for the adult islet transplants
performed to date have been disappointing. Although there can be no
assurance, the Company believes that the success rate of transplant therapy
will improve over time.
Kidney stones. Kidney stones are a major health care problem in the
United States, and a worse one in other parts of the world. Nearly one in
every 1000 residents in the United States has been hospitalized for stones,
and autopsies have revealed that one in every 100 persons have observable
stone formation in their kidneys. Between seven and ten of every 1000
hospital admissions in the United States are for kidney stones; this is
approximately 248,000 hospital admissions annually. There are approximately
one million kidney stone incidents annually, the seventh leading cause of
physician visits. Nationwide, approximately 12% of the U.S. population will
develop stones in their lifetime, but stones are particularly common in the
region from Virginia to New Mexico, commonly referred to as the "stone belt."
In other parts of the world, particularly the Middle-East, Asia, and India,
kidney stones are an even worse problem since hot climates seem to favor stone
formation.
If a stone cannot be passed, it is surgically removed or shattered by
extracorporeal shock-wave lithotripsy. Both treatments are expensive, with
the average lithotripsy costing $4,617 and surgery costing $8,308 (including
the hospital stay). Approximately 30% of patients with kidney stones are
hospitalized, the remainder pass the stone at home, which, while not
particularly expensive, is exceedingly painful. Based on 1993 data, the total
annual cost of kidney stones in the United States was conservatively estimated
at $1.83 billion annually.
Unfortunately, kidney stones usually recur; although for most patients,
the time between episodes can be years. The majority of kidney stones are
made of oxalate, which is an end product of metabolism in the body, and an
important component of a typical diet. The intestinal oxalate degrading
bacteria, Oxalobacter formigenes, plays an important role in oxalate
homeostasis, both by regulating intestinal absorption of dietary oxalate and
also its secretion into intestinal lumen from the blood by maintaining a
transepithelial gradient. Thus it may be clinically important to screen and
treat patients with oxalate-associated diseases like kidney stones, enteric
hyperoxaluria, cardiomyopathy, cardiac conductance disorders, cystic fibrosis,
Crohn's disease, renal failure and toxic death, and possibly vulvodynia for
the presence or absence of the bacterium. Indeed, recent research indicates
an increased risk of kidney stones in patient populations with significantly
decreased intestinal colonization by O. formigenes. This may be particularly
true of patients with cystic fibrosis, who are at materially increased risk of
kidney stones as a result of excess oxalate.
Inflammatory Bowel Disease. Inflammatory Bowel Disease ("IBD") is a
general term which covers two primary chronic disorders that cause
inflammation or ulceration in the small and large intestine: Crohn's disease
and ulcerative colitis. The cause of IBD is unknown, with many theories, none
proven. One theory is that an agent, like a virus or a bacterium, affects the
immune system, thus causing an inflammatory reaction in the intestinal wall.
While there is evidence that IBD is associated with abnormalities in the
immune system, it is not known whether they are cause or effect of the
disease. Many persons with IBD are also hyperoxaluric, suggesting that excess
oxalate may be a complicating factor in the disease, or may lead to increased
risk of kidney stones. In 1987, the latest data available, the number of new
cases of IBD in the United States annually ranged from two to six per 100,000
of population. There were about 100,000 hospitalizations annually,
approximately 64% for Crohn's.
Vulvodynia. Vulvar vestibulitis syndrome ("vulvodynia") is a complex,
multifactorial disorder with painful and debilitating symptoms affecting the
tissue surrounding the vagina and urethra, including intense burning, itching,
and inflammation. In chronic cases it is very disruptive of a person's life.
Recognition of this condition as a significant, physiological syndrome
appeared in medical journals only a decade ago. There are no population
studies of the incidence or prevalence of vulvodynia although the condition
may affect from 150,000 to 200,000 American women. Because the cause is often
unknown, treatments have been aimed at symptoms and include xylocaine,
acupuncture, hypnotherapy, interferon injections, and, as a last resort in
chronic cases, surgery. Recent research suggests that vulvodynia is
associated with oxalate, with some investigators reporting significant
improvement following control of dietary oxalate.
Other Oxalate Related Markets. Two additional products which could make
use of Ixion's oxalate technology include improved kidney dialysis devices and
an improved urological catheter. As of 1995, there were approximately 175,000
U.S. hemodialysis patients and approximately 300,000 more in Europe and Japan.
The use of the Ixion oxalate technology could significantly reduce the time
that patients spend in dialysis by increasing the efficiency of oxalate
removal during the process.
The market for urological drains (catheters) was $675 million in 1995.
Catheters often foster infection and account for the leading side effect of an
invasive hospital procedure. One major cause of catheter infection is the
build-up of oxalate crystals on the catheter. The Ixion oxalate technology
would allow an improved catheter which would inhibit or dissolve encrusted
oxalate crystals, thus reducing the potential for infection.
Business Strategy
The Company intends to market its initial diagnostic products, while
working with strategic partners to take its planned therapeutic products
through clinical trials into the market.
Basic Research. Ixion has a strategic alliance with the University of
Florida through affiliation with the Biotechnology Program. Ixion has used
and intends to continue to use cooperative research and development agreements
with the University for basic discovery research. The University of Florida
is the tenth largest university in the nation and is the largest research
institution in the Southeast. In 1995, it ranked ninth in the United States
in gross royalties received from patent licenses, and sixteenth in the United
States in the number of U.S. patents obtained.
Technology Evaluation and Development. The Company plans to use its
strategic affiliation to seek out, evaluate, license, and develop cutting-edge
university based biotechnology. The Company's scientific and business team
will review early stage academic inventions, identify discoveries which are
scientifically innovative and commercially promising, obtain licenses from the
University, and develop the discoveries to add value by confirming the initial
observations. Discoveries which support the Company's core technologies will
be retained for further development; the remainder will be licensed-out to
generate immediate royalty revenue.
The University's faculty has only recently begun to engage in commercial
collaborations in significant numbers, thus many promising commercial
discoveries have not been exploited, for example, the Company recently
licensed an anti-microbial patent from two members of the University of
Florida faculty. See "Business-Licensed Technology." In addition, academic
intellectual property is often embryonic and, therefore, too risky, expensive,
and time consuming for large pharmaceutical and biotechnology companies to
acquire and develop. Ixion, on the other hand, is in a position to perform
"applied basic" research inexpensively, either in its labs or through
cooperative research agreements, in order to add value to the technology such
that it is of greater interest to commercial licensees. By increasing the
maturity stage of the technology, Ixion hopes to capture an enhanced return
upon licensing-out for royalty and milestone payments. See Figure 1, below.
Discovery supports core technology.
/ Ixion develops product.
/
/
/
University-Discovered Ixion / Substantial commercial potential,
Very Early Stage --------Evaluation----- but not within core focus.
Technology \ Ixion develops technology,
\ then licenses out.
\
\
\
Discovery lacks commercial
promise or no Ixion
capability for further
development.
Ixion declines license.
Figure 1 - Ixion Technology Opportunity Strategy
Ixion intends to continue to develop collaborative arrangements with
leading researchers at the University of Florida and at other research
institutions in its core oxalate and diabetes areas to diversify and
strengthen its intellectual property estate and to establish its reputation
and credibility in the scientific and medical communities.
Collaborative Product Development and Marketing with Established
Companies. Ixion plans to develop products in collaboration with other
companies. Collaborative agreements may call for Ixion's collaborative
partners to provide research funds as well as clinical and other support
during product development, although Ixion may develop and test ideas
independently before entering into a collaborative agreement. The Company
contemplates that its partners will provide an established and trained
marketing and sales force, as well as GMP manufacturing experience, clinical
trial expertise, support for patent prosecution, and other capabilities.
Independent Product Development. The quality of Ixion's scientific team
also permits independent product development. Independently developed
products will provide the Company with the flexibility either to market the
product directly or enter into agreements with pharmaceutical partners on
terms more favorable to the Company. While independent product development is
riskier than collaborative development, the Company may be able to retain a
higher proportion of any eventual product revenue stream. The Company's HOF
Probe is an example of independent product development.
Contract Clinical Trial and Manufacturing Services. Initially, the
Company has elected to retain contract vendors to support clinical studies
and product development. Moreover, it will not construct its own good
manufacturing practices ("GMP") manufacturing facilities. By contracting
with a qualified manufacturing company, Ixion will be able to obtain immediate
access to the necessary GMP and regulatory skill base at low entry costs. The
Company thus expects to minimize the time to market, maintain control over
development candidates, and reduce its financial risk when product risk is the
greatest.
Product Development
The Company's first target products for diabetes will be a population of
cultured islet or pancreatic cells for use in diabetes treatment, and its
first target products for oxalate-related diseases will be the HOF Probe and
the associated enzymatic treatment for oxalate-related conditions. The
Company also plans other products that will detect and measure the presence of
oxalate or Oxalobacter formigenes in urine or blood. Certain of these
products may be suitable for use in research applications and, subject to
certain limitations, would not require FDA approval prior to use in that
context. (See "Business - Government Regulation," below.)
Genetics Institute Sponsored Research Agreement. In connection with its
potential diabetes products, in June 1996, the Company entered into a
sponsored research agreement with Genetics Institute, Inc. ("GI"), a leading
biopharmaceutical firm. The sponsored research agreement relates to the
Company's IPSC technology and grants GI an option to a right of first
negotiation for an exclusive world-wide license to the Company's IPSC
technology and any improvements or developments relating to IPSC technology
which arise during the term of the agreement. The Company does not expect
this agreement to be renewed in 1997, nor that GI will exercise its option.
Descriptions of Planned Diabetes Products. Ixion intends to develop
products to enhance research into the disease of diabetes, as well as
therapeutic approaches where Ixion's proprietary technology offers unique
solutions.
Islet transplantation to reverse diabetes or reduce insulin dependency
has been limited by, among other things, immunological attack resulting in
rapid rejection of transplanted tissue. In addition to the immunologic
difficulties, there are significant shortages of human islets suitable for
transplant or research, with only 4,000 or fewer pancreases available for
transplant annually. Xenotransplants using porcine islets face additional
difficulties, such as the possibility of cross-species viruses. To date,
efforts to propagate commercial quantities of islets in vitro (in the test
tube) from either fetal or adult tissue has had minimal success. The Company
believes that a source of reproducible islet cells would significantly improve
the speed and results of research into transplanted islets.
Ixion's IPSC technology permits the successful growth of in vitro
pancreatic-derived, pluripotent (e.g., able to differentiate) islet-producing
cells from mice. When mouse cells were implanted into clinically prediabetic
mice, the implanted mice were successfully weaned from insulin until they were
sacrificed for histological studies. The Company has also been successful in
propagating human islet cells from children and adult donors as well, but has
not transplanted such islets at the date of this Prospectus.
The following table summarizes the current status of the Company's IPSC
research and development program for diabetes products.
Product Development-Diabetes IPSC Technology
Product Planned Research Products Status
(1)
Cultured IPSCs
or Islets Implantation in vivo of encapsulated cells
for study of protected implantations to
reverse diabetes Research
Genetically
Engineered IPSCs Implantation in vivo without encapsulation
for study of unprotected implantations to
reverse diabetes Research
Islet Growth Factors Promotion of cell growth and differentiation
of pancreatic explants Research
Nucleic Acid Probes Genetic and phenotype analysis Concept
Surface Antibodies Analysis of health or disease of biopsy
specimens
Identification of cells
Enrichment of specific cell types
Isolation and identification of cells by stage
of differentiation
Production of knock-out lines of pancreatic
cells Concept
Planned Clinical Products
Cultured IPSCs
or Islets Encapsulated implantation in vivo to reverse
diabetes Concept
Genetically
Engineered IPSCs Transplantation without encapsulation (or other
mechanical means of immunologic protection)
in vivo to reverse diabetes Concept
Islet Growth Factors Correct disease deficiencies
Promote greater efficiency in culturing cells
for transplantation
Elucidation of diabetes disease process
Monitor disease stages Concept
(1) "Concept" includes feasibility, theoretical market, and product
design studies based on laboratory or other data. "Research" includes
discovery research, development of the product's physical form and
specifications, and its initial production. "Preclinical" denotes efficacy,
pharmacology, safety, or toxicology studies in animal models.
Descriptions of Planned Oxalate Products. At the present time, there is
no commercial method of rapidly and easily detecting the presence or absence
of O. formigenes in the body or of measuring oxalate levels in a patient's
blood. The current tests for O. formigenes are laborious, time consuming, and
unreliable, and are limited by (1) the difficulties of anaerobic culture
methods, (2) the inability to standardize and accurately quantitate the
presence of the bacteria, and (3) the fact that the tests cannot be automated.
In addition, the current tests are not sensitive and are poorly suited to a
clinical setting.
The only commercially available tests for levels of oxalate in the human
body are currently performed in clinical labs by measuring oxalate
concentrations in urine. Available assays for measuring oxalate levels in
urine also have major drawbacks: the samples require careful processing to
remove inhibitory substances, the tests are complex and cumbersome, and they
often fail to provide consistent results. Accordingly, such tests cannot be
performed in many hospital labs or in a doctor's office. Ixion's planned
oxalate products are designed to address these drawbacks.
The HOF Probe. Ixion's oxalate technology consists of cloned, sequenced,
and expressed genes encoding the oxalic acid degrading enzyme and formate
degrading enzyme from the intestine dwelling bacteria, Oxalobacter formigenes.
Ixion's Dr. Sidhu, in collaboration with Dr. Milton Allison, a member of
Ixion's Scientific Advisory Board and the discoverer of O. formigenes, has
used these genes to construct a DNA probe (the "HOF Probe") to detect the
presence of O. formigenes in easily-collectable stool samples. O. formigenes
is a gram negative anaerobe present in humans and other animals. The role of
this species in intestinal management of oxalate is supported by findings
showing significantly decreased intestinal colonization in patient populations
at increased risk of kidney stones. Research in this area has been inhibited
by the difficulty of culturing and detecting the anaerobe.
The HOF Probe being developed by Ixion is a significant improvement over
current tests for O. formigenes and is an important potential addition to
routine diagnostic testing for several reasons.
Ixion's HOF Probe is much easier to perform and provides accurate
results in a fraction of the time required to culture and test for
O. formigenes using existing methods.
Ixion's DNA method relies upon standard DNA techniques and does
not require anaerobic cultures of the organisms since it provides
direct detection of DNA extracted from fecal samples and amplified
using PCR.
Because it is based upon PCR and subsequent hybridization to
species-specific sequences, the HOF Probe is simple to perform and
provides the required level of sensitivity, accuracy, selectivity,
and throughput necessary for a commercial diagnostic test.
The HOF Probe is sensitive to the level of 1,000 to 10,000 colony
forming units/gram of fecal material. This is approximately 100-
fold lower than the number of colony forming units in fecal
material of normal, healthy adults.
Ongoing development of the HOF Probe is focused on the following areas:
Extended evaluation and enhancement of probe specificity with
respect to other intestinal organisms to assure the absence of
cross reactivity and misdiagnosis. Organisms currently being
evaluated include the following: Eschericia coli, Yersinia spp.,
Shigella spp., Salmonella spp., Vibrio colera, Helicobacter
pylori, Klebsiella, Giardia lamblia, and Campylobacter spp.
Development of probes against clinically important intestinal
organisms such as those listed above. These, coupled with the HOF
Probe, will provide for a panel of clinically important diagnostic
tests.
Development of quantitative capability for the HOF Probe and other
DNA probe diagnostics based upon technologies such as PCR, dot
blot hybridization, and other technologies.
The Company expects to file an application under Section 510(k) of the
Food, Drug, and Cosmetic Act for clearance to market its HOF Probe during
1997. There is no assurance that the HOF Probe will qualify for 510(k)
procedure, in which case the Company will have to file an application for
premarket approval ("PMA") with the FDA. If the Company must follow the PMA
approval route, the approval process may be lengthy.
IxC-162 Enzyme Therapy for Oxalate-Related Disease
In addition to the HOF Probe and other potential diagnostic products
described above, Ixion is developing IxC-162, an orally administered
therapeutic product consisting of two enzymes normally found in O. formigenes:
oxalo-CoA decarboxylase ("oxc") and formyl-CoA transferase ("frc"). The
enzymatic therapy is based upon the re-establishment of oxalate degrading
mechanisms in the body. IxC-162 is targeted at oxalate-related disorders
including kidney stones, enteric hyperoxaluria, oxalosis, cardiomyopathy,
cardio conductance disorders, cystic fibrosis, Crohn's disease, and possibly
vulvodynia. Very few satisfactory treatments currently exist for these
disorders.
Both the oxc and frc enzymes have been successfully cloned into E. coli
and expressed in active form as verified using activity assays developed by
Ixion's scientists. Physicochemical analysis such as SDS-PAGE, IEF, and N-
terminal sequence analysis has been completed, further verifying the correct
identity of these proteins. Ixion has grown the recombinant E. coli to 80
liter scale and has purified the oxc and frc enzymes for use in a variety of
preclinical studies including (1) additional physicochemical characterization,
(2) formulation and drug delivery, and (3) animal studies. The Company is
also purifying the native form of the oxc and frc enzymes from O. formigenes,
to provide comparative data to the recombinant versions. The Company has not
determined whether the recombinant or native enzymes will be used
therapeutically. The current intention is to file an IND for the IxC-162
enzymatic therapy for oxalate-related disorders in early 1998.
At the date of this Prospectus, the HOF Probe has been performed in
preclinical studies by Ixion lab personnel on over 300 human samples from
varied populations in the Ukraine, Germany, the United States, and India. The
results of those studies include the following:
Cystic Fibrosis. Oxalate kidney stones are a known complication of
cystic fibrosis. The incidence in cystic fibrosis populations over 12
years old approaches 3% to 4% as compared to 0.2% in normal populations.
Renal autopsies show >90% nephrocalcinosis. In an Ixion sponsored
clinical study conducted in collaboration with collaborators at
Northwestern University, the University Children's' Hospital, Cologne,
Germany, and University Children's Hospital, Halle, Germany, 40 (18 male
and 22 female) cystic fibrosis patients (aged three to 35 years) were
examined for colonization with Oxalobacter formigenes. 33 of the 40
patients were non-colonized, and of these, 18 were hyperoxaluric and
eight had urinary oxalate levels in the upper normal range. The seven
patients who were colonized with O. formigenes all showed normal levels
of urinary oxalate.
Recurrent Stone Formers. In another currently ongoing study on O.
formigenes colonization in adult calcium oxalate stone formers,
preliminary data have revealed that the majority of recurrent stone
formers (five or more stone episodes) are non-colonized with this
bacteria. Studies in the literature suggesting a decrease in the colony
forming units of O. formigenes in patients with oxalate calculi, rather
than complete non-colonization, has led to the development by Ixion of a
Quantitative- PCR HOF Probe. The Quantitative-PCR HOF Probe is now
being used in additional preclinical work to detect and quantitate O.
formigenes in oxalate stone formers to determine if the number of Colony
Forming Units is a relevant risk factor.
Vulvodynia. A new preclinical study has just begun in cooperation with
the Diagnostic Reference Laboratory at the Shands Hospital at the
University of Florida to examine 25 to 40 vulvodynia patients for
colonization with Oxalobacter formigenes.
Over 65 percent of kidney stones are calcium-oxalate stones, and excess
oxalate is implicated in other diseases as set forth above. Oxalate is present
in many common foods, including tea, broccoli, and spinach. O. formigenes is
involved in degradation of dietary oxalate and its secretion from plasma into
the gut. The Company believes that a robust colony of O. formigenes prevents
recurrent calcium-oxalate kidney stone formation and may ameliorate other
disease states. Management believes that Ixion is the only company world-wide
which is examining the role of O. formigenes in human and animal disease
states.
Blood Oxalate Assay. The combination of the oxc and frc enzymes and
cofactors also serve as the basis for a planned blood oxalate assays. The
recurrence rate of calcium oxalate kidney stone formation is very high, with
hyperoxaluria as the major predisposing factor to stone formation. Accurate
measurements of blood oxalate levels, together with the presence or absence of
O. formigenes, are important requirements for predicting the risk of
calculogenesis in an individual. Development is planned in 1998 on an
additional oxalate product: a blood oxalate assay, to be designed for clinical
use by hospitals, independent labs, and doctors.
The following table summarizes the current status of the Company's
oxalate product research and development program.
Product Development-Oxalate Technology
Product Planned Research Products Status (1)
HOF Probe Detection of O. formigenes in stool for
vulvodynia and kidney stone research
Preclinical
Blood Oxalate Assay Measurement of oxalate levels in blood for
research in kidney stone, hyperoxaluria,
cystic fibrosis, Crohn's disease, vulvodynia,
and other oxalate-related diseases Concept
Planned Clinical Products
HOF Probe Detection of O. formigenes in stool for
oxalate-related disorders
Preclinical
IxC-162 Enzyme
Therapy Treatment of oxalate-related disorders:
Kidney Stones
Crohn's Disease
Cystic Fibrosis
Hyperoxaluria
Vulvodynia
Other oxalate-related diseases
Preclinical
Blood Oxalate Assay Diagnostic oxalate detection kit for blood Concept
Dialysis Cartridge Rapid removal of excess oxalate in blood Concept
Oxalate-Resistant
Catheter Catheter coated to avoid oxalate encrustation
as a method to reduce the incidence of
infection Concept
(1) "Concept" includes feasibility, theoretical market, and product
design studies based on laboratory or other data. "Research" includes
discovery research, development of the product's physical form and
specifications, and its initial production. "Preclinical" denotes efficacy,
pharmacology, safety, or toxicology studies in animal models. "Clinical"
denotes testing for safety and efficacy.
Licensed Technology
The Company has been licensed, on an exclusive world-wide basis,
commercial rights under one issued U.S. patent, issued February 1997, relating
to its oxalate technology, and one patent allowed June 1997, relating to its
IPSC technology, as well as several pending patent applications, divisional
applications, continuations, and continuations-in-part, held by the University
of Florida Research Foundation, Inc. ("UFRFI"), the technology transfer
organization of the University of Florida. The licensed technology relates to
two areas: in vitro grown Islet Progenitor/Stem Cells ("IPSCs") for curing
diabetes, and materials and methods for detection of oxalate and Oxalobacter
formigenes. The licenses are subject to nonexclusive licenses granted to the
U.S. government, which is commonly required when the government has funded a
portion of the research leading to the patent applications.
The license agreements pursuant to which the Company has the rights to
these patent applications require UFRFI to file and prosecute the patents
relating to the technology licensed to the Company, the costs of which are
required to be reimbursed by the Company, and to take all steps to defend such
patent rights. If UFRFI fails to take any such action, the Company has the
right to defend such rights at its own expense.
The Company and UFRFI entered into a Patent License Agreement relating to
materials and methods for detection of oxalate on January 11, 1996, and
another Patent License Agreement relating to in vitro grown IPSCs for curing
diabetes on February 17, 1995 (the "University Patent Licenses"). Except for
royalty rates and certain other immaterial differences, the terms of these
licenses are substantially identical. Pursuant to the University Patent
Licenses, UFRFI licensed its rights under patent applications on an exclusive,
worldwide basis to the Company. The Company has rights under the University
Patent Licenses to all possible uses of the patent applications, any patents
issued from such applications, any divisionals and continuations of such
applications, and to any claims of U.S. and foreign continuation-in-part
applications, and of the resulting patents, which are directed to subject
matter specifically described in such applications. The University Patent
Licenses are subject to certain diligence milestones related to
commercialization of products.
Under the University Patent Licenses, the Company paid a license issue
fee, is obligated to pay royalties on net sales by Ixion or its sublicensees
of licensed products or licensed processes, and must reimburse UFRFI for
patent costs incurred in prosecuting the patent applications. There are no
minimum annual royalties. The Company is also obliged to obtain product
liability insurance prior to the sale for commercial purposes of licensed
products. There is no assurance that the Company will be able to obtain such
insurance on reasonable terms. See "Risk Factors - Risk of Product Liability;
Insurance."
A number of pharmaceutical companies, biotechnology companies,
universities and research institutions, and individuals have filed patent
applications or received patents to technologies that are similar to the
technologies licensed by the Company. The Company is aware of certain patent
applications previously filed by and patents already issued to others that
could conflict with patents or patent applications licensed to the Company,
either by claiming the same methods or compounds or by claiming methods or
compounds that could dominate those licensed to the Company. In addition,
there can be no assurance that the Company is aware of all patents or patent
applications that may materially affect the Company's ability to make, use, or
sell any products. United States patent applications are confidential while
pending in the United States Patent and Trademark Office ("PTO"), and patent
applications filed in foreign countries are often first published six months
or more after filing. Any conflicts resulting from third party patent
applications and patents could significantly reduce the coverage of the
patents or patent applications licensed to the Company and limit the ability
of the Company to obtain meaningful patent protection. If patents are issued
to other companies that contain competitive or conflicting claims, the Company
may be required to obtain licenses to these patents or to develop or obtain
alternative technology. There can be no assurance that the Company will be
able to obtain any such license on acceptable terms or at all. If such
licenses are not obtained, the Company could be delayed in or prevented from
the development or commercialization of its product candidates, which would
have a material adverse effect on the Company.
The Company is aware of potentially significant risks regarding the
patent rights licensed by the Company relating to Islet Progenitor/Stem Cells
and to its oxalate technology, particularly bacterial oxalyl-CoA
decarboxylase, an enzyme used in the Company's proposed oxalate-related
products including the HOF Probe and the IxC-162 enzyme therapy. The Company
may not be able to commercialize its proposed diabetic products based on its
method of proliferating IPSCs in vitro or its proposed oxalate-related disease
management products, both due to patent rights held by third parties other
than the Company's licensors. As a result, the positions of the Company and
its licensors with respect to the use of IPSCs or products containing oxalyl-
CoA decarboxylase are uncertain and involve legal and factual questions that
are unknown or unresolved. If any of these questions is resolved in a manner
that is not favorable to the Company's licensors or the Company, the Company
would not have the right to commercialize products relating to certain aspects
of IPSC technology or products containing oxalyl-CoA decarboxylase in the
absence of a license from one or more third parties, which may not be
available on acceptable terms or at all. The Company's inability to
commercialize any of these products would have a material adverse effect on
the Company.
As mentioned above, the Company obtained its rights to IPSCs under a
license from the University of Florida Research Foundation, Inc. ("UFRFI") in
February 1995. In 1994 and 1995, UFRFI filed in the United States and
thereafter in numerous foreign countries patent applications covering IPSCs.
In 1981, the Ontario Cancer Institute filed a patent application in the
United States and was issued a patent in 1984 covering a method for producing
pancreatic islet-like structures having histology and insulin-producing
properties corresponding to those of fetal pancreatic islets and islets from
adult animals maintained in culture, based on discoveries by Michael Archer
(the "Archer Patent"). The patented method is similar, but not identical, to
the Company's IPSC technology. The Archer Patent was licensed to
CytoTherapeutics, Inc. in 1991. CytoTherapeutics may have filed patent
applications in foreign countries based upon the Archer Patent and may have
additional patent applications on the same general subject matter pending in
the United States. CytoTherapeutics' 50%-owned Swiss subsidiary, Modex
Therapeutics SA, has licensed certain technology from CytoTherapeutics, which
may include the Archer Patent, with the intent of developing treatments for
Type I diabetes.
The Company is also aware that in 1993, Human Cell Cultures, Inc., filed
an application in the United States and thereafter in foreign jurisdictions,
covering a cell culturing method and medium to form pancreatic "pseudotissues"
composed of "pseudoislets" to treat blood sugar disorders in mammals, based on
discoveries by Hayden Coon (the "Coon Patent Application"). The Coon Patent
Application covers a method which is also similar, but not identical, to the
Company's IPSC technology. At the date of this Prospectus, the Company is not
aware of any U.S. or foreign patents which have issued relating to the Coon
Patent Application. However, such patents may have been issued and there may
have been additional patent applications filed in the United States or foreign
countries based upon the Coon Patent Application.
In the United States, one must be the first to invent a subject matter in
order to be entitled to patent protection on that invention. With respect to
patent applications filed prior to January 1, 1996, United States patent law
provides that if a party invented a technology outside the United States, then
for purposes of determining the first to invent the technology, that party is
deemed to have invented the technology on the earlier of the date it
introduced the invention in the United States or the date it filed its patent
application. In foreign countries, the first party to file a patent
application on an invention, not the first to invent the subject matter, is
entitled to patent protection on that invention, assuming that the invention
meets the other requirements for patentability. There can be no assurance that
the owners of the Archer Patent nor the owners of the Coon Patent Application
will not make challenges to any UFRFI patents or patent applications relating
to IPSCs, or that UFRFI will succeed in defending any such challenges. There
can be no assurance that the sale of IPSC products by the Company would not be
held to infringe United States and foreign patent rights of the owners of the
Archer Patent or the Coon Patent Application. Under the patent laws of most
countries, a product can be found to infringe a third party patent either if
the third party patent expressly covers the product or method of treatment
using the product, or in certain circumstances, if the third party patent,
while not expressly covering the product or method, covers subject matter that
is substantially equivalent in nature to the product or method. If it is
determined that products derived from the Company's IPSC technology infringe
the Archer Patent or infringe a patent, if any, issued pursuant to the Coon
Patent Application, the Company would not have the right to make, use, or sell
its IPSC products in one or more countries in the absence of a license from
the owners of such patents. There can be no assurance that the Company could
obtain a license from such owners on acceptable terms or at all.
As mentioned above, the Company obtained its rights to its oxalate
technology under a license from UFRFI in January 1995. In 1994 and 1995,
UFRFI filed in the United States and thereafter in numerous foreign countries
patent applications covering its oxalate technology with claims which cover
the Company's HOF Probe and its IxC-162 therapy for oxalate-related disorders,
both of which involve the use of an enzyme called oxalyl-CoA decarboxylase
derived from the anaerobic bacteria, Oxalobacter formigenes.
In June, 1995, Human Genome Sciences, Inc., filed a patent application in
the United States, and thereafter in foreign countries, relating to a claimed
human oxalyl-CoA decarboxylase and the DNA(RNA) encoding such polypeptide, as
well as a procedure for producing such polypeptide and for producing an
antibody relating to such polypeptide for use in the treatment of calcium
oxalate kidney stones and hyperoxaluria. A U.S. Patent was issued on June 3,
1997 (the "HGS Patent"). The HGS Patent purports to relate to a human version
of oxalyl-CoA decarboxylase which is stated to be 50% to 60% homologous to the
oxalyl-CoA decarboxylase from the anaerobic bacteria, Oxalobacter formigenes.
If the use of the Company's bacterial oxalyl-CoA decarboxylase is found to
infringe the patent owned by Human Genome Sciences, then the Company would not
have the right to sell such products in one or more countries without a
license from Human Genome Sciences. There can be no assurance that the
Company would be able to obtain a license from Human Genome Sciences on
acceptable terms or at all.
Litigation, which could result in substantial cost to the Company, may
also be necessary to enforce any patents to which the Company has rights or to
determine the scope, validity, and enforceability of other parties'
proprietary rights, which may affect the Company's product candidates and
technology. United States patents carry a presumption of validity and
generally can be invalidated only through clear and convincing evidence. The
Company's licensors may also have to participate in interference proceedings
declared by the PTO to determine the priority of an invention, which could
result in substantial cost to the Company. There can be no assurance that
the Company's licensed patents would be held valid by a court or
administrative body or that an alleged infringer would be found to be
infringing. Further, with respect to the technology licensed by the Company
from UFRFI, UFRFI is primarily responsible for any litigation, interference,
opposition, or other action pertaining to patents or patent applications
related to the licensed technology, and the Company is required to reimburse
it for the costs it incurs in interference or opposition. As a result, the
Company generally does not have the ability to institute or determine the
conduct of any such patent proceedings unless UFRFI does not elect to
institute or elects to abandon such proceedings. In cases where UFRFI elects
to institute and prosecute patent proceedings, the Company's rights will be
dependent in part upon the manner in which UFRFI conducts the proceedings.
UFRFI could, in any of these proceedings that it elects to initiate and
maintain, elect not to vigorously pursue or defend or to settle such
proceedings on terms that are not favorable to the Company. An adverse
outcome in any patent litigation or interference proceeding could subject the
Company to significant liabilities to third parties, require disputed rights
to be licensed from third parties, or require the Company to cease using such
technology, any of which could have a material adverse effect on the Company.
No assurance can be given that any existing patent application, or any
future patent application will issue or that any patents, if issued, will
provide the Company with adequate patent protection with respect to the
covered products, their uses, technology, or processes. In addition, under
its licenses with UFRFI, the Company is required to meet specified diligence
requirements to retain its license of these patents. No assurance can be
given that the Company will satisfy any of these requirements. See "Risk
Factors - Uncertainty Regarding Patents and Proprietary Rights."
In January 1997, Ixion entered into a patent license agreement obtaining
exclusive rights to the issued patent of Dr. Randy S. Fischer and Dr. Roy A.
Jensen, faculty members at the University of Florida, for identifying a
difference which exists between the metabolic pathway of a microbial or plant
target organism and a non-target host specie and then preparing a control
agent which perturbs the metabolic pathway of the target without significantly
perturbing the metabolic pathway of the host. This patent may be useful in
the development of microbicides for drug resistant pathogens such as
staphyloccus, enterococcus, and neisseria. Under the Fischer/Jensen license
agreement, the Company paid a license issue fee and is obligated to pay
royalties on net sales by Ixion or its sublicensees. There are no minimum
annual royalties.
Patents and Trade Secrets
Dr. Peck, as an employee of the University of Florida, is bound by the
terms of the University's patent policy, which requires that any invention
conceived of or developed in the area in which he is employed belongs
exclusively to the University (subject to certain rights of the federal
government and to Ixion's rights under the consulting agreement it has with
him). See "Management - Consulting Agreement With Dr. Peck" and "Business -
Government Regulation - Florida Conflicts of Interest."
It is the Company's policy to require its directors, material investors,
employees, consultants, outside scientific collaborators, and sponsored
researchers, and other advisors to execute confidentiality agreements upon
investment or upon the commencement of employment or consulting relationships
with the Company. These agreements provide that all confidential information
developed or made known to the individual during the course of his or her
relationship with the Company is to be kept confidential and not disclosed to
third parties. Ixion also requires signed confidentiality or material
transfer agreements from any company that is to receive confidential data or
proprietary compounds. In the case of employees and consultants, the
confidentiality agreements also generally provide that all inventions
conceived by the individual while rendering services to the Company shall be
assigned to Ixion as the exclusive property of Ixion (subject, in the case of
Dr. Peck, to the prior rights of the University of Florida). There can be no
assurance, however, that these agreements will provide meaningful protection
or adequate remedies for the Company's trade secrets or other proprietary
information in the event of an unauthorized disclosure or will be effective to
assign inventions.
Certain of the Company's research is being funded in part by Small
Business Innovation Research grants ("SBIRs") and may be funded by Small
Business Technology Transfer Research grants ("STTRs"). In connection with
such funding, the U.S. Government will have certain rights (the "Government
Rights") in the technology developed with the funding. The Government Rights
include a non-exclusive, paid-up, worldwide license under such inventions for
any governmental purpose. In addition, the Government has the right to
require the Company to grant an exclusive license under any of such inventions
to a third party if the government determines that (i) adequate steps have not
been taken to commercialize such inventions, (ii) such action is necessary to
meet public health or safety needs, or (iii) such action is necessary to meet
requirement for public use under federal regulations. Federal law requires
any licensor of an invention that was partially funded by federal grants
(which is the case with the inventions licensed by Ixion from UFRFI) to obtain
a covenant from its exclusive licensee to substantially manufacture products
using the invention in the United States, although this covenant is subject to
a discretionary waiver by the government. In addition, the Company's licenses
from UFRFI are also subject to Government Rights.
In order to produce or use the HOF Probe in its current formulation or to
produce the Blood Oxalate Assay (and other immunodiagnostic products) in
commercial quantities for resale, it may be necessary to license certain
rights from Roche Molecular Systems, Inc., the holder of patents on a nucleic
acid amplification process known as the polymerase chain reaction ("PCR")
process. If Ixion finds it necessary to use PCR to produce commercial
quantities, it will enter into such a license with Roche which makes non-
exclusive licenses generally available. The Company does not anticipate that
the terms of such license will have a materially adverse effect on the
Company.
Competition
The biotechnology and pharmaceutical industries are characterized by
rapidly evolving technology and intense competition. The Company's
competitors include major pharmaceutical, chemical, and specialized
biotechnology companies, many of which have larger R&D budgets, as well as
substantially greater experience in developing products, in obtaining
regulatory approvals, and in manufacturing and marketing diagnostic and
pharmaceutical products. In addition, many biotechnology companies have
formed collaborations with large, established companies to support research,
development, and commercialization of products that may be competitive with
those of the Company. Academic institutions, governmental agencies, and other
public and private research organizations are also conducting research
activities and seeking patent protection and may commercialize products on
their own or through joint ventures.
The Company's products under development are expected to address a broad
range of markets. The Company's competition will be determined in part by the
potential indications for which the Company's products are developed and
ultimately approved by regulatory authorities. See "Business - Government
Regulation." In addition, the first pharmaceutical product to reach the
market in a therapeutic or preventive area is often at a significant
competitive advantage relative to later entrants to the market. Accordingly,
the relative speed with which Ixion or its future corporate partners can
develop products, complete the preclinical and clinical trials and approval
processes, and supply commercial quantities of the products to the market are
expected to be important competitive factors. The Company's competitive
position will also depend on its ability to attract and retain qualified
scientific and other personnel, develop effective proprietary products,
develop and implement production and marketing plans, contract for and manage
third-party service providers, obtain and maintain patent protection, and
secure adequate capital resources. The Company expects its products, if
approved for sale, to compete primarily on the basis of product efficacy,
safety, patient convenience, reliability, value, and scope of patent rights.
See "Risk Factors - Intense Competition."
Government Regulation
In the United States, the Food and Drug Administration ("FDA") regulates
distribution, manufacture, labeling, and promotion of drugs, medical devices,
and biologics. In addition, manufacturers of these products are subject to
other federal, state, and local environmental and safety laws and regulations.
Governments in other countries may impose additional requirements.
FDA Authorization to Market. Drugs, medical devices, or biologics may
not be manufactured for commercial use in the United States unless they have
FDA authorization. Obtaining FDA authorization to market a regulated product
generally involves the submission of preclinical, product characterization,
clinical, and manufacturing information. The process can take a number of
years and the expenditure of significant resources, and there is no guarantee
that the FDA will ever authorize marketing of the product.
Drugs and Biologics. Some of the Company's planned products, such as the
diabetes treatment products, will be considered drugs, devices, biologics or a
combination of these designations. The Food, Drug, and Cosmetic Act ("FDCA")
and the Public Health Service Act ("PHSA") provide that drugs and biologics
may not be commercially distributed within the United States unless they have
been approved by the FDA. The process required by the FDA before drugs and
biologics may be marketed in the United States generally involves five steps:
(1) preclinical laboratory and animal testing, (2) submission to the FDA of an
Investigational New Drug ("IND") application which must be effective prior to
the initiation of human clinical studies, (3) adequate and well-controlled
clinical trials to establish safety and efficacy for its intended use, (4)
submission to the FDA of an New Drug Application ("NDA"), Biologics License
Application, ("BLA"), or Product License Application ("PLA")/ Establishment
License Application ("ELA"), and (5) review and approval of the NDA, BLA, or
PLA/ELA by the FDA.
Preclinical testing covers laboratory evaluation of product chemistry and
formulation as well as animal studies to assess the safety, pharmacology,
toxicology, and efficacy of the product. The results of these tests are
submitted to the FDA as part of the IND. If a company is not notified by the
FDA within 30 days of submission of the IND, Phase I clinical trials may be
initiated. Clinical trials are typically conducted in three sequential
phases, although the phases may overlap. Phase I represents the initial
administration of the drug or biologic to a small group of humans, healthy
volunteers, to test for safety, dosage tolerance, absorption, distribution,
metabolism, excretion, and clinical pharmacology. Phase II involves studies
in a small number of patients to assess the efficacy of the product, to
ascertain dose tolerance and the optimal dose range, and to gather additional
data relating to safety and potential adverse effects. Once an
investigational drug is found to have some efficacy and an acceptable safety
profile in the targeted patient population, Phase III studies are initiated to
establish safety and efficacy in an expanded patient population and multiple
clinical study sites. The FDA reviews both the clinical plans and the results
of the trials and may request that the Company discontinue or expand the
trials at any time if there are significant safety issues.
The results of the preclinical tests and clinical trials of drugs and
biologics are submitted to the FDA in the form of an application for an NDA
(in the case of a drug), BLA, or PLA (in the case of a biologic). Additional
information, including additional animal studies or clinical trials, may be
requested during the FDA review period that may extend the review process and
delay marketing approval. There can be no assurance that the FDA will
authorize marketing of the product, or that it will do so in a timely manner.
For certain biologics, the manufacturer must also apply for and obtain an
establishment license (ELA), which may be granted following a review and
inspection of the manufacturing procedures, equipment, and facilities involved
in manufacturing the product. For drugs and biologics reviewed via a BLA, the
manufacturer must also pass a premarket inspection of its compliance with good
manufacturing practices. After FDA approval of the NDA, BLA, or PLA for the
initial indications, further clinical trials may be necessary to gain approval
for the labeling of the product for additional indications.
Medical Devices. Many of the Company's planned products (e.g., the in
vitro diagnostic products such as the HOF Probe, or the populations of in
vitro grown islets for transplantation therapy) will be considered medical
devices or a combination of devices and biologics. Pursuant to the FDCA, the
FDA regulates the clinical testing, manufacture, labeling, distribution, and
promotion of medical devices. The FDCA further provides that, unless
exempted by regulation, medical devices may not be commercially distributed in
the United States unless they have been approved or cleared by the FDA.
In the United States, medical devices are classified into one of three
classes (class I, II, or III), on the basis of the controls deemed necessary
by the FDA to reasonably assure their safety and effectiveness. Under FDA
regulations, class I devices are subject to general controls (for example,
labeling, premarket notification, and adherence to GMPs), and class II devices
are subject to general and specific controls (for example, performance
standards, postmarket surveillance, patient registries and FDA guidelines).
Generally, class III devices are those which must receive a PMA by the FDA to
ensure their safety and effectiveness (for example, life sustaining, life-
supporting, and implantable devices, or new devices which have not been found
substantially equivalent to legally marketed devices).
There are two review procedures by which medical devices can receive such
approval or clearance. Some products may qualify for clearance under a
Section 510(k) ("510(k)") procedure, in which the manufacturer provides a
premarket notification that it intends to begin marketing the product, and
shows that the product is substantially equivalent to another legally marketed
product (i.e., that it has the same intended use and is as safe and effective
as a legally marketed device and does not raise different questions of safety
and effectiveness than does a legally marketed device). In some cases, the
submission must include data from human clinical studies. Marketing may
commence when the FDA issues a clearance letter finding such substantial
equivalence.
If the medical device does not qualify for the 510(k) procedure (either
because it is not substantially equivalent to a legally marketed device or
because it is a Class III device required by the statute and implementing
regulations to have an approved application for premarket approval), the FDA
must approve a premarket approval ("PMA") application before marketing can
begin. PMA applications must demonstrate, among other matters, that the
medical device is safe and effective. A PMA application is typically a
complex submission, usually including the results of preclinical and clinical
studies, and preparing an application is a detailed and time-consuming
process. Once a PMA application has been submitted, the FDA's review may be
lengthy and may include requests for additional data. The manufacturer must
also pass a premarket inspection of its compliance with good manufacturing
practices. There can be no assurances that the FDA will authorize marketing
of the product under a 510(k) or a PMA, or that it will do so in a timely
manner. After FDA approval of the initial indication, further clinical trials
may be necessary to gain approval of the product for additional indications.
Clinical investigations of most devices are subject to the
investigational device exemption ("IDE") requirements, which usually involve
FDA review of the investigation before it may begin. Clinical investigations
of many in vitro diagnostic ("IVDs") tests are exempt from the IDE
requirements, provided the testing meets certain exemption criteria, including
labeling as an Investigational Use Only ("IUO") product. In addition, IVDs
may be distributed for research use only ("RUO"), provided they are intended
for laboratory research and labeled for research use. Pursuant to current FDA
policy, manufacturers of IVDs for IUO or RUO are encouraged by the FDA to
establish a certification program under which these IVDs are distributed to or
utilized only by individuals, laboratories, or health care facilities that
have provided the manufacturer with a written certification of compliance
indicating that the IUO or RUO product will be restricted in use and will,
among other things, meet institutional review board and informed consent
requirements.
The Company's Products. The Company's HOF Probe and Blood Oxalate Assays
will be distributed initially for research use and will not require FDA review
prior to distribution for those uses. To market these products for diagnostic
use, the Company intends to request authorization under the 510(k) procedure
for the HOF Probe and perhaps the Blood Oxalate Assay. PMAs may, however, be
required for each of these products. The Company's diabetes treatment
products will require a BLA or PLA/ELA before they may be commercially
distributed, and these products may be clinically tested only after the FDA
has been provided an IND which may be reviewed within the FDA by the Center
for Biologics and Research (CBER) and the Center for Drug Evaluation and
Research (CDER). Additionally the Company may be required to register its
diabetes treatment products as a prerequisite to commercial distribution.
There can be no assurance that the FDA will accept the Company's views on the
regulatory status of its products, or that the FDA will authorize marketing or
clinical investigation of any product, or that it will do so in a timely
manner. Additional studies or other information may be requested during the
FDA review period that may delay marketing authorization. Marketing
authorizations, if granted, may include significant limitations on the uses
for which a product can be marketed. The law or government regulations may
change in ways that could prevent or delay marketing authorization for the
Company's products. Delays in receipt of, failure to receive, or loss of
previously received approvals could have a material adverse effect on the
Company's business, financial condition, and results of operations.
Other FDA Obligations. Each manufacturing facility for drugs, medical
devices, or biologics, must be registered with the FDA, and the products
manufactured at that facility must be listed with the FDA. A manufacturer's
quality control and manufacturing procedures must conform on an ongoing basis
with good manufacturing practices. Certain adverse effects and product
malfunctions must be reported to the FDA. Product labeling and advertising
must comply with FDA requirements. In some cases, postmarket testing may be
required, or other requirements imposed. Complying with these requirements
requires substantial time, money, and effort. The Company intends to rely on
its strategic partners for assistance with these matters.
FDA Enforcement. The FDA inspects manufacturers of drugs, medical
devices, and biologics on a regular basis. Failure to comply with applicable
requirements can, among other consequences, result in civil penalties,
injunctions, suspensions, and losses of regulatory approvals, product recalls,
seizure of products, refusal to allow the Company to enter into supply
contracts with the government, and criminal prosecution. The Company intends
to rely on its strategic partners for assistance with these matters.
Non-U.S. Marketing. For marketing outside the United States, the Company
is also subject to foreign regulatory requirements. Requirements governing
the conduct of clinical trials, product licensing, pricing, and reimbursement
vary widely from country to country. The time required to obtain approvals by
foreign countries may be longer or shorter than that required for FDA
approval, and regulatory requirements for foreign countries may differ
significantly from those of the FDA. In some cases, products may not be
exported until FDA approval is obtained. The Company intends to rely on its
strategic partners both in the United States and abroad for assistance with
these matters.
Florida Conflicts of Interest. Because Dr. Peck, the Company's Chief
Scientist, and Dr. Schuster and Dr. Khan, members of the Company's Scientific
Advisory Board, are employees of the Florida State University System, they,
and consequently the Company, are subject to Florida statutes relating to
conflicts of interest. In order for Ixion to conduct business with the
University (including licensing University technology or entering into
CRADAs), it is necessary to obtain and maintain an exemption for Dr. Peck from
the application of the Florida conflict of interest statutes, and to obtain
approvals for outside activities for Dr. Schuster and Dr. Khan.
Dr. Peck obtained his initial exemption from the Florida conflict of
interest statutes on January 5, 1995. The exemption was issued pursuant to a
monitoring plan which requires the Company, among other things, to promptly
disclose every material transaction between the Company and any employee of
the University. Exemptions must be renewed annually at the beginning of each
academic year (or upon material alterations in the terms of the relations
between the Company and Dr. Peck) and the process can take up to six or more
months. The most recent requests to reconfirm Dr. Peck's exemption were
timely filed and are pending. There is no assurance that the exemption will
be renewed, or that it will be renewed on reasonable terms.
Manufacturing and Marketing
The Company has no experience in manufacturing or marketing products on a
commercial scale. Marketing rights for products may be licensed to corporate
partners. Co-marketing arrangements may also be feasible for some products.
Ixion intends to seek distribution arrangements for its products in other
countries outside of the United States. While using third parties for
distribution or marketing permits the Company to avoid the costs of
establishing a distribution or marketing network in a particular area, this
strategy also makes the Company more dependent on the efforts of third
parties, involves a potential reduction in profit margins, and may complicate
negotiations and other matters associated with technology licenses.
Target Markets. Management believes there will be substantial demand for
the HOF Probe in the research market and by certain specialized kidney,
nephrogenic, and urologic reference labs. The target markets for the new
blood oxalate assay include approximately 5,000 hospital labs, the several
major independent labs, and the same specialized kidney, nephrogenic, and
urologic reference labs as for the HOF Probe. For the use of the HOF Probe,
the blood oxalate assay, and its IxC-162 enzymes therapy in the management of
kidney stones, the Company plans to target the country's approximately 7,300
in-office urologists. For the use of the HOF Probe and IxC-162 enzyme therapy
for managing kidney stone risk in cystic fibrosis patients, the Company plans
to target the cystic fibrosis treatment centers in the United States. For the
use of the HOF Probe and IxC-162 enzyme therapy in the diagnosis and treatment
of vulvodynia, the Company intends to approach the market through the 35,000
gynecologists practicing in the United States.
Marketing Strategy. The strategy for marketing IPSC-related products
will depend on collaborations with third parties with greater marketing
resources than the Company.
Kidney stones, while prevalent, are not generally recognized as
predictable or avoidable by many physicians and their patients. Consequently,
the promotional task will be difficult. To meet this challenge, the Company
intends to invest in both physician education programs, and, assuming funds
are available, consumer awareness campaigns. The Company can reach the
country's over 7,300 in-office urologists through a direct mail campaign. In
addition, working with specialized companies in the urology market, the
Company proposes to inform urologists about the Company's planned new kidney
stone disease management products. In addition, the Scientific Advisory Board
members and other recognized scientists will be encouraged to write articles
for peer review scientific journals to stimulate interest and establish
further credibility in the scientific and medical communities.
A similar approach will be used to approach the gynecological market for
the Company's vulvodynia. Products and the cystic fibrosis market for the
management of kidney stone risk.
In each case, the Company intends to participate in urology, nephrology,
gynecology, and other industry trade meetings and to exploit on-line medical
databases and its own web site. Finally, as stated above, the Company intends
to use third-party sales forces to amplify its efforts. See "Business -
Business Strategy."
Facilities
As an affiliate of the University of Florida's Biotechnology Program, the
Company has leased approximately 1,900 square feet of equipped laboratory
space and approximately 500 square feet of administrative office space in the
business incubator at Progress Park (the University of Florida biotechnology
industrial park), called the Biotechnology Development Institute. As a
resident, the Company shares (at no additional cost) specialized facilities
such as animal rooms, small-scale fermentation capabilities, and glass washing
and autoclaving facilities. Further, the Company uses (again at no
additional cost) expensive and specialized equipment located in the
centralized instrument lab. Finally, the Company has available the services
of the University Biotechnology Core Laboratories including the Recombinant
Protein Expression Core, the DNA Synthesis Core, the Flow Cytometry Core, the
Protein Chemistry Core, and the Electron Microscopy Core.
The Company is developing a small scale facility in its BDI lab suite to
produce preclinical quantities of its HOF Probe as well as IxC-162.
Commercial
scale production, if any, will be subcontracted to third party contract
manufacturers. See "Business - Business Strategy." The facilities license
agreement for the Company's laboratory and administrative offices at the BDI
has one year remaining of its three-year term expiring July 31, 1998 at which
time the Company will likely be required to relocate. Annual payments
(including utilities) are approximately $43,200, a portion of which is
deferred under the agreement with the University.
Contract Suppliers and Manufacturers. It is the Company's present
intention to enter into agreements with contract testing and manufacturing
entities to test and manufacture commercial quantities of the Company's
planned products in order to avoid the expenditure of significant funds to
hire and train personnel and comply with the extensive regulations, including
"good manufacturing practice" ("GMP") requirements applicable to such a
facility.
Legal Proceedings
The Company is not a party to any legal proceedings and is not aware of
any threatened litigation or regulatory action that could have a material
adverse effect on the Company's business, financial condition, or results of
operations.
Employees
The Company has five full time employees and six part time employees,
including Dr. Peck, who is an exclusive consultant, Mr. Peck, President and
Chief Financial Officer, Mr. Tedesco, Vice President - Operations and
Regulatory Affairs, and Ms. Ramsey, Controller. The Company is not subject to
any collective bargaining agreements and believes that its relationship with
its employees is good.
Scientific Advisory Board
None of the members of the Scientific Advisory Board (the "Scientific
Advisors") are employees of the Company. Members devote only a small portion
of their time to the Company and have commitments to other institutions which
may conflict or compete with their obligations to the Company. Scientific
Advisors review and evaluate the Company's research programs, advise the
Company with respect to technical matters in fields in which the Company is
involved, consult on aspects of product planning and feasibility studies,
assist in establishing research priorities, provide guidance on clinical
evaluation programs, alert the Company to potential collaborators, advise the
Company on new developments, and recommend personnel to the Company.
The Scientific Advisory Board meets periodically as a group. In
addition, certain members may meet in smaller groups or individually with
Company scientists. Ixion has confidentiality agreements with each
Scientific Advisor providing that all confidential information shall be the
exclusive property of the Company. Scientific Advisors receive no cash
compensation, but are reimbursed expenses, and, pursuant to the 1994 Board
Retainer Plan, 5,000 restricted shares of the Company's Common Stock upon
joining, and 1,000 restricted shares annually thereafter. They also receive
stock options for 2,500 shares annually after their initial year.
The current members of the Scientific Advisory Board, in chronological
order of their appointment, are the following:
Hans Wigzell, M.D., D.Sc., Dr. Wigzell is presently the Rector of
Stockholm's famed Karolinska Institute.
He received his M.D. and D.Sc. from
Karolinska in 1967. From 1982 onwards,
he has been Chairman of the Department
of Immunology at Karolinska. Among his
many honors was his service as Chairman
of the Nobel Committee of Karolinska from
1990 to 1992.
Milton J. Allison, Ph.D. Dr. Allison has long been a pioneer in
oxalate research, having discovered and
named Oxalobacter formigenes. He is
presently Professor of Microbiology,
Immunology, and Preventive Medicine,
Iowa State University and Microbiologist
Emeritus of the National Animal Disease
Center, USDA, Ames, Iowa. He earned his
Ph.D. from the University of Maryland in
1961.
Saeedur R. Khan, Ph.D. Dr. Khan is Associate Professor of
Pathology at the University of Florida
College of Medicine and a leader in the
field of oxalate research and molecular/
microscopy. His current and previous
committee memberships include the NIH Ad
hoc Reviewer on Urinary Stone Grants;
member, Center for the Study of Lithiasis
and Pathological Calcification; and
member
of the Shands Stone Center Committee. He
earned his B.Sc. in 1962 from Agra
University in Agra, India, his M.Sc. in
1964 from the Peshawar University,
Peshawar, Pakistan, and his Ph.D. from
the University of Florida in 1973.
Sheldon M. Schuster, Ph.D. Dr. Schuster is Biotechnology Program
Director for the University of Florida's
biotechnology program and Associate
Director for Research for the University
of Florida Cancer Center. He is a member
of the American Association for the
Advancement of Science and the American
Society of Biological Chemistry and
Molecular Biology. He was a co-founder
of BioNebraska, Inc., and is a Director
and Senior Vice President and Chief
Scientist of AquaGene, Inc. He received
his B.S. in biochemistry from the
University of California, Davis and his
Ph.D. in biochemistry and pharmacology
from the University of Arizona.
Marguerite Hatch, Ph.D. Dr. Hatch is a Professor in the College
of Medicine, Nephrology Division, and
Director of the Kidney Stone Center at
the
University of California, Irvine College
of Medicine since 1990. Previously she
was Director of the New York Kidney Stone
Center, SUNY Health Science Center. She
earned her B.Sc. with Honors in 1974 from
the University College, Dublin, Ireland
and her Ph.D. in 1978 from Trinity
College, Dublin, Ireland.
MANAGEMENT
Officers, Directors, and Key Employees
The following table sets forth certain information with respect to
officers, directors, and significant employees and consultants of the Company.
Name Age Position
Weaver H. Gaines (1) 53 Chairman and Chief Executive Officer
David C. Peck (1,2) 50 President, Chief Financial Officer,
and Director
Ammon B. Peck, Ph.D. 51 Senior Vice President and Chief
Scientific Officer and Chairman of the
Scientific Advisory Board
David M. Margulies, M.D. (2) 46 Director
Vincent P. Mihalik (2) 46 Director
John L. Tedesco 42 Vice President - Operations and
Regulatory Affairs
Harmeet Sidhu, Ph.D. 40 Director of Research, Oxalate Division
Janet Cornelius, MS 57 Associate Director of Research,
Diabetes Division
Kimberly A. Ramsey 40 Controller
(1) Member of Executive Committee
(2) Member of Audit and Benefits Committee
Certain of the Company's key personnel are part-time employees or
consultants who, at the Company's present stage of development are not
required full time. Mr. Peck, the Company's President and Chief Financial
Officer devotes time to the Company's affairs as needed (on the average
approximately 10 days per month). Dr. Peck, Senior Vice President, Chief
Scientist, and Chairman of the Scientific Advisory Board, devotes four days
per month (see "Peck Consulting Agreement"). Mr. Tedesco, Vice President -
Operations and Regulatory Affairs devotes ten to 11 days per month, Janet
Cornelius, Associate Director of Research, Diabetes Division is half-time (the
other half time is in Dr. Peck's laboratory at the University) and Ms. Ramsey,
the Controller, approximately one day per week. With the exception of Dr.
Peck (whose availability to the Company is limited by the University of
Florida to not more than 48 days per year), each other officer is available
when required and is not limited as to the time spent on Company affairs.
Mr. Gaines is a co-founder of the Company and has been its Chairman and
Chief Executive Officer and a Director since April, 1993. He is the Company's
only full-time officer. He was also the President of the Company from April,
1993 to April, 1994. From April to November 1992, he was a Senior Advisor on
the Washington campaign staff of Bush/Quayle 92. From 1985 to 1992, he held
various executive positions with The Mutual Life Insurance Company of New York
and its operating subsidiaries, including Executive Vice President and General
Counsel of MONY and President of Unified Management, a broker/dealer in
Indianapolis. He is also a director of AquaGene, Inc., and Chairman of the
Board of BIO+Florida, the Florida biotechnology trade association. Mr.
Gaines is a graduate of Dartmouth College and the University of Virginia
School of Law.
Mr. David Peck is a co-founder of Ixion, its President since April, 1994,
Chief Financial Officer since May, 1995, and a Director since March 1993.
From September 1995, Mr. Peck has also been Chief Executive Officer of
BACOMPT, a printing company located in Carmel, Indiana. From 1992 until April
1994, he was the Chief Operating Officer of NEXCOM, the Navy Exchange Service
Command, a multi-billion dollar retail operation. He has a long history of
executive positions in management, marketing, and planning with prominent
financial firms including Merrill Lynch, Citicorp, Bank of America, and
Chemical Bank. Mr. Peck has served with several national consulting firms
(including Arthur D. Little, Inc. and the Naisbitt Group) in the areas of
operations, systems, planning, marketing, and technology (clients included
Hoffman-LaRoche, Bristol-Myers, Johnson & Johnson, and Merck) and has held
faculty positions with eight universities, including Syracuse, Rutgers, Pace,
and Fordham. He is the author of two books on financial services and
investments. Mr. Peck earned his BA and MBA degrees from Syracuse University.
Mr. Peck is Dr. Peck's brother. He is employed as a consultant.
Dr. Ammon Peck is the scientific founder of the Company and has been its
Senior Vice President and Chief Scientist and Chairman of the Scientific
Advisory Board since April, 1993. He was a director from March, 1993, to May,
1995. Dr. Peck has been at the University of Florida since 1979 and is
presently Professor of Pathology and Laboratory Medicine at Florida's College
of Medicine and former President of the medical faculty. (See "Management -
Consulting Agreement with Dr. Peck.") He received a B.S. in Bacteriology &
Russian Studies and an additional B.S. in Computer Science from Syracuse
University. His Ph.D. in Medical Microbiology was received from the
University of Wisconsin. He is a member of the American Association of
Immunologists, the American Association for the Advancement of Science, the
American Diabetes Association, the Juvenile Diabetes Foundation, and the New
York Academy of Sciences. Dr. Peck is Mr. Peck's brother. He is employed as
a consultant.
Dr. Margulies, a Director since 1994, is currently Executive Vice
President and Chief Scientist as well as a director-nominee of Synetic, Inc.,
a publicly-held company in two principal lines of business: plastics
technologies and healthcare communications. From July 1996 to January 1997,
Dr. Margulies was a founder and Chairman and CEO of CareAgents, Inc., a
developer of Internet-based clinical commerce applications, which was acquired
by Synetic in January 1997. From 1991 to July 1996, Dr. Margulies was a
Director, an Executive Vice President, and Chief Scientist of Cerner
Corporation, a publicly-held company that supplies enterprise-level clinical
applications. He received his B.A. from Amherst College and M.D. from
Harvard Medical School.
Mr. Mihalik, a Director since 1995, is presently Executive Vice
President, Group Personnel, Corange International Holding BV, the parent
company of Boehringer Mannheim Corporation. Until November of 1996, he was
Senior Vice President Global Marketing for the Diabetes Care Business Unit of
Boehringer Mannheim Corporation. From August 1994 to November 1995, Mr.
Mihalik was Senior Vice President, Strategic Business Development/Commercial
Operations for Diabetes Care - Americas. He joined Boehringer Mannheim in
1990 and held the position of President, Patient Care Systems Division. He is
a member of the International Diabetes Federation, the American Diabetes
Association, the American Association of Clinical Chemistry, and the Clinical
Laboratory Management Association. He earned his B.S. in Biology from
Pennsylvania State University and his M.B.A. from the Kellogg Graduate School
of Management.
Mr. Tedesco joined Ixion in December 1996 as Vice President - Operations
and Regulatory Affairs. He is also currently President of Brandywine
Consulting, Inc., a consulting company specializing in product development,
regulatory affairs, quality control, and protein purification, a position he
has held since 1996. From 1994 to 1996, Mr. Tedesco was Vice President,
Analytical and Development Services at Tektagen, Inc., and from 1992 to 1994,
Director of Process Development and Manufacturing at Amylin Pharmaceuticals,
Inc. Mr. Tedesco is a member of the Regulatory Affairs Professional Society,
the International Society of Pharmaceutical Engineering (ISPE), and the
Parenteral Drug Association. He earned a B.S. degree in biology at
Pennsylvania State University, and a M.S. degree in biology at the University
of Wisconsin. He did post graduate work at Marquette University where he also
taught for two years. He is employed as a consultant.
Dr. Harmeet Sidhu joined the Company as a full-time consultant in May of
1995 and became a full-time employee in January of 1997. From May 1995 to
January 1997, Dr. Sidhu held the position of postgraduate fellow and visiting
scientist at the University of Florida on a fellowship funded entirely by
Ixion. From 1992 to May 1995, she was an Assistant Professor in the
Biochemistry Department at the Postgraduate Institute of Medical Education and
Research ("P.G.I.M.E.R.") in Chandigarh, India. She has been actively
involved in the area of biochemical mechanisms and medical management of
hyperoxaluria for many years. She is a graduate of Delhi University with a
B.Sc. in Chemistry and received her M.Sc. and a Ph.D. in biochemistry from
P.G.I.M.E.R.
Ms. Janet C. Cornelius joined the Company on July 1, 1997. Previously,
since 1995, she was Scientific Research Manager in Dr. Peck's laboratory in
the Department of Pathology, University of Florida Medical School, where she
was responsible for Islet Progenitor/Stem Cell (IPSC) work in collaboration
with Dr. Peck. She is a co-inventor of the IPSC technology for developing a
cure for diabetes. From 1975 to 1995 she held the title of Biological
Scientist in the same department. Ms. Cornelius received her B.S. in Biology
from Dalhousie University, Halifax, Nova Scotia, and her Masters Degree in
Medical Science from the University of Florida.
Kimberly A. Ramsey joined the Company in June 1995. From September 1993
to date, she has been a supervisory accountant at Environmental Consulting &
Technology in Gainesville, Florida. From 1992 to 1993 she was a staff
accountant with the Jaymark Companies of Orlando, Florida. She is a member of
the Institute of Management Accountants. She received her B.S. in Accounting
from the University of Florida.
All directors hold office until the next annual meeting of stockholders
and until their successors are duly elected and qualified. Officers are
elected annually to serve, subject to the discretion of the Board of
Directors, until their successors are elected or appointed. The Company's
Bylaws authorize the Board of Directors from time to time to determine the
number of its members. The Board currently consists of four members whose
terms expire in 1998. Successors to those directors whose terms have expired
are required to be elected by stockholder vote; vacancies in unexpired terms
and any additional positions created by board action are filed by action of
the existing Board of Directors.
The Executive Committee, consisting of Messrs. Peck and Gaines, is
responsible for all matters which arise between meetings of the Board to the
extent permitted by Delaware law. The Audit and Benefits Committee, composed
of Messrs. Peck and Mihalik and Dr. Margulies, recommends to the Board of
Directors the appointment of the Company's independent auditors, reviews the
compensation of such auditors, and reviews with them the plans for and results
and scope of their auditing engagement. It also determines the salaries and
incentive compensation of the officers, key employees, and key consultants of
the Company and administers the Company's 1994 Stock Option Plan and 1994
Board Retainer Plan. A majority of its members must be outside directors.
The following table summarizes the compensation of those persons who
were, at December 31, 1996, the Company's Chairman and Chief Executive
Officer, its President, and its Senior Vice President and Chief Scientist for
the years ended December 31, 1994, 1995, and 1996.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-Term
Compensation
Annual Compensation
Awards
Restricted Securities
Name Year Deferred Cash All Other
Stock Underlying
Salary Salary Compensation
Awards Options/SARs
<S> <C> <C> <C> <C>
<C> <C>
Weaver H. Gaines (1)
Chairman and CEO 1994 $75,000 $ 0 $0
$0 0
1995 $31,250 $43,750 $0
$0 0
1996 $25,000 $60,000 $0
$0 0
David C. Peck (2)
President & CFO 1994 $45,000 $ 0 $0
$0 0
1995 $35,000 $25,000 $0
$0 0
1996 $25,000 $35,000 $0
$0 0
Ammon B. Peck (3)
Sr. V.P. & Chief
Scientist 1994 $17,500 $ 0 $0
$0 0
1995 $ 7,500 $22,500 $0
$0 0
1996 $ 5,000 $35,000 $0
$0 0
</TABLE>
(1) Mr. Gaines joined the Company at its inception in March 1993.
(2) Mr. Peck joined the Company in April 1994. He is paid a consulting fee
rather than a salary.
(3) Dr. Peck began consulting for the Company in June 1994. He is paid a
consulting fee rather than a salary.
There have been no stock option grants to the Company's executive
officers to date.
Annual Bonus Plan
In August, 1994, the Board of Directors adopted an annual incentive
compensation plan (the "Annual Bonus Plan"), administered by the Audit and
Benefits Committee, pursuant to which officers, employees, and key consultants
may be awarded cash bonuses (if the Company has sufficient cash to pay such
bonuses prudently) or deferred bonuses, based on the financial performance of
the Company. For 1997, the Audit and Benefits Committee determined that
awards could range up to 50% of a participant's base salary or consulting fee.
Awards under the Annual Bonus Plan may be made during the first quarter of
each year at the discretion of the Committee, based on achievement of goals
set by the Committee. For each participant, the award ranges from the maximum
award if the Company achieves its approved goals, to no award if the Company
achieves less than 70% of its approved goals. No awards were made relating to
1996.
Deferred Compensation Plan
In January, 1994, the Board of Directors adopted a Deferred Compensation
Plan for officers, key employees, and consultants of the Company, permitting
such persons to defer the receipt of all or a portion of their compensation.
Under the Deferred Compensation Plan, an unfunded deferred compensation
account is established for each participant. The only obligation of the
Company regarding such account is to make the payments when they become
payable. Any amount credited to such account is solely for record-keeping,
and is not considered to be held in trust or in escrow or in any way vested in
the participant. Payments under the Deferred Compensation Plan are to be made
only upon termination of employment (which may be by death, disability,
retirement, or otherwise) and may be in a lump sum or as an annuity. In the
case of certain senior participants, if termination is by death or dismissal
without cause, at the election of the participant, the balance in his account
may be converted into Common Stock of the Company at a price per share not
greater than the lowest price per share (adjusted for stock splits, stock
dividends, the issuance of convertible securities, warrants, or options, or
other dilution) at which shares of the Company's Common Stock have been issued
(or agreed to be issued) at any time in the 365 days preceding the date of
termination.. A termination is deemed without cause for substantially the
same occurrences described under "Employment Agreements," below. Amounts in
the account bear interest, compounded annually, at a rate established by the
Board of Directors, currently 8.0%.
At December 31, 1996, balances in the deferred accounts for the Company's
executive officers and key consultant were as follows:
Name Capacities in Deferred
Compensation
Which Served Balance (1)
Weaver H. Gaines Chairman and Chief Executive Officer $199,655
David C. Peck President and Chief Financial Officer $119,630
Ammon B. Peck, Ph.D. Senior Vice President, Chief Scientist, and
Chairman, Scientific Advisory Board $ 35,141
__________________________________
(1) Includes accrued interest.
Employment Agreements
The Company has entered into written agreements (the "Employment
Agreements") with two of its executive officers, Messrs. Gaines and D. Peck,
which currently provide for annual base compensation of $95,000 and $60,000,
respectively. Base compensation levels are to be reviewed at least annually.
Upon a determination by the Board that the Company has obtained adequate
financing, base compensation may be increased to not less than the average
cash base compensation reported by an appropriate salary survey (as determined
by the Board) for executive officers at biotechnology companies of equivalent
size and status. The effective date of the Employment Agreements is August
31, 1994, and the initial term of each expires December 31, 1997, renewable
automatically for one year terms unless either party gives written notice of
termination at least 92 days before the end of the then current term. Annual
bonus compensation, if any, shall be determined by the Board of Directors.
The Employment Agreements provide that the Company has the right to
terminate the executive at any time upon 60 days' notice. A termination for
cause (as defined in the Employment Agreements) is effective without further
benefits, upon a finding by the Board of Directors. Termination without cause
(as defined in the Employment Agreements), or termination by the executive for
"Good Reason" (as defined in the Employment Agreements) requires the Company
to pay severance benefits equal to the aggregate base salary at the then
current rate payable through the end of the then current term, but not less
than two times the executive's base compensation. In addition, the employee
is eligible for annual bonus compensation calculated in accordance with the
Annual Bonus Plan. Finally, all restricted stock is immediately vested, all
outstanding stock options are immediately vested and accelerated, and the
executives have the right to purchase Common Stock of the Company pursuant to
the terms of the Deferred Compensation Plan. Termination is deemed without
cause or for "Good Reason" if (i) there is a reduction in the executive's
annual aggregate compensation or benefits, (ii) there is a diminution in the
executive's position, powers, authority, duties, or responsibilities, or (iii)
there is a material breach of the Employment Agreement by the Company.
The Employment Agreements contain covenants that an executive must
refrain from engaging in any business competitive with the Company during the
period of his employment and for six months after termination or resignation
and must not use, disclose or make accessible to any third party any
proprietary information of the Company during the period of his employment, or
thereafter. All inventions relating to biotechnology generally conceived
while rendering services to the Company must be assigned to the Company.
Consulting Agreement with Dr. Peck
The Company has an exclusive consulting agreement expiring on December
31, 1999, with Dr. Ammon B. Peck for consulting services relating to the
Company's business and technology. The fee is $50,000 per year. Dr. Peck is
obligated to devote 48 days of service per year to the Company, including
travel time, and has agreed not to engage in competitive activities with Ixion
during the term of the agreement, or for two years thereafter. Generally,
under the terms of Dr. Peck's employment by the University of Florida, the
latter has a right of first refusal to any intellectual property and must
approve waivers by Dr. Peck of the University's intellectual property rights
in any consulting agreement. Dr. Peck has agreed to assign to the Company
any inventions or intellectual property rights developed by him while
performing services under the consulting agreement in any inventions or
intellectual property rights waived by the University. See "Government
Regulation - Florida Conflicts of Interest." The consulting agreement may be
canceled by either party on 30 days' written notice. The Company has a life
insurance policy on the life of Dr. Peck in the amount of $500,000 payable to
the Company.
Consulting Agreement with Brandywine Consultants, Inc.
In December of 1996, Company entered into a consulting agreement,
terminable on 90 days' notice by either party, with Brandywine Consultants,
Inc. (the "Brandywine Consulting Agreement"), of which John L. Tedesco is
President. Under the Brandywine Consulting Agreement, Mr. Tedesco was elected
to the office of the Company's Vice President - Operations and Regulatory
Affairs, and he and other Brandywine consultants will provide consulting
services in connection with the strategic planning and execution of the
Company's drug and device development efforts, as well as services in the area
of corporate development and financing. Brandywine must devote not less than
80 hours per month to the Company's affairs, for which it is paid $5,000
monthly. In addition, upon the achievement of certain milestones, Brandywine
will be issued warrants for up to 20,000 shares of Ixion Common Stock,
expiring five years from the date of issue, and exercisable at a price of
$5.00 per share. Warrants for 3,000 shares, expiring in February 2002 were
issued on June 23, 1997 upon the approval of the Product Development Plan
prepared by Brandywine. Finally, the Company will pay Brandywine a fee on any
capital raised through investors introduced by a Brandywine consultant.
1994 Stock Option Plan
In August 1994, the Board of Directors adopted and the shareholders
approved the 1994 Stock Option Plan (the "Plan"). The Plan was amended in
June 1997. The purpose of the Plan is to provide incentive to officers,
directors, consultants, members of the Scientific Advisory Board, and key
employees who are, or will be given responsibility for the management or
administration of the Company's business and the growth of the Company, and to
provide those personnel with an opportunity to participate in the growth,
development, and financial success of the Company.
The Plan reserves an aggregate of 250,000 shares (approximately 6.0% of
the 4.0 million authorized shares) of the Company's authorized but unissued
Common Stock for grants of options to employees and an additional 75,000
shares for grants of options to members of the Board of Directors and members
of the Scientific Advisory Board under the Board Retainer Plan. At June 30,
1997, options to purchase 43,900 shares were outstanding, and 281,100 shares
remained reserved for grants of options under the Plan.
The Plan permits the grant of both "incentive stock options" within the
meaning of Section 422 of the Internal Revenue Code (the "Code") and
nonqualified stock options. The Committee, in its discretion, may grant
options to the Company's employees, consultants, non-employee directors, and
members of the Scientific Advisory Board; provided, however, that only
employees may be granted incentive stock options. The Committee must be
composed of at least two outside directors (if there are two outside
Directors, otherwise such number of outside directors as are available for
service) and has complete discretion to select the eligible individuals who
are to receive option grants. Outside directors who are members of the
Committee may not be awarded discretionary grants, but are awarded options for
2,000 shares upon election to the Committee and options for 2,500 shares, all
exercisable at the then fair market value, annually thereafter.
Generally, options become exercisable as to 20% of the shares subject to
option after the optionee's first full year of continuous service with the
Company and as to 1/12 of 20% of the shares at the end of each additional full
month of continuous service thereafter. Options granted to members of the
Scientific Advisory Board generally vest at the rate of 25% at the end of each
three-month period following the grant.
No incentive stock option may be exercised more than ten years after its
grant date, or in the case of nonqualified stock options, ten years and one
day after the date of its grant. No option is transferable by the optionee
other than by will or the laws of descent and distribution, and each option is
exercisable during the lifetime of the optionee only by the optionee, his or
her guardian, or legal representative. Subject to certain exceptions, vested
incentive stock options expire one year after the optionee's death or
disability. Vested nonqualified options expire one year after termination of
employment for any reason including death.
The exercise price of incentive stock options may not be less than the
fair market value of the shares on the date of grant (or 110% of the fair
market value for incentive stock options granted to holders of 10% or more of
the stock of the Company or any subsidiary of the Company). The price may be
paid in cash, by promissory note, or previously owned shares of the Company.
1994 Board Retainer Plan
The Company does not pay cash compensation to outside members of the
Board of Directors or to members of the Scientific Advisory Board but does
reimburse expenses incurred in connection with meetings. Accordingly, the
Board of Directors adopted the 1994 Board Retainer Plan (amended June 1997) to
grant shares of Common Stock to such members. Members of both boards are also
eligible for grants under the 1994 Stock Option Plan.
Unvested shares granted are subject to reacquisition by the Company at no
cost if the grantee ceases to be a director. With respect to directors, the
reacquisition option will typically lapse as to 20% of the shares granted
after the grantee's first full year of continuous service with the Company and
as to 1/12 of 20% of the granted shares at the end of each additional full
month of continuous service thereafter. Scientific Advisors' shares are not
subject to reacquisition by the Company after a year.
New outside members of the Board or the Scientific Advisory Board
receive 5,000 shares upon joining, and each will receive 1,000 shares annually
thereafter during the pendency of the Board Retainer Plan. The Audit and
Benefits Committee of the Board may change the amount granted each eligible
person at any time in its complete discretion. 75,000 shares were reserved by
the Board for the Board Retainer Plan, of which 57,000 shares have been
issued.
CERTAIN TRANSACTIONS
The following is a summary of certain transactions among the Company and
related persons.
Commencing with the founding of the Company, Messrs. Gaines and D. Peck
made loans to the Company pursuant to the terms of a convertible promissory
note (the "Subordinated Notes"). The amount outstanding varied from month to
month. On June 30, 1996, $16,159.04 (the entire outstanding balance
including accrued interest) of the Subordinated Notes were converted into
21,544 shares of Common Stock (17,560 shares to Mr. Gaines and 3,984 shares to
Mr. D. Peck). The Subordinated notes were converted pursuant to their terms
at a price per share not greater than the lowest price per share (adjusted for
stock splits, stock dividends, or other dilution) at which shares of Ixion's
Common Stock had been issued during the 12 month period immediately prior to
the notice of election to convert, in this case at a price of $.75 per share.
Prior to their conversion, the loans bore interest at 8.0%, compounded monthly
by additions to principal. No cash interest was ever paid on the Subordinated
Notes.
On August 31, 1994, Messrs. Gaines and D. Peck each converted $9,000 of
principal amount of Subordinated Notes into an aggregate of 900,000 shares of
the Company's Common Stock, at a price of $0.02 per share. That price was
determined by the Board of Directors to be the fair market value of such stock
on such date.
On August 31, 1994, the Board of Directors accepted Dr. Ammon B. Peck's
offer to assign to the Company all his interest in oxalate technology (subject
to prior rights of the University of Florida under the University's patent
policy) and to agree to execute an exclusive consulting agreement with the
Company in exchange for an aggregate of 650,000 shares of Common Stock at a
price of $0.02 per share. The Board of Directors valued the assignment of
such rights at not less than $13,000, and determined that amount to be the
fair market value of the shares on such date. This transaction was
consummated on October 17, 1994.
As of October 10, 1994, members of the immediate families of the founders
of the Company, including a partnership in which Mr. Gaines has an undivided
25% interest, purchased an aggregate of 140,000 shares of the Company's
Common Stock pursuant to an Agreement to Purchase Shares dated as of such
date, for a price of $0.10 per share, or $14,000 in the aggregate.
As of January 1, 1996, the Company purchased used laboratory equipment
with a replacement value in excess of $60,000 from Carl Therapeutic, Inc.
(controlled by a vice president of the Company), pursuant to a chattel
mortgage agreement in the amount of $32,309. None of this equipment had been
acquired by Carl Therapeutic within the previous two years. The agreement
calls for monthly payments of $897.47 commencing August 1, 1996. There is no
interest on the outstanding balance. The loan is secured by a security
interest in the laboratory equipment.
On April 16, 1996, the Chairman and Chief Executive Officer and the
President of the Company each entered into an agreement to extend the Company
up to $25,000 in the form of a bridge loan. Under these agreements, the
Company borrowed a total of $32,099.56, all of which was repaid in cash by the
Company on June 14, 1996. The loans bore cash interest at the rate 8%, paid
monthly and upon repayment of the principal. In addition, the Chairman, on
June 21, 1996, agreed to increase his loan commitment to an amount up to
$150,000, if necessary, to enable the Company to continue operations for the
next year.
Because of their managerial positions and stock holdings in the Company,
and their activities related to the organization of the Company, Messrs.
Gaines and Peck, and Dr. Peck may be deemed to be "promoters" as that term is
used under the Securities Act.
PRINCIPAL SHAREHOLDERS
The table below sets forth information as of the date of this
Prospectus and, as adjusted, assumes the sale of all of the Common Stock
offered pursuant to this Prospectus. The table also assumes, with respect to
each individual stockholder, the exercise of all warrants, options or
conversion of all convertible securities held by such stockholder, and
exercisable within 60 days of the date of this Prospectus. It does not assume
the exercise or conversion of securities held by any other holder of
securities. The table is based on information obtained from the persons named
below with respect to the beneficial ownership of shares of Common Stock by
(i) each person known by the Company to be the owner of more than 5% of the
aggregate outstanding shares of Common Stock, (ii) each officer and director
and (iii) all officers and directors as a group.
Amount and Nature of Beneficial
Ownership
Name and Address of Number of Percentage of Outstanding
Beneficial Owners (1) Shares Shares Owned
Prior to After
Offering
Offering(2)
Ammon B. Peck, Ph.D. 655,000(3) 26% 23%
David C. Peck 415,984(4) 17% 14%
Weaver H. Gaines 553,512(5) 22% 19%
David M. Margulies 18,250(6) (7) (7)
Vincent P. Mihalik 12,275(8) (7) (7)
All officers and directors
as a group (6 persons) 1,658,021 67% 57%
(1) Address is 12085 Research Drive, Alachua, FL 32615 unless otherwise
indicated.
(2) Assumes sale of all Units offered hereby, but does not assume
exercise or conversion of other securities held by anyone other than the
named persons.
(3) Includes 50,000 shares held by Dr. Peck's wife in trust for her
brothers as to which Dr. Peck disclaims beneficial ownership, and 5,000
shares issuable upon conversion of Unsecured Convertible Notes held by
members of Dr. Peck's immediate family sharing his household as to which
Dr. Peck disclaims beneficial ownership.
(4) Includes 12,000 shares issuable upon conversion of Unsecured
Convertible Notes held by members of Mr. Peck's immediate family sharing
his household as to which Dr. Peck disclaims beneficial ownership.
(5) Includes 40,000 shares held by WABS Associates, a general
partnership composed of Mr. Gaines and his three siblings. Mr. Gaines
disclaims beneficial ownership of 30,000 of such shares, and 5,952 shares
issuable upon conversion of Unsecured Convertible Notes held by Mr. Gaines.
(6) Includes 2,250 shares issuable upon exercise of currently
exercisable options, but excludes 5,250 shares issued under options not
currently exercisable.
(7) Less than 1.0%.
(8) Includes 1,275 shares issuable upon exercise of currently exercisable
options but excludes 4,725 shares issuable under options not currently
exercisable.
DESCRIPTION OF SECURITIES
Units
Each Unit consists of one share of Common Stock and .25 Charitable
Benefit Warrant to purchase an additional share of Common Stock. The Common
Stock will be immediately separated from the Charitable Benefit Warrants, and
will be immediately transferable.
Common Stock
As of the date of this Prospectus, the authorized capital stock of the
Company consists of 4,000,000 shares of Common Stock, $0.01 par value. As of
July 1, 1997, there were 2,464,544 shares of Common Stock outstanding, held of
record by approximately 60 shareholders.
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from
time to time by the Board of Directors out of funds legally available
therefor. See "Dividend Policy." In the event of 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. The
Common Stock has no preemptive or conversion rights or other subscription
rights. There are no redemption or sinking fund provisions applicable to the
Common Stock. All outstanding shares of Common Stock are fully paid and
nonassessable, and the shares of Common Stock offered hereby will also be
fully paid and nonassessable.
Charitable Benefit Warrants Included in the Units
The Charitable Benefit Warrant has been designed to permit purchasers of
Units in the Offering to make tax deductible contributions of the value of the
Charitable Benefit Warrant to an approved qualified charitable organization as
a new modality for channeling funds to medical research. An approved
qualified charitable organization means a charitable organization,
institution, foundation, or research institute described in Section 501(c)(3)
of the Internal Revenue Code (the "Code"), which is excluded from the
definition of a private foundation as referred to in Section 509(a) of the
Code, which is eligible to receive tax-deductible contributions under Section
170 of the Code, and which has been approved by the Company as described
below.
Approved qualified charitable organizations at the date of this agreement
include the following:
Juvenile Diabetes Foundation
American Kidney Foundation
Vulvar Pain Foundation
National Vulvodynia Foundation
Crohn's and Colitis Foundation of America
Cystic Fibrosis Foundation
Oxalosis and Hyperoxaluria Foundation
Mycological Society of America
Intestinal Disease Foundation
Cystic Fibrosis Alliance
National Kidney Foundation
National Institute of Diabetes and Digestive and Kidney Diseases
North American Mycological Society
University of Florida Research Foundation
Florida Cystic Fibrosis, Inc.
The Charitable Benefit Warrant included in the Units will be issued
pursuant to a Warrant Agreement among the Company and SunTrust Bank, Atlanta,
as warrant agent (the "Warrant Agent"), and will be in registered form.
Charitable Benefit Warrants may only be transferred to an approved qualified
charitable organization; provided, however, that transfer to a testamentary
trust, legatee, or heir by will or by descent upon the death of a Registered
Holder, will be permitted upon proper proof as decided by the Company. A
registered holder may transfer Charitable Benefit Warrants to an approved
qualified charitable organization at any time from the time of issuance and
prior to the close of business on September ___, 2007, the Warrant Expiration
Date.
Qualified charitable organizations may be added to the approved list by
the Company, in its absolute discretion, from time to time until the Warrant
Expiration Date. In order to be added to the approved list, a charitable
organization must be tax exempt, and it must be eligible to receive tax
deductible contributions in accordance with Section 170 of the Code.
Charitable organizations may be added at the election of the Company, or they
may be nominated by a Registered Holder. Registered Holders wishing to
nominate a charitable organization must send their nomination in writing to
the Company, together with proof of such charitable organization's status as
an organization described in Section 501(c)(3) of the Code which is excluded
from the definition of a private foundation as referred to in Section 509(a)
of the Code and which is eligible to receive tax deductible contributions in
accordance with Section 170 of the Code. Charitable organizations that fall
into the excluded categories are generally those that either have broad public
support or actively function in a supporting relationship to such
organizations.
In order to be tax-exempt, an organization must be organized and operated
exclusively for one or more of the purposes set forth in Section 501(c)(3),
and none of the earnings of the organization may inure to any private
shareholder or individual. In addition, the organization may not attempt to
influence legislation as a substantial part of its activities, nor may it
participate at all in campaign activities for or against political candidates.
The Company will favor charitable organizations which dedicate a material
portion of their assets or revenue to research activities connected with the
cure and treatment of diabetes and oxalate-related diseases.
Each of the Warrants will entitle the holder to purchase one share of
Common Stock at a price of $20.00 per share. An approved qualified charitable
organization may exercise at any time from the date of issuance and prior to
the close of business on September ____, 2007. A holder who is not an
approved qualified charitable organization may not exercise during the first
nine years. Such holder may only exercise during the one-year period
commencing September __, 2006, and ending at the close of business September
__, 2007.
The exercise price of the Charitable Benefit Warrants, and the number and
kind of shares of Common Stock or other securities and property issuable upon
exercise of the Warrants are subject to adjustment in certain circumstances,
including a stock dividend or a subdivision or combination of the Common
Stock. Additionally, an adjustment will be made upon a reclassification or in
case of a consolidation or merger of the Company with or into another company
or the sale of all or substantially all of the assets of the Company, in order
to enable approved qualified charitable organization holders of Charitable
Benefit Warrants to purchase the kind and number of shares of stock or other
securities or property (including cash) receivable in such event by a holder
of the number of shares of Common Stock that might otherwise have been
purchased upon exercise of the Charitable Benefit Warrant. No adjustment for
previously paid cash dividends, if any, will be made upon exercise of the
Charitable Benefit Warrant.
Charitable Benefit Warrants do not confer upon the holder any voting or
any other rights of a stockholder of the Company. Upon notice to the Warrant
holders, the Company has the right to reduce the exercise price or extend the
expiration date of the Charitable Benefit Warrants.
The Charitable Benefit Warrants may be exercised only upon surrender of
the Charitable Benefit Warrant certificate on or prior to the expiration date
of such Warrant at the offices of the Warrant Agent, with the form of
"Subscription Form" on the reverse side of the Charitable Benefit Warrant
certificate completed and executed as indicated, accompanied by payment of the
full exercise price (by certified check payable to the order of the Warrant
Agent) for the number of Charitable Benefit Warrants being exercised.
Unsecured Convertible Notes
In 1996 the Company issued $787,270 total principal amount, composed of
$215,600 in 10% Unsecured Convertible Notes (the "10% Notes") and $571,670 in
Variable Conversion Rate Unsecured Convertible Notes (the "Variable Notes")
due 2001 (in the aggregate hereafter called the "Notes"), which were issued
under a Note Purchase Agreement (the "Note Purchase Agreement"), dated as of
September 13, 1996, between the Company and the initial purchasers of the
Notes. The 10% Notes accrue interest at the stated rate until maturity, or
conversion, and pay interest quarterly. The 10% Notes are convertible into
shares of the Company's Common Stock at any time prior to maturity at a
conversion price of $4.20 per share. The Variable Notes are non-interest
bearing and are convertible into shares of the Company's Common Stock, at any
time prior to maturity, at variable conversion prices ranging from $4.20 to
$2.10. The variable conversion prices are based on the length of time the
investor holds the Variable Notes prior to conversion, as shown in the table
below:
Conversion Date Conversion Price
End of Year 1 Year 2 Year 3 Year 4 Year 5
November $4.10 $3.70 $3.30 $2.90 $2.50
February $4.00 $3.60 $3.20 $2.80 $2.40
May $3.90 $3.50 $3.10 $2.70 $2.30
August $3.80 $3.40 $3.00 $2.60 $2.10
Outstanding Common Stock Purchase Warrants
As of July 1, 1997, there were outstanding warrants to purchase 20,630
shares of Common Stock. Warrants for 17,630 shares entitle the registered
holder to purchase Common Stock at a price of $2.00 per share through August
31, 2000. Warrants for 3,000 shares entitle the registered holder to purchase
Common Stock at a price of $5.00 per share through February 2002. The
exercise price of the warrants and the number of shares of Common Stock to be
obtained upon exercise of the warrants are subject to adjustment in certain
circumstances, including a stock dividend to holders of Common Stock, a
subdivision or combination of outstanding shares of Common Stock, or the
issuance of capital stock in a reclassification or reorganization of Common
Stock. The exercise price of the warrants is subject to adjustment in the
event that the Company (i) issues, sells, or otherwise distributes Common
Stock at a price which is less than the then current market price of the
Common Stock, (ii) issues options (other than options issued under the 1994
Stock Option Plan or the 1994 Board Retainer Plan) whose exercise price is
less than the then current market price of the Common Stock, (iii) issues
convertible securities whose conversion price is less than the then current
market price of the Common Stock, or (iv) pays a dividend of cash or other
property in any one year greater than 10% of the then current market price of
the Common Stock. The Company must give advance notice to warrant holders of
any of the above events as well as any merger, sale, transfer, dissolution, or
winding up.
The warrants do not confer upon the holder any voting or other rights of
a shareholder of the Company. Upon notice to the holders of the warrants, the
Company has the right to reduce the exercise price or extend the expiration
date of the warrants. See "Shares Eligible for Future Sale - Registration
Rights" for a description of the registration rights of holders of certain of
the warrants.
Limitation of Liability
As permitted by Delaware law, the Certificate of Incorporation provides
that no director of the Company will be liable for monetary damages for breach
of fiduciary duty as a director, except (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or involving intentional misconduct or a knowing violation
of law, (iii) for approval of certain unlawful dividends or stock purchases or
redemptions, and (iv) for any transaction from which the director derived an
improper personal benefit. In appropriate circumstances, equitable remedies
such as an injunction or other forms of non-monetary relief would remain
available under Delaware law.
The Company intends to purchase and maintain directors' and officers'
insurance as soon as the Board of Directors determines practicable, in amounts
which they consider appropriate, insuring the directors against any liability
arising out of the director's status as a director of the Company regardless
of whether the Company has the power to indemnify the director against such
liability under applicable law.
The Company has been advised that it is the opinion of the Commission
that insofar as the foregoing provisions may be invoked to disclaim liability
for damages arising under the Securities Act, or to claim indemnification for
such liability, such provisions are against public policy as expressed in the
Securities Act and are, therefore, unenforceable.
Transfer Agent and Registrar and Warrant Agent
The Transfer Agent and Registrar for the Common Stock and the Warrant
Agent for the Charitable Benefit Warrants is SunTrust Bank, Atlanta.
CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of certain federal income tax considerations
relevant to the acquisition, holding, and disposition of Units, Common Stock,
and Charitable Benefit Warrants pursuant to this Offering. This discussion is
not a complete analysis of all potential tax considerations to prospective
purchasers. The discussion is limited solely to U.S. federal income tax
matters and is based upon the Internal Revenue Code of 1986, as amended (the
"Code"), Treasury regulations, administrative rulings, and pronouncements of
the Internal Revenue Service ("IRS"), and judicial decisions, all as of the
date hereof and all of which are subject to change at any time, possibly with
retroactive effect.
This discussion is limited to those initial purchasers of Units who would
hold the Common Stock and Charitable Benefit Warrants as "capital assets" for
U.S. federal income tax purposes. This discussion does not address U.S.
federal income tax consequences that may be applicable to particular
categories of Unit holders, including insurance companies, tax-exempt persons,
financial institutions, dealers in securities, persons with significant
holdings of Company stock, and non-United States persons, including foreign
corporations, foreign partnerships, and nonresident alien individuals. This
discussion does not address any tax considerations under the laws of any
state, locality, or jurisdiction, or foreign country.
The Company will not seek, a ruling from the IRS as to any of the matters
covered by this discussion, and there can be no assurance that the IRS will
not successfully challenge the conclusions reached in this discussion.
BECAUSE THE U.S. FEDERAL INCOME TAX CONSEQUENCES DISCUSSED BELOW DEPEND UPON
EACH HOLDER'S PARTICULAR TAX STATUS, PROSPECTIVE INVESTORS SHOULD CONSULT
THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE TAX CONSIDERATIONS
DISCUSSED BELOW TO THEIR PARTICULAR SITUATIONS, AS WELL AS THE APPLICATION OF
ANY STATE, LOCAL, FOREIGN, OR OTHER TAX LAWS.
The Units
Because the original purchasers of Common Stock also will acquire
Charitable Benefit Warrants, each share of Common Stock likely will be treated
for federal income tax purposes as having been issued as part of an
"investment unit" consisting of the Common Stock and associated Charitable
Benefit Warrants. The purchase price of an investment unit is allocated
between its component parts based on their relative fair market values at the
time of purchase. The portion of the purchase price allocable to the Common
Stock and Charitable Benefit Warrants, respectively, will be the holder's
initial tax basis in the Common Stock and Charitable Benefit Warrants,
respectively.
The Common Stock
Dividends. The Company does not currently intend to make distributions
with respect to the Common Stock. However, any distributions that are made by
the Company with respect to the Common Stock will be characterized as
dividends and, therefore, will be includable in the recipient's gross income
to the extent of the Company's current or accumulated earnings and profits, if
any, as determined for U.S. federal income tax purposes. To the extent that a
distribution on the Common Stock exceeds the holder's allocable share of the
Company's current or accumulated earnings and profits, such distribution first
will be treated as a return of capital that will reduce the holder's adjusted
tax basis in such Common Stock, and the excess will be treated as taxable
gain. The availability of current or accumulated earnings and profits, if
any, in future years will depend on future profits and losses which cannot be
accurately predicted. Thus, there can be no assurance that all or any portion
of a distribution on the Common Stock will be characterized as a dividend for
U.S. federal income tax purposes. Corporate stockholders will not be entitled
to claim the dividends received deduction with respect to distributions that
are not characterized as dividends. See the discussion regarding the
dividends received deduction below.
Subject to important restrictions, dividends received by a corporate
holder of Common Stock generally will qualify for the 70 percent dividends
received deduction provided by Section 243(a)(1) of the Code. Under certain
circumstances, a corporate holder may be subject to the alternative minimum
tax with respect to the amount of its dividends received deduction. Also,
under certain circumstances, a corporation that receives an "extraordinary
dividend," as defined in Section 1059(c) of the Code, is required to reduce
its stock basis by the nontaxed portion of such dividend. Corporate holders
are advised to consult their tax advisors concerning possible limitations on
the availability of the dividends received deduction, as well as the potential
application of Section 1059 of the Code with respect to dividends received
from the Company.
Sale or other Taxable Disposition of Common Stock. Upon a sale or other
taxable disposition (other than a redemption) of Common Stock, a holder
generally will recognize gain or loss for federal income tax purposes in an
amount equal to the difference between (i) the amount of cash plus the fair
market value of any property received upon such sale or disposition and (ii)
the holder's adjusted tax basis in the Common Stock being sold. The holder's
adjusted tax basis in the Common Stock will be that amount of the purchase
price of a Unit allocated to the Common Stock as described above.
Redemption of Common Stock. The Company has no plans to redeem Common
Stock. A redemption of Common Stock generally will be a taxable event to the
redeemed stockholder. The amount received in the redemption will be treated
as a distribution taxable as a dividend to the redeemed stockholder (and may
constitute an extraordinary dividend under Section 1059) unless the
redemption: (a) is treated as a distribution "not essentially equivalent to a
dividend" with respect to the stockholder; (b) is "substantially
disproportionate" with respect to the stockholder; (c) "completely terminates"
the stockholder's equity interest in the Company; or (d) is of stock held by a
noncorporate stockholder and is in partial liquidation of the Company. In
determining whether any of those tests has been met, there generally must be
taken into account Common Stock actually owned and certain Common Stock
constructively owned by the stockholder. If any of those tests is met as to a
stockholder, the redemption of the Common Stock generally would be treated as
to that stockholder as an exchange giving rise to capital gain or loss
(measured by the difference between the amount received and the holder's tax
basis in the redeemed Common Stock). Even in such a case, however, payments
received upon redemption which represent accrued but unpaid dividends may be
taxed as ordinary income dividends, and the extraordinary dividend rule
discussed above could apply. Prospective purchasers should consult their own
tax advisors as to the application of the foregoing rules.
The Charitable Benefit Warrants
Exercise of the Charitable Benefit Warrants. The exercise of a
Charitable Benefit Warrant will not result in a taxable event to the holder.
Upon exercise of a Charitable Benefit Warrant, the holder's aggregate basis in
the Common Stock received upon exercise (the "Warrant Shares") will be the sum
of (a) its basis in the Charitable Benefit Warrant and (b) the cash paid upon
exercise of the Charitable Benefit Warrant. The holding period for capital
gain and loss purposes for the Warrant Shares will not include the period
during which the Charitable Benefit Warrant was held by such holder.
Expiration of the Charitable Benefit Warrants. Upon the expiration of an
unexercised Charitable Benefit Warrant, the holder will recognize a loss equal
to the adjusted tax basis of the Charitable Benefit Warrant in the hands of
the holder. Such loss will be a capital loss, provided the Warrant Shares
would have been a capital asset in the hands of the Charitable Benefit
Warrant holder had the Charitable Benefit Warrant been exercised, and will be
long-term capital loss with respect to Charitable Benefit Warrants held for
more than one year at the time of the expiration.
Adjustments Under the Charitable Benefit Warrants. Pursuant to the terms
of the Charitable Benefit Warrants, the number of shares that may be purchased
upon exercise of the Charitable Benefit Warrants is subject to adjustment from
time to time upon the occurrence of certain events. Under Section 305 of the
Code, a change in conversion ratio or any transaction having a similar effect
on the interest of a Charitable Benefit Warrant holder may be treated as a
distribution with respect to any holder whose proportionate interest in the
assets or earnings and profits of the Company is increased by such change or
transaction. Thus, under certain future circumstances which may or may not
occur, such an adjustment pursuant to the terms of the Charitable Benefit
Warrants may be treated as a taxable distribution to the Charitable Benefit
Warrant holders to the extent of the Company's current or accumulated earnings
and profits, without regard to whether such holders receive any cash or other
property. If the Charitable Benefit Warrant holders receive such a taxable
distribution, their bases in the Charitable Benefit Warrants will be increased
by an amount equal to the taxable distribution.
The rules with respect to adjustments are complex and Charitable Benefit
Warrant holders should consult their own tax advisors in the event of an
adjustment.
Charitable Contribution of Charitable Benefit Warrants. Upon charitable
contribution of a Charitable Benefit Warrant to an approved qualified
charitable organization, the transferor will be entitled to a deduction in
respect of a charitable contribution in an amount equal to the fair market
value of the Charitable Benefit Warrant to such transferor at the time of such
contribution, subject to the usual requirements for deductions in respect of
charitable contributions, including, without limitation, certain annual
limitations on deductions based on adjusted gross income and other
requirements referred to below.
The fair market value of the Charitable Benefit Warrant at the time of
any such contribution will be based on the value of the Charitable Benefit
Warrant in the hands of the transferor at that time. That is, the Charitable
Benefit Warrant will be valued as a warrant that may be exercised only during
the one year period commencing September __, 2006 and ending September __,
2007, notwithstanding that an approved qualified charitable organization may
exercise the Charitable Benefit Warrant at any time after issuance.
Individuals and certain other transferors are required to obtain an appraisal
of the fair market value of property contributed if the deduction claimed for
the contribution of such property and all similar property exceeds $5,000 in
any one taxable year (including donations to different donees). Certain
other substantiation requirements apply as well.
The amount of any deduction in respect of a charitable contribution of
appreciated property is reduced by, among other things, the amount of gain
which would not have been long-term capital gain if the property contributed
had been sold by the taxpayer at its fair market value (determined at the time
of such contribution). To avoid that reduction, a holder must hold the
property for a period of time such that its disposition would result in long-
term capital gain, which currently is any period longer than one year.
The substantiation and other requirements for a deduction in respect of
charitable contribution are, in part, highly technical. Accordingly, a holder
of Charitable Benefit Warrants who is planning to contribute Charitable
Benefit Warrants to an approved qualified charitable organization is urged to
consult his or her own tax advisor with respect to those requirements.
Backup Withholding
Federal income tax backup withholding at a rate of 31% on dividends and
proceeds from a sale, exchange, or redemption of Common Stock will apply
unless the holder (i) is a corporation or comes within certain other exempt
categories (and, when required, demonstrates that fact) or (ii) provides a
taxpayer identification number, certifies as to no loss of exemption from
backup withholding and otherwise complies with applicable requirements of the
backup withholding rules. The amount of any backup withholding from a payment
to a holder will be allowed as a credit against the holder's federal income
tax liability and may entitle such holder to a refund, provided that the
required information is furnished to the IRS.
SHARES ELIGIBLE FOR FUTURE SALE
At the completion of this Offering, there will be 2,864,544 shares of
Common Stock outstanding if all Units are sold. There will be 43,900 shares
of Common Stock issuable upon the exercise of outstanding options, 20,630
issuable upon the exercise of outstanding warrants, and up to 323,557 shares
of Common Stock issuable upon conversion of the Company's Unsecured
Convertible Notes. There is no current market for the Company's securities,
and it is unlikely there will be one at the conclusion of this Offering.
Should the Company elect to register its securities in the future, it
cannot predict whether a market for its securities will develop, or, if one
develops, the effect, if any, that market sales of restricted shares of Common
Stock (described below) or the availability of such shares for sale will have
on the market prices prevailing from time to time. Nevertheless, the
possibility that substantial amounts of Common Stock may be sold in the public
market would likely adversely affect any prevailing market price for the
Common Stock and could impair the Company's ability to raise capital through
the sale of its equity securities.
Sales of Restricted Securities
All 2,464,544 shares of Common Stock outstanding prior to the Offering,
all outstanding warrants and options, and all Unsecured Convertible Notes, as
well as the shares of Common Stock issuable upon exercise of such warrants and
options or conversion of the Unsecured Convertible Notes were or will be
issued and sold by the Company in private transactions not involving a public
offering in reliance upon exemptions under the Securities Act. These
securities are treated as "restricted securities" and may not be resold except
in compliance with the registration requirements of the Securities Act or
pursuant to an exemption therefrom.
Registration Rights
Pursuant to the Agreement to Purchase Shares dated as of October 10,
1994, the holders of 140,000 shares of Common Stock ("Contingently
Registerable Securities") are entitled to certain contingent piggyback
registration rights, subject to the terms and conditions of the Agreement to
Purchase Shares. Under such Agreement, if at any time during the period
ending October 9, 2004, Ixion registers any shares of Common Stock under the
Act on certain SEC forms, one or more holders of the Contingently Registerable
Securities may request that all or a part of their securities be included in
the registration statement. The Company is required to bear all registration
and selling expenses (other than underwriter's fees, discounts, or
commissions) in connection with the registration of Contingently Registerable
Securities. See "Certain Relationships and Related Transactions."
Pursuant to the Employment Agreements, Messrs. D. Peck and Gaines,
holders of record of an aggregate of 911,544 shares of the Company's Common
Stock as of July 31, 1996 (the "Registerable Securities") are entitled to
certain demand registration rights, subject to the terms and conditions of
such Employment Agreements. Subject to certain exceptions, if the Company is
then a public company, at any time during the contract term (and until the
third anniversary of termination), either or both of Messrs. D. Peck and
Gaines may demand that the Company register at least 100,000 shares under the
Act on an appropriate SEC form. Each executive is entitled to only one demand
registration under his Employment Agreement. Each executive may also request
inclusion of all or a portion of his Registerable Securities in any
registration by the Company under the Act. The Company is required to bear
all registration and selling expenses (other than underwriter's fees,
discounts, or commissions) in connection with the registration of Registerable
Securities. See "Management - Employment Agreements."
Holders of 17,630 outstanding warrants have certain piggyback
registration rights for the Common Stock issuable upon exercise of such
warrants, subject to the terms and conditions of the warrants. Pursuant to
the terms of such warrants, until June 30, 2001, if the Company registers any
sales of Common Stock under the Securities Act, it must notify the warrant
holders in order that they may request inclusion in such registrations
statement. The expenses of the registration (other than transfer taxes,
underwriting commissions, and fees of warrant holders' counsel) shall be paid
by the Company.
Pursuant to the Note Purchase Agreement relating to the Unsecured
Convertible Notes, until August 31, 2006, Note holders who convert their
Unsecured Convertible Notes into shares of Common Stock are also entitled to
certain contingent piggyback registration rights. The expenses of the
registration (other than transfer taxes, underwriting commissions, and fees of
the converting Note holders' counsel) shall be paid by the Company.
PLAN OF DISTRIBUTION
The Company proposes to sell up to 400,000 Units composed of 400,000
newly issued shares of Common Stock and 100,000 newly issued Charitable
Benefit Warrants at a price of $10.00 per Unit directly to members of the
public residing in selected states. Announcements of this Offering, in the
form prescribed by Rule 134 of the Securities Act, will be communicated to
selected persons. There is no required minimum number of Units to be sold,
and all funds received will go immediately to the Company. If only a few
Units are sold, the result could be that all the proceeds will be used to pay
the expenses of the Offering. The Offering will begin on the date of this
Prospectus and continue for up to twelve months (unless extended) or until all
of the Units offered are sold or such earlier date as the Company may close or
terminate the Offering. All Units will be sold at the public offering price
of $10.00 per share and a minimum purchase of 100 Units ($1,000.00) is
required. Since there is no minimum number of Units to be sold, there is no
escrow account for the deposit of subscribers' funds and no arrangements to
return the funds if all of the Units offered are not sold.
The Company plans to offer and sell the Units directly to investors and
has not retained any underwriters, brokers, dealers, or placement agents in
connection with the Offering. However, the Company reserves the right to use
brokers, dealers, or placement agents and could pay commissions equal to as
much as 10 percent of the gross proceeds although the Company does not
currently intend to pay more than $200,000 in aggregate commissions. The
Company will effect offers and sales of Units through printed copies of this
Prospectus delivered by mail and electronically, by contacting prospective
investors by publicizing the Offering through a posting on the Company's World
Wide Web site (which was first established in July of 1996), by publicizing
the Offering through newspaper advertisements, and by contacting additional
potential investors by direct e-mail and regular mail solicitation. Any voice
or other communications will be conducted in certain states through the
Company's executive officers, and in other states, where required, through a
designated sales agent, licensed in those states. Under Rule 3a4-1 of the
Exchange Act, none of these employees of the Company will be deemed a
"broker," as defined in the Exchange Act, solely by reason of participation in
this Offering, because (1) none is subject to any of the statutory
disqualifications in Section 3(a)(39) of the Exchange Act, (2) in connection
with the sale of the Units offered, none will receive, directly or indirectly,
any commissions or other remuneration based either directly or indirectly on
transactions in securities, (3) none is an associated person (partner,
officer, director, or employee) of a broker or dealer, and (4) each meets all
of the following conditions: (a) primarily performs substantial duties for the
issuer otherwise than in connection with transactions in securities; (b) was
not a broker or dealer, or an associated person of a broker or dealer, within
the preceding 12 months; and (c) will not participate in selling an offering
of securities for any issuer more than once every 12 months.
To subscribe for Units, each prospective investor must complete, date,
execute and deliver to the Company a Unit Purchase Agreement and have paid the
purchase price of the Units subscribed for by check payable to Ixion
Biotechnology, Inc. A copy of the Unit Purchase Agreement is included with
this Prospectus.
The Company reserves the right to reject any Unit Purchase Agreement in
its entirety or to allocate Units among prospective investors. If any Unit
Purchase Agreement is rejected, funds received by the Company for such
subscription will be returned to the subscriber without interest or deduction.
Within five days of its receipt of a Unit Purchase Agreement accompanied
by a check for the purchase price, the Company will send by first class mail a
written confirmation to notify the subscriber of the extent, if any, to which
such subscription has been accepted by the Company. Not more than thirty days
following the mailing of its written confirmation, a subscriber's Common Stock
and Charitable Benefit Warrant certificates will be mailed by first class
mail. The Company shall not use the proceeds paid by any investor until the
Common Stock and Charitable Benefit Warrant certificates evidencing such
investment have been mailed.
There is no public market for the Common Stock, and it is unlikely that
any such market will develop after the Offering. The Company does not
currently meet the requirements for listing on an organized stock exchange or
quotation of over-the-counter market maker trades on the NASDAQ market. After
completion of the Offering, the Company may apply for a listing on a United
States regional exchange, if the Company meets certain numerical listing
requirements. However, there can be no assurance that the Company will be
listed or that a market will develop or be sustained. If it does not, the
Company has been advised that a registered securities broker-dealer may
provide an order matching service for persons wishing to buy or sell shares,
upon completion of the Offering. However, there is currently no agreement
between the Company and such a registered securities broker-dealer. The
Company may in the future also seek to provide a passive, bulletin board
system on the Internet providing information to buyers and sellers of the
Company's Common Stock to facilitate trading. The System would not affect
transactions and would be obliged to meet the requirements of the Commission.
The Company has not constructed such a system at the date of this Prospectus.
In the absence of a public trading market, purchasers may be unable to resell
the Common Stock for an extended period of time, if at all.
Determination of Offering Price
The Company has arbitrarily determined the offering price of the Units.
Among the factors considered in determining such price were offering prices of
recent biotechnology initial public offerings, the Company's capital
requirements, the percentage of ownership to be held by investors following
the Offering, the prospects for the Company's business and the biotechnology
industry, the assessment of the present early stage of the Company's
development, the prospects for initiation or growth of the Company's revenues,
and the current state of the economy in the United States. The offering price
does not necessarily bear any relationship to the Company's assets, book
value, earnings history, or other investment criteria and should not be
considered an indication of the actual value of the Company's securities.
LEGAL MATTERS
Certain legal matters in connection with validity of the Units offered
hereby will be passed upon for the Company by Bruce Brashear, Esq.,
Gainesville, Florida. Certain tax matters in connection with the investment in
Charitable Benefit Warrants will be passed on for the Company by Thacher
Proffitt & Wood, New York, New York. James R. Shorter, Jr., a partner in
Thacher Proffitt & Wood, is the beneficial owner of approximately 1.2% of the
Company.
EXPERTS
The balance sheet as of December 31, 1996 and the statements of
operations, capital deficiency and cash flows for the years ended December 31,
1995 and 1996, and for the period March 25, 1993 (date of inception) to
December 31, 1996 included in this Prospectus have been so included in
reliance on the report of Coopers & Lybrand, L.L.P., independent accountants,
given on the authority of said firm as experts in auditing and accounting.
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form SB-2 under the
Securities Act of 1933 with the Securities and Exchange Commission with
respect to the Units offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits
thereto; certain portions have been omitted pursuant to rules and regulations
of the Commission. Statements contained in this Prospectus as to the
contents of any contract or other document are not necessarily complete and,
in each instance, reference is made to the copy of such contract or document
filed as an exhibit to the Registration Statement, each such statement being
qualified in all respects by such reference.
The Company will provide without charge to each person who receives a
Prospectus, upon written or oral request of such person, a copy of any of the
information that is incorporated by reference in this Prospectus (not
including exhibits to the information that is incorporated by reference unless
the exhibits are themselves specifically incorporated by reference). Requests
for such information should be directed to Ms. Gwen Thompson, Director of
Administration, Ixion Biotechnology, Inc., 12085 Research Drive, Alachua, FL
32615, tel: 904-417-1428, fax: 904-462-0875, email: [email protected].
The Registration Statement, including the exhibits and schedules thereto,
may be inspected and copied at the public reference facilities of the
Commission in Washington, D.C., and certain of its regional offices and copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission as follows: the Midwest Regional Office,
500 West Madison Street, Chicago, Illinois 60661; and the Northeast Regional
Office, 7 World Trade Center, New York, New York 10048, and copies of all or
any part thereof may be obtained at prescribed rates. Electronic registration
statements made through the Electronic Data Gathering, Analysis and Retrieval
("EDGAR") system are publicly available through the Commission's World Wide
Website at <http://www.sec.gov>.
UNIT PURCHASE AGREEMENT
[To purchase any of the Units, you must be a resident of one of the following
states: ]
To: Ixion Biotechnology, Inc., 12085 Research Drive,
Alachua, FL 32615 USA
Phone: 904-418-1428 - - -Fax: 904-462-0875 - - -
Email: [email protected]
I have received and had an opportunity to read the Prospectus by which the
Units are offered.
Enclosed is payment for____________ Units (minimum 100), at $10.00 per unit,
totaling $____________.
Make check payable to Ixion Biotechnology, Inc.
Signature(s)___________________________________________ Date ________________
Register the Units in the following name(s) and amount(s):
Name(s)_____________________________________ Number of Units ____________
As (check one):
Individual _______ Joint Tenants _______ Trust _______
IRA ______
Tenants in Common _______ Corporation _______ Keogh _______
Other ______
For the person(s) who will be registered owners(s):
Mailing
Address:___________________________________________________________________
City, State & Zip Code:
_____________________________________________________________
Business Phone: (_____)___________________
Home Phone: (_____)___________________
Social Security or Taxpayer ID Number: ______________________
________________________________________________
(Please attach an special mailing instructions other than shown above)
NO UNIT PURCHASE AGREEMENT IS EFFECTIVE UNTIL ACCEPTANCE
(You will be mailed a signed copy of this Agreement to retain for your
records.)
Subscription accepted by Ixion Biotechnology, Inc.
_________________________
David C. Peck, President Date_____________________________________
INDEX TO FINANCIAL STATEMENTS
Page
Audited Financial Statements
Report of Independent Accountants F-2
Balance Sheet as of December 31, 1996 F-3
Statements of Operations for the years ended December 31,
1995 and 1996 and for the period March 25, 1993 (date of
inception) through December 31, 1996 F-4
Statements of Capital Deficiency for the period March 25, 1993
(date of inception) through December 31, 1996 F-5
Statements of Cash Flows for the years ended December 31, 1995 and 1996
and for the period March 25, 1993 (date of inception)
through December 31, 1996 F-6
Notes to Financial Statements F-8
Condensed Unaudited Financial Statements
Balance Sheet as of March 31, 1997 F-9
Statements of Operations for the three month periods ended
March 31, 1996 and 1997 and for the period March 25,
1993 (date of inception) through March 31, 1997 F-10
Statements of Cash Flows for the three month periods ended
March 31, 1996 and 1997 and for the period March 25,
1997 (date of inception) through March 31, 1997 F-11
Notes to Condensed Financial Statements F-12
F-1
<PAGE>
Report of Independent Accountants
The Board of Directors
Ixion Biotechnology, Inc.
We have audited the balance sheet of Ixion Biotechnology, Inc. (A Development
Stage Company) as of December 31, 1996, and the related statements of
operations, capital deficiency and cash flows for the years ended December 31,
1996 and 1995 and for the period March 25, 1993 (date of inception) through
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 audits 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 Ixion Biotechnology, Inc. at
December 31, 1996, and the results of its operations and its cash flows for
the years ended December 31, 1996 and 1995 and for the period March 25, 1993
(date of inception) through December 31, 1996 in conformity with generally
accepted accounting principles.
/S/ Coopers & Lybrand L.L.P.
Orlando, Florida
February 4, 1997, except
for Note 12, for which the
date is June 27, 1997
1
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 1996
<TABLE>
<CAPTION>
Assets
<S> <C>
Current Assets:
Cash and cash equivalents $ 611,539
Accounts receivable 8,159
Prepaid expenses 7,778
Other current assets 500
----------
Total current assets 627,976
Property and Equipment, net 41,409
Patents Pending 118,137
Other 10,341
----------
$ 797,863
-----------
</TABLE>
<TABLE>
<CAPTION>
Liabilities and Capital Deficiency
<S> <C>
Current Liabilities:
Accounts payable $ 46,252
Current portion of notes payable 10,769
Accrued expenses 18,717
-----------
Total current liabilities 75,738
-----------
Long-Term Liabilities:
Notes payable and accrued interest 806,319
Deferred revenue 100,000
Deferred fees and salaries, including accrued
interest, payable to related parties 385,038
-----------
Total long-term liabilities 1,291,357
-----------
Total liabilities 1,367,095
-----------
Commitments (Note 9)
Capital Deficiency:
Common stock, $.01 par value; authorized
4,000,000, issued and outstanding
2,443,544 shares 24,435
Additional paid-in capital 703,388
Deficit accumulated during the development stage (1,178,349)
Note receivable from shareholder (6,000)
Less unearned compensation (112,706)
-----------
Total capital deficiency (569,232)
-----------
Total Liabilities and Capital Deficiency $ 797,863
-----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
Statements of Operations
For the Period
March 25,
1993 (Date of
Inception)
through
Year Ended December 31, December 31,
1996 1995 1996
---------- ------- ------------
<S> <C> <C> <C>
Revenues:
Income under research agreement $ 139,079 $ - $ 139,079
Income from SBIR grant 20,000 - 20,000
Interest income 7,760 5,060 12,820
Other income 4,366 3,062 10,815
----------- ------- -------
Total revenues 171,205 8,122 182,714
----------- -------- -------
Expenses:
Operating, general and
administrative 276,642 230,423 761,538
Research and development 392,010 130,984 531,380
Interest 37,136 20,927 68,145
----------- -------- -------
Total expenses 705,788 382,334 1,361,063
Net Loss $(534,583) $(374,212) $(1,178,349)
----------- -------- ---------
Net Loss per Share $ (0.22) $ (0.18)
----------- ---------
Weighted Average Common Shares 2,411,275 2,025,975
----------- ---------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Statements of Capital Deficiency
<TABLE>
<CAPTION>
For the Period March 25, 1993 (Date of Inception) through December 31, 1996
Deficit
Accumulated
Additional
During the Unearned
Common Stock Paid-In
Development Note Compen-
Shares Amount Capital
Stage Receivable sation Total
<S> <C> <C> <C> <C>
<C> <C> <C>
Initial sale of common
stock, $.01 per share 100,000 $ 1,000 $ - $
- - $ - $ - $ 1,000
Sale of common stock,
$.01 per share 50,000 500 -
- - - - 500
Net loss for the period March 25,
1993 (date of inception) through
December 31, 1993 - - -
(54,268) - - (54,268)
-------- -------- -------- ---
- ----- -------- -------- ---------
Balance, December 31, 1993 150,000 1,500 -
(54,268) - - (52,768)
Conversion of subordinated
notes payable, $0.02 per share 900,000 9,000 9,000
- - - - 18,000
Issuance of stock under Board
Retainer Plan,$0.02 per share 5,000 50 50
- - - - 100
Sale of stock, $0.02 per share 5,000 50 50
- - - - 100
Issuance of stock in exchange
for certain intellectual
property, $0.02 per share 650,000 6,500 6,500
- - - - 13,000
Conversion of deferred consulting
fees, $0.10 per share 10,000 100 900
- - - - 1,000
Sale of stock, $0.10 per share 140,000 1,400 12,600
- - - - 14,000
Net loss - - -
(215,286) - - (215,286)
-------- -------- -------- ---
- ----- -------- -------- ---------
Balance, December 31, 1994 1,860,000 18,600 29,100
(269,554) - - (221,854)
Sale of stock, $0.75 per share 500,000 5,000 370,000
- - - - 375,000
Issuance of stock under Board
Retainer Plan, $0.75 per share 10,000 100 7,400
- - - - 7,500
Issuance of 9,608 common stock
warrants - - 9,608
- - - - 9,608
Sale of stock, $3.00 per share 3,000 30 8,970
- - - - 9,000
Note received from shareholder
for common stock and warrants - - -
- - (6,000) - (6,000)
Net loss - - -
(374,212) - - (374,212)
-------- -------- -------- ---
- ----- -------- -------- ---------
Balance, December 31, 1995 2,373,000 23,730 425,078
(643,766) (6,000) - (200,958)
Issuance of stock under Board
Retainer Plan, $3.00 per share 20,000 200 59,800
- - - (26,166) 33,834
Issuance of stock, $3.00 per share 14,000 140 41,860
- - - (36,540) 5,460
Issuance of stock under Board
Retainer Plan, $10.00 per share 15,000 150 149,850
- - - (50,000) 100,000
Issuance of 8,022 common stock
warrants - - 10,857
- - - - 10,857
Conversion of subordinated notes
payable to related parties,
$0.75 per share 21,544 215 15,943
- - - - 16,158
Net loss - - -
(534,583) - - (534,583)
-------- -------- -------- ---
- ----- -------- -------- ---------
Balance, December 31, 1996 2,443,544 $24,435 $ 703,388
$(1,178,349) $ (6,000) $(112,706) $ (569,232)
--------- ------- --------- -------
- ----- -------- ---------- -----------
--------- ------- --------- -------
- ----- -------- ---------- -----------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Period
March 25,
1993 (Date
of Inception)
through
Year Ended
December 31, December 31,
1996
1995 1996
----------
- ---------- -------------
<S> <C>
<C> <C>
Cash Flows from Operating Activities:
Net loss $ (534,583)
$(374,212) $(1,178,349)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 8,546
2,107 12,929
Amortization 738
87 825
Stock warrants issued under license agreement 10,857
9,608 20,465
Stock compensation 139,295
7,500 146,795
Decrease (increase) in employee advance 900
300 -
Decrease (increase) in prepaid expenses
and other current assets 7,932
(16,035) (8,103)
Decrease (increase) in accounts receivable (8,159)
- - (8,159)
Increase in deferred revenue 100,000
- - 100,000
Increase in accounts payable and
accrued expenses 24,869
29,128 66,312
Increase in deferred fees and salaries 83,256
74,846 358,486
Increase in interest payable 2,325
20,831 33,198
----------
- ---------- -------------
Net cash used in operating activities (164,024)
(245,840) (455,601)
----------
- ---------- -------------
Cash Flows from Investing Activities:
Purchase of property and equipment (13,993)
(3,736) (26,140)
Organization costs -
- - (436)
Payments for patents pending (67,053)
(52,428) (119,481)
----------
- ---------- -------------
Net cash used in investing activities (81,046)
(56,164) (146,057)
----------
- ---------- -------------
Cash Flows from Financing Activities:
Proceeds from issuance of subordinated
notes payable to related parties -
- - 30,307
Proceeds from issuance of convertible notes payable 787,270
- - 787,270
Proceeds from issuance of common stock -
378,000 406,700
Payment of loan costs (11,080)
- - (11,080)
----------
- ---------- -------------
Net cash provided by financing activities 776,190
378,000 1,213,197
----------
- ---------- -------------
Net Increase in Cash and Cash Equivalents 531,120
75,996 611,539
Cash and Cash Equivalents at Beginning of Period 80,419
4,423 -
----------
- ---------- -------------
Cash and Cash Equivalents at End of Period $ 611,539
$ 80,419 $ 611,539
----------
- ---------- ----------
----------
- ---------- ----------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Statements of Cash Flows - Continued
For the Period
March 25,
1993 (Date
of Inception)
through
Year Ended
December 31, December 31,
1996
1995 1996
----------
- ---------- --------------
<S> <C>
<C> <C>
Supplemental Disclosure of Cash Flow Information:
Cash paid during the year for:
Interest $ 5,761
$ 55 $ 6,269
----------
- ---------- --------------
----------
- ---------- --------------
Supplemental Disclosure of Noncash Investing and
Financing Activities:
Common stock issued for subordinated notes payable $ 16,158
$ - $ 34,158
----------
- ---------- --------------
----------
- ---------- --------------
Common stock and stock warrants issued for
services or technology $ 10,857
$ 7,608 $ 19,457
----------
- ---------- --------------
----------
- ---------- --------------
Common stock issued for note receivable $ -
$ (6,000) $ (6,000)
----------
- ---------- --------------
----------
- ---------- --------------
Equipment purchased under an installment
note arrangement $ 28,022
$ - $ -
----------
- ---------- --------------
----------
- ---------- --------------
Common stock issued under Board Retainer Plans $ 210,000
$ 7,500 $ 217,500
----------
- ---------- --------------
----------
- ---------- --------------
Other common stock issued as compensation $ 42,000
$ - $ 42,000
----------
- ---------- --------------
----------
- ---------- --------------
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Notes to Financial Statements
Years Ended December 31, 1996 and 1995 and the Period March 25, 1993 (Date of
Inception) through December 31, 1996
1. Significant Accounting Policies:
Organization - Ixion Biotechnology, Inc., a Delaware corporation (the
"Company"), was incorporated on March 25, 1993 and has been in the
development stage since its formation. The Company is in business to
develop pharmaceutical products and medical devices to detect, diagnose,
treat or prevent diabetes and oxalate-induced diseases. The Company has
not generated significant revenues to date and has experienced operating
losses since its inception. The Company expects to incur additional
operating losses for the next several years as the Company expands its
research and development and regulatory activities and prepares for the
manufacturing and marketing of its products.
Basis of Presentation - The Company is in the development stage since it
is devoting substantially all of its efforts to establishing its business
and its planned principal operations have not commenced. Successful
completion of the Company's development program, and its transition to
profitable operations, is dependent upon obtaining approval to market its
products from the United States Food and Drug Administration and
achieving revenues from the commercial development of its products.
Cash and Cash Equivalents - The Company considers all highly liquid
instruments with a maturity of three months or less at time of purchase
to be cash equivalents.
Income Taxes - Deferred income taxes are recognized for the tax
consequences in future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at each year
end based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized. Income tax expense is
the tax payable for the period and the change during the period in
deferred tax assets and liabilities.
Property and Equipment - Property and equipment are stated at cost.
Gains and losses on disposition are recognized in the year of the
disposal. Expenditures for maintenance and repairs are expensed as
incurred.
Depreciation is computed using the straight-line method over the
estimated lives of the assets (5 years).
Patents Pending - Patents pending consist of direct costs incurred in
connection with the applications for patents. No patents have received
final approvals at December 31, 1996. Amortization of these costs over
the estimated life will begin upon final approvals or expensed
immediately if rejected.
7
<PAGE>
1. Significant Accounting Policies - Continued:
Research and Development - Research and development costs are charged to
expense as incurred.
Other Assets - Other assets consists of organizational costs and loan
costs associated with convertible notes. The organizational costs are
being amortized on a straight-line basis over five years. Loan costs are
being amortized over the term of the notes payable.
Net Loss Per Common Share - Except as noted below, historical net loss
per share is computed using the weighted average number of common shares
outstanding for the period. Common equivalent shares from stock options,
warrants and convertible notes payable are excluded from the computation
as their effect is antidilutive. However, pursuant to an SEC Staff
Accounting Bulletin, 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).
Reclassifications - For comparability purposes, certain reclassifications
have been made to the 1995 financial statements to conform with the 1996
financial statement presentation.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
Recently Issued Accounting Standards - The Financial Accounting Standards
Board recently issued Statement No. 128, Earnings Per Share. This
statement is effective for the year ending December 31, 1997 and
establishes standards for computing and presenting earnings per share.
Applying the provisions of this pronouncement, the Company would have
reported Basic Net Loss Per Share and Diluted Net Loss Per Share of
approximately $(.22) per share.
2. Property and Equipment:
Property and equipment consists of the following as of December 31, 1996:
<TABLE>
<S> <C>
Computers and equipment $ 51,525
Computer software 1,357
Library 1,281
-------
54,163
Less accumulated depreciation (12,754)
-------
$ 41,409
-------
-------
</TABLE>
3. Notes Payable:
On March 15, 1996, the Company entered into a written agreement to
purchase certain laboratory equipment for a sales price of $32,309,
payable in 36 monthly installments of $897, including interest, beginning
August 1, 1996. As of December 31, 1996, $28,022 in principal remains
outstanding under this agreement.
8
<PAGE>
In September, 1996, the Company completed the private placement of
$787,270 in Convertible Unsecured Notes due 2001. The private placement
provided investors with the option of either 10% Convertible Unsecured
Notes ("10% Notes") or Variable Conversion Rate Convertible Unsecured
Notes ("Variable Notes"). The 10% Notes accrue interest at the stated
rate until maturity, or conversion, and pay interest quarterly commencing
on November 30, 1996. The 10% Notes are convertible into shares of the
Company's common stock, at any time prior to maturity, at a conversion
price of $4.20 per share. The Variable Notes are non-interest bearing
and are convertible into shares of the Company's common stock, at any
time prior to maturity, at variable conversion prices ranging from $4.20
to $2.10. The variable conversion prices are based on the length of time
the investor holds the notes prior to conversion. As of December 31,
1996, there were $215,600 of 10% Notes and $571,670 of Variable Notes
outstanding. Accrued interest on the 10% Notes totaled $1,796 as of
December 31, 1996.
Future principal maturities of notes payable for each of the five years
subsequent to December 31, 1996 are as follows:
<TABLE>
Year Ending
<S> <C>
1997 $ 10,769
1998 10,769
1999 6,484
2000 -
2001 789,066
----------
Total $ 817,088
----------
----------
</TABLE>
<PAGE>
4. Income Taxes:
The components of the Company's net deferred tax asset and the tax
effects of the primary temporary differences giving rise to the Company's
deferred tax asset are as follows as of December 31, 1996:
<TABLE>
<S> <C>
Deferred compensation $ 152,000
Net operating loss carryforward 327,000
----------
Deferred tax asset 479,000
Valuation allowance (479,000)
----------
Net deferred tax asset $ -
----------
----------
</TABLE>
9
<PAGE>
Any tax benefits for the years ended December 31, 1996 and 1995 and the
period March 25, 1993 (date of inception) through December 31, 1996
computed based on statutory federal and state rates are completely offset
by valuation allowances established since realization of the deferred tax
benefits are not considered more likely than not.
5. Common Stock Warrants:
During 1996 and 1995, the Company issued warrants to purchase 8,022 and
7,608 shares, respectively, of common stock to the University of Florida
Research Foundation ("UFRFI"). The warrants were issued as part of a
license agreement with UFRFI whereby Ixion is authorized to occupy space
at a UFRFI facility. The agreement calls for the Company to pay $18 per
square foot annually for the space that the Company currently occupies,
payable at $11 per square foot in cash and $7 per square foot through
issuance of common stock warrants.
For the 7,608 warrants issued in 1995, the value assigned was $1.00 per
warrant and rent (prepaid or expense) was charged $7,608 related to this
grant. The value assigned to these warrants was based on the Company's
assessment of fair value at the time of issuance.
The 8,022 warrants issued in connection with the UFRFI license agreement
in 1996 are accounted for under the provisions of Statement of Financial
Accounting Standards Board No. 123, Accounting for Stock Based
Compensation. This standard requires equity instruments issued in
exchange for goods or services to be accounted for at the fair value of
goods or services received or equity investments issued, whichever is
more measurable. In connection with the issuance of the 1996 warrants,
the Company received cash license payment reductions of $10,857, the
value assigned to the warrants, or $1.35 per warrant, which was charged
to rent (prepaid or expense).
<PAGE>
5. Common Stock Warrants - Continued:
In addition, during 1995, the Company issued warrants to purchase 2,000
shares of common stock to an investor. These warrants were issued under
a subscription agreement for the purchase of 3,000 shares of common stock
at $3.00 per share and warrants to purchase 2,000 shares of common stock
at an exercise price of $2.00 per share. The value assigned to the
warrants, $1 per warrant, was based on the Company's assessment of fair
value at the time of issuance. The purchaser paid $5,000 in cash, and
$6,000 in the form of a promissory note.
All common stock warrants outstanding as of December 31, 1996 are
exercisable at a price of $2.00 per share and expire on August 31, 2000.
10
<PAGE>
6. Stock Option Plan:
In August, 1994, the Board of Directors adopted the 1994 Stock Option
Plan, under which 250,000 shares of common stock were reserved for
issuance upon exercise of options granted to non-employee directors,
officers, employees, members of the Scientific Advisory Board and
consultants of the Company. Options vest at the rate of 20% per year and
are exercisable generally within ten years after date of grant. Activity
under the Company's stock option plan is set forth below:
<TABLE>
<CAPTION>
Exercise
Shares Price
-------- ----------
<S> <C> <C>
Outstanding at January 1, 1994 - -
Granted 2,000 $0.02
Exercised - -
--------
Outstanding at December 31, 1994 2,000 $0.02
Granted 3,500 $0.75
Exercised - -
--------
Outstanding at December 31, 1995 5,500 $0.02 - $0.75
Granted 13,000 $3.00
Exercised - -
--------
Outstanding at December 31, 1996 18,500 $0.02 - $3.00
--------
--------
</TABLE>
6. Stock Option Plan - Continued:
The status of options outstanding at December 31, 1996 is as follows:
<TABLE>
<CAPTION>
Weighted Weighted
Exercise Average Average Number
Price Shares Remaining Life Exercise Price Exercisable
-------- ------ -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
$.02 2,000 7.5 years $.02 933
$.075 3,500 8.5 years $.075 1,108
$3.00 13,000 9.5 years $3.00 -
------ -----------
18,500 2,041
------ -----------
------ -----------
</TABLE>
11
<PAGE>
The Company applies APB Opinion No. 25 and related Interpretations in
accounting for stock issued to employees under this plan. Compensation
expense resulting from stock options is measured at the grant date based
upon the difference between the exercise price and the market value of
the common stock. All stock options granted prior to December 15, 1995
were granted at an exercise price equal to the market value at the date
of grant. Had compensation cost for the Company's stock-based
compensation plan been determined based on the fair value at the grant
dates for awards consistent with the method of FASB Statement No. 123,
the Company's reported net loss and loss per share would not have been
materially different.
7. Board Retainer Plan:
The Company does not pay cash compensation to outside members of the
Board of Directors or to members of the Company's Scientific Advisory
Board. Accordingly, in August, 1994, the Board of Directors adopted the
1994 Board Retainer Plan, under which 75,000 shares of common stock were
reserved for non-employee directors and members of the Scientific
Advisory Board.
New outside members of the Board or the Scientific Advisory Board receive
5,000 shares upon joining, and all will receive 5,000 shares annually
during the pendency of the Board Retainer Plan. Shares either vest upon
delivery or time of service. For the shares which vest over time of
service, unearned compensation equivalent to the fair value at the date
of grant is charged to capital deficiency and amortized over the service
period to compensation expense. Shares which vest upon delivery are
recorded as compensation expense upon issuance. At December 31, 1996, a
total of 50,000 shares had been granted under this Plan. Compensation
expense recognized in connection with such awards for the years ending
December 31, 1996 and 1995 was $139,295 and $7,500, respectively.
Unearned compensation of $112,706 remains to be recognized as expense
over future periods of service.
8. Related-Party Transactions:
Commencing with the founding of the Company, two executives, the
Chairman/Chief Executive Officer and the President, made loans to the
Company pursuant to the terms of a convertible promissory note (the
"Subordinated Note Agreement"). Under the terms of the Subordinated
Notes, principal amounts were convertible into common stock at a price
per share not greater than the lowest price per share (adjusted for stock
splits, stock dividends, or other dilution) at which shares of the
Company's common stock have been issued during the 12-month period
immediately prior to the notice of election to convert.
12
<PAGE>
On September 30, 1994, these officers each converted $9,000 of
Subordinated Notes into an aggregate of 900,000 shares of the Company's
common stock, at a price of $0.02 per share. On June 30, 1996, the
remaining obligation on these notes was converted by the officers into a
total of 21,544 shares of the Company's common stock, at a price of $0.75
per share.
In addition, the Company has agreed to defer the 1993, 1994 and part of
the 1995 and 1996 salaries of the Chairman/Chief Executive Officer and
the President pursuant to agreements between the Company and such
executives. Similar agreements are in effect with the Company's Senior
Vice President and Chief Scientist. Payments are to be made only upon
termination of employment (which may be by death, disability, retirement,
or otherwise) and may be in a lump sum or as an annuity. Amounts bear
interest, compounded annually, at a rate established by the Board of
Directors, currently 8.0%. These obligations are unfunded recorded
liabilities of the Company.
On October 10, 1994, Dr. A.B. Peck, who is an executive officer and
consultant, assigned to the Company all his interest in certain oxalate
technology (subject to prior rights of the University of Florida) and
agreed to an exclusive consulting agreement with the Company in exchange
for an aggregate of 650,000 shares of common stock at a price of $0.02
per share.
On November 10, 1994, members of the immediate families of the founders
of the Company, including a partnership in which the Chairman/Chief
Executive Officer has an undivided 25% interest, purchased an aggregate
of 140,000 shares of the Company's common stock pursuant to an Agreement
to Purchase Shares dated as of such date, for a price of $0.10 per share,
or $14,000 in the aggregate.
On April 16, 1996, the Chairman/Chief Executive Officer and the President
of the Company each entered into an agreement to extend the Company up to
$25,000 in the form of a bridge loan. Interest on the notes is at 8%,
but can be reset annually, at the election of either party, to prime rate
in effect on January 1 of any given year, plus 3%. In addition, on June
21, 1996, the Chairman/Chief Executive Officer agreed to increase his
loan commitment to an amount up to $150,000, if necessary, to enable the
Company to continue operations. During 1996, no amounts are outstanding
against either of these loan agreements as of December 31, 1996.
13
<PAGE>
9. Sponsored Research Agreement:
On June 5, 1996, the Company entered into an agreement with Genetics
Institute, Inc. ("GI") relating to Islet Producing Stem Cells Technology.
Under the agreement, GI will sponsor certain research by the Company and
will provide funding of $275,000 over a 12-month period, plus patent
expenses of approximately $35,000. The agreement may be extended, at
GI's option, for up to two additional six-month periods. GI will provide
funding of $50,000 for each six-month extension. The revenue under this
contract is being recognized on a pro rata basis consistent with the
period over which the research will be conducted as well as upon delivery
of certain research reports. As of December 31, 1996, the Company has
recognized approximately $139,000 under the terms of this agreement, of
which $14,000 represents reimbursable patent expenses incurred for the
period. In addition, as of December 31, 1996, the Company has recorded
deferred revenue of $100,000 in connection with this agreement.
10. Management's Plans:
The Company's financial statements for the year ended December 31, 1996
have been prepared on a going concern basis, which contemplates the
realization of assets and the settlement of liabilities and commitments
in the normal course of business. The Company incurred a net loss of
$509,671 for the year ended December 31, 1996 and, as of December 31,
1996, had a total capital deficiency of $569,319.
Management recognizes that the Company must generate additional resources
or reduce operating costs to enable it to continue operations.
Management's plans to secure other financing include a private placement,
a public offering, bridge financing or corporate collaboration. If none
of these financing possibilities are concluded, then the Company would
reduce ongoing operating expenses and seek loans from its officers in
amounts that the Company considers necessary to sustain operations for
the next year.
11. Risks and Uncertainties:
Approximately 80% of 1996 revenues consisted of revenues related to a
single sponsored research agreement which expires in 1997 unless
otherwise renewed.
The Company's product candidates are in an early stage of development.
The Company has not completed the development of any products and,
accordingly, has not received any regulatory approvals or commenced
marketing activities. No revenues have been generated from the sale of
its products.
14
<PAGE>
11. Risks and Uncertainties - Continued:
The Company's development and commercialization rights for its proposed
products are derived from its license agreements with the University of
Florida and others. To date, the Company owns no patents outright. A
deterioration in the relationship between the Company and the University
of Florida could have a material adverse effect on the Company.
The Company is aware of potentially significant risks regarding the
patent rights licensed by the Company relating to Islet Progenitor/Stem
Cells and to its oxalate technology. The Company may not be able to
commercialize its proposed diabetic products due to patent rights held by
third parties other than the Company's licensors.
12. Subsequent Events:
In February, 1997, the Company issued 1,000 shares of restricted common
stock in exchange for a patent with a remaining legal life of 13 years.
The patent was valued based on the Company's determination of the fair
market value of the stock of $7.50 per share. In addition to the
issuance of stock, the Company will be required to pay royalties of 2% of
net sales generated from the patented technology.
In February, 1997, the Company issued 10,000 shares of restricted common
stock to an employee in exchange for entering into an employment
agreement for future services.
In June, 1997, the Board of Directors authorized management of the
Company to file a registration statement with the Securities and Exchange
Commission permitting the Company to sell shares of its common stock in
an initial public offering (the "IPO").
In April through June, 1997, the Board of Directors granted 25,400 options to
purchase shares of the Company's common stock at exercise prices ranging from
$6.00 to $10.00 per share.
In June, 1997, the Board of Directors issued an additional 7,000 shares of
stock under the Company's Board Retainer Plan. Shares vest over periods
ranging from one to five years.
<PAGE>
Unaudited Financials
Ixion Biotechnology, Inc.
(A Development Stage Company)
Balance Sheet
March 31, 1997
Unaudited
Assets
Current Assets:
Cash and cash equivalent$ 373,880
Accounts receivable 39,010
Prepaid expenses 4,611
Other current assets 500
Total current asset 418,001
-------
Property and Equipment, net 39,776
-------
Other Assets:
Patents pending 164,454
Other 9,786
-------
Total other assets 174,240
-------
Total Assets $ 632,017
-------
-------
Liabilities and Capital Deficiency
Current Liabilities:
Accounts payable $ 47,595
Current portion long term debt 10,770
Accrued expenses 7,014
-------
Total current liabilities 65,378
-------
Long-Term Liabilities:
Notes payable 801,630
Deferred revenue 50,000
Deferred fees and salaries,
including interest 392,647
---------
Total long-term liab. 1,244,277
---------
Total liabilities 1,309,655
---------
Capital Deficiency:
Common stock, $.01 par value; authorized 4,000,000,
issued and outstanding 2,454,544 shares at March 31 24,545
Common stock warrants outstanding 21,631
Additional paid-in capital 828,198
Note receivable from shareholder -6,000
Deficit accumulated during the
development stage -1,341,906
Less unearned compensation -204,106
---------
Total capital deficiency -677,637
---------
Total Liabilities and Capital Deficiency $ 632,017
---------
---------
See accompanying notes to condensed financial statements
<PAGE>
<TABLE>
<CAPTION>
(A Development Stage Company) For the
Period
March
25,
Statements of Operations 1993
(Date)
of
inception)
Three Months Ended
through
March 31, March
31,
1997 1996 1997
---------- ----------- --------
- ---
Unaudited
Unaudited
<S> <C> <C> <C>
Revenues:
Income under research ag$ $ 87,312 $ - $
226,391
Income from SBIR Grant - -
20,000
Interest income 4,435 599
17,255
Other income 899 818
11,714
--------- -------- -------
- ---
Total revenues 92,646 1,416
275,360
--------- -------- -------
- ---
Expenses:
Operating, general and
administrative 107,396 61,362
868,934
Research and development 135,653 39,612
667,033
Interest 13,154 5,779
81,299
--------- --------- -------
- ---
Total expenses 256,203 106,753
1,617,266
--------- --------- -------
- ---
Net Loss $-163,557 $-105,337 $-
1,341,906
--------- -------- -------
- ---
--------- --------- -------
- ---
Net Loss per Common Share $ -0.07 $ -0.04
--------- --------- -------
- ---
--------- --------- -------
- ---
Weighted Average Common Shares 2,449,533 2,373,000
--------- ----------
--------- ----------
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
<TABLE>
<CAPTION>
Statements of Cash Flows
For the Period
March 25, 1993
Three Months
(Date of inception)
Ended March 31,
through
1997
1996 March 31, 1997
Unaudited Unaudited
Cash Flows from Operating Activities:
<S> <C>
<C> <C>
Net loss $ -163,557
$ -105,337 $ -1,341,906
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 2,787
2,064 15,716
Amortization 791
72 1,617
Stock warrants issued under license agreement 21,631
1,902 42,096
Stock compensation 28,600
- - 175,395
Decrease (increase) in prepaid expenses and
other current assets 3,167
7,924 -4,936
Decrease (increase) in accounts receivable -30,851
- - -39,010
Increase (decrease) in deferrred revenue -50,000
- - 50,000
Increase (decrease) in accounts payable and
accrued expenses -10,360
10,992 55,952
Increase in deferred fees and salaries 7,609
39,542 366,095
Increase in interest payable -
- - 33,198
---------
- ------- -------
Net cash used in operating activities -190,181
- -42,841 -645,782
---------
- ------- -------
Cash Flows from Investing Activities:
Purchase of property and equipment -1,161
- - -27,301
Organization costs -
- -109 -436
Payments for patents pending -46,317
- -15,589 -165,798
---------
- -------- -------
Net cash used in investing activities -47,478
- -15,698 -195,535
---------
- -------- -------
Cash Flows from Financing Activities:
Proceeds from issuance of subordinated notes
payable to related parties -
- - 30,307
Proceeds from issuance of convertible notes payable -
- - 787,270
Proceeds from issuance of common stock -
- - 406,700
Payment of loan costs -
- - -11,080
---------
- -------- -------
Net cash provided by financing activities 0
0 1,213,197
---------
- -------- -------
Net Increase In Cash and Cash Equivalents -237,659
- -58,539 373,880
Cash and Cash Equivalents at Beginning of Period 611,539
80,419
---------
- -------- -------
Cash and Cash Equivalents at End of Period $ 373,880
$ 21,880 $ 373,880
---------
- -------- -------
---------
- -------- -------
</TABLE>
See accompanying notes to condensed financial statements
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements
Three Month Periods Ended March 31, 1997
1. Basis Of Presentation:
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments, consisting only of normal recurring
accruals, necessary to present fairly the Company's financial position,
results of operations and cash flows for the periods presented. The results
of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
The condensed financial statements should be read in conjunction with the
Company's annual financial statements for the year ended December 31, 1996.
2. Income Taxes:
The components of the Company's net deferred tax asset and the tax effects
of the primary temporary differences giving rise to the Company's deferred
tax asset are as follows as of March 31, 1997:
Deferred compensation $155,000
Net operating loss carryforward 392,000
Deferred tax asset 547,000
Valuation allowance (547,000)
Net deferred tax asset $ -
3. Recent Accounting Pronouncements:
In February, 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings Per Share. This statement, which is effective
for the Company's annual report for the year ended December 31, 1997,
establishes new requirements for the calculation, presentation and
disclosure of earnings per share. The Company estimates that earnings per
share presented in accordance with Statement No 128 would not differ
materially from what is currently presented.
4. Risks and Uncertainties:
Approximately 94% of revenues for the quarter ended March 31, 1997
consisted of revenues related to a single sponsored research agreement
which expires in 1997 unless otherwise renewed.
The Company's product candidates are in an early stage of development. The
Company has not completed the development of any products and, accordingly,
has not received any regulatory approvals or commenced marketing
activities. No revenues have been generated from the sale of its products
The Company's development and commercialization rights for its proposed
products are derived from its license agreements with the University of
Florida and others. To date, the Company owns no patents outright. A
deterioration in the relationship between the Company and the University of
Florida could have a material adverse effect on the Company.
<PAGE>
Ixion Biotechnology, Inc.
(A Development Stage Company)
Notes to Condensed Financial Statements - Continued
Three Month Periods Ended March 31, 1997
5. Risks and Uncertainties (continued):
The Company is aware of potentially significant risks regarding the patent
rights licensed by the Company relating to Islet Progenitor Stem Cells and
to its oxalate technology. The Company may not be able to commercialize
its proposed diabetic products due to patent rights held by third parties
other than the Company's licensors.
<PAGE>
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Officers.
Under Delaware law, a corporation may indemnify any person who was or is
a party or is threatened to be made a party to an action (other than an action
by or in the right of the corporation) by reason of his service as a director
or officer of the corporation, or his service, at the corporation's request,
as a director, officer, employee or agent of another corporation or other
enterprise, against expenses (including attorneys' fees) that are actually and
reasonably incurred by him ("Expenses"), and judgments, fines and amounts paid
in settlement that are actually and reasonably incurred by him, in connection
with the defense or settlement of such action, provided that he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Although Delaware law permits a corporation to indemnify any person referred
to above against Expenses in connection with the defense or settlement of an
action by or in the right of the corporation, provided that he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests, if such person has been judged liable to the
corporation, indemnification is only permitted to the extent that the Court of
Chancery (or the court in which the action was brought) determines that,
despite the adjudication of liability, such person is entitled to indemnity
for such Expenses as the court deems proper. The General Corporation Law of
the State of Delaware also provides for mandatory indemnification of any
director, officer, employee or agent against Expenses to the extent such
person has been successful in any proceeding covered by the statute. In
addition, the General Corporation Law of the State of Delaware provides the
general authorization of advancement of a director's or officer's litigation
expenses in lieu of requiring the authorization of such advancement by the
board of directors in specific cases, and that indemnification and advancement
of expenses provided by the statute shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may
be entitled under any bylaw, agreement or otherwise.
The Certificate of Incorporation (the "Certificate") of the Company
provides that, to the fullest extent permitted by applicable law, as amended
from time to time, the Company will indemnify any person who was or is a party
or is threatened to be made a party to an action, suit or proceeding (whether
civil, criminal, administrative or investigative) by reason of the fact that
such person is or was director, officer, employee or agent of the Company or
serves or served any other enterprise at the request of the Company.
In addition, the Certificate provides that a director of the Company
shall not be personally liable to the Company or its stockholders for monetary
damages for breach of the director's fiduciary duty. However, the Certificate
does not eliminate or limit the liability of a director for any of the
following reasons: (i) a breach of the director's duty of loyalty to the
Company or its stockholders; (ii) acts or omissions not in good faith or that
involve intentional misconduct or knowing violation of law; or (iii) a
transaction from which the director derived an improper personal benefit.
The Company intends to purchase and maintain Directors' and Officers'
Insurance as soon as the Board of Directors determines practicable, in amounts
which they consider appropriate, insuring the directors against any liability
arising out of the director's status as a director of the Company regardless
of whether the Company has the power to indemnify the director against such
liability under applicable law.
Item 25. Other Expenses of Issuance and Distribution.
SEC registration fee.............................................$ 1,818
Printing expenses................................................ 20,000
Distribution .................................................... 18,000
Advertising ..................................................... 50,000
Fees and expenses of counsel..................................... 30,000
Fees and expenses of accountants................................. 20,000
Premium on D & O insurance....................................... 25,000
Transfer agent and registrar fees................................ 4,000
Warrant agent fees............................................... 1,500
Blue sky fees and expenses....................................... 40,000
Miscellaneous.................................................... 11,394
Total.......................................................$221,712
* To be filed by amendment.
Except for the SEC registration, all of the foregoing expenses have been
estimated. All expenses will be paid by the Company.
Item 26. Recent Sales of Unregistered Securities.
Set forth below is information as to securities sold by Ixion within the
past three years which were not registered under the Securities Act of 1933
(the "Act"). The Company issued all such securities in reliance upon Section
4(2) under the Act. The sales were conducted as non-public sales to a limited
number of investors. No underwriters were involved in any of the sales so
there were no underwriting discounts or commissions. All of such securities
are deemed to be restricted securities for the purposes of the Securities Act.
All certificates representing such issued and outstanding restricted
securities of the Company have been properly legended and the Company has
issued "stop transfer" instructions to its transfer agent with respect to such
securities, which legends and stop transfer instructions are presently in
effect unless such securities have been registered under the Securities Act or
have been transferred pursuant to an appropriate exemption from the
registration provisions of the Securities Act.
(a) On September 30, 1994, two directors and senior officers of the
Company, who may be deemed promoters, converted an aggregate of
$18,000 of cash loans made to the Company under the terms of a
subordinated convertible note agreement into a total of 900,000
shares of Common Stock, at a price of $0.02 per share. In
addition, a director was issued 5,000 shares of Common Stock under
the Company's Board Retainer Plan for service as a director valued
at $100 or $0.02 per share, and the Company's tax advisor was
issued 5,000 shares of Common Stock in exchange for services
valued at $100 or $0.02 per share.
(b) On October 17, 1994, a director and senior officer of the
Company, who may be deemed a promoter, received 650,000 shares of
Common Stock in exchange for all his interest in certain oxalate
technology and his agreement to an exclusive consulting agreement
with the Company, valued at the price of $13,000 or $0.02 per
share.
(c) On October 31, 1994, a consultant to the Company canceled $1,000
of deferred consulting fees in exchange for 10,000 shares of
Common Stock at the price of $0.10 per share.
(d) On November 10, 1994, 10 members of the immediate families of the
founders of the Company, as well as a partnership whose general
partners include a director and senior officer of the Company and
members of his immediate family, purchased a total of 140,000
shares of Common Stock for a price of $14,000 or $0.10 per share.
(e) From March 20, 1995 to May 31, 1995, the Company sold an
aggregate of 500,000 shares of Common Stock to 26 accredited
investors and three unaccredited investors for an aggregate of
$375,000 or $.75 per share.
(f) On May 31, 1995, the Company issued 10,000 shares of Common Stock
(5,000 shares to each of two directors) under the Company's Board
Retainer Plan for services as directors valued at an aggregate of
$7,500 or $.75 per share.
(g) On September 21, 1995, the Company sold 3,000 shares of Common
Stock (together with 2,000 warrants to purchase Common Stock at an
exercise price of $2.00 per share expiring in 2000) to an
accredited investor for $5,000 in cash and a note due April 1997
for $6,000 or a price of $3.00 per share and $1.00 per warrant.
(h) On November 11, 1995, the Company issued warrants to purchase
7,608 shares of Common Stock at an exercise price of $2.00 per
share expiring in 2000 to an institution in partial payment of
rent for the Company's facilities, valued at $1.00 per warrant.
(i) In August, October, and November, 1996, the Company issued
warrants to purchase an aggregate of 8,022 shares of Common Stock
at an exercise price of $2.00 per share expiring in 2000 to an
institution in partial payment of rent for the Company's
facilities, valued at $1.35 per warrant.
(j) On June 10, 1996, the Company issued 34,000 shares of Common
Stock (5,000 shares to each of two directors, 5,000 shares to each
of two members of the Scientific Advisory Board, both under the
Company's Board Retainer Plan for services as directors or
scientific advisors and 14,000 shares of Common Stock to a senior
officer of the Company as a hiring bonus for services to be
rendered) valued at an aggregate of $92,000 (a portion of which is
unearned compensation) or $3.00 per share.
(k) On June 30, 1996, two directors and senior officers of the
Company, who may be deemed promoters, converted an aggregate of
$16,158 of cash loans made to the Company under the terms of a
subordinated convertible note agreement into a total of 21,544
shares of Common Stock, at a price of $.75 per share.
(l) On September 15, 1996, the Company issued 10,000 shares of Common
Stock (5,000 shares to each of two members of the Scientific
Advisory Board) under the Company's Board Retainer Plan for
services as scientific advisors valued at $100,000 (a portion of
which is unearned compensation) per share.
(m) On October 10, 1996, the Company issued 5,000 shares of Common
Stock to a member of the Scientific Advisory Board under the
Company's Board Retainer Plan for services as a scientific advisor
valued at $50,000 (a portion of which is unearned compensation)
per share.
(n) In October and November, 1996, the Company issued an aggregate of
$787,270 of Convertible Unsecured Notes due 2001 to accredited
investors. The Notes are convertible at any time prior to
maturity into a maximum of 323,557 shares of Common Stock at
conversion prices ranging from $4.20 to $2.10. The conversion
prices are based on the length of time the investor holds the
Notes prior to conversion.
(o) On February 11, 1997, the Company issued 1,000 shares of Common
Stock to two inventors in exchange for an exclusive license of a
patent entitled "Method for the Selective Control of Weeds, Pests
and Microbes," valued at $7,500 or $7.50 per share and 10,000
shares to an employee as a hiring bonus for services to be
rendered (a portion of which is unearned compensation), valued at
$100,000 (a portion of which is unearned compensation) or $10.00
per share.
(p) On June 27, 1997, the Company issued 7,000 shares of Common Stock
(1,000 shares to each of two directors, and 1,000 shares to each
of five members of the Scientific Advisory Board, all under the
Company's Board Retainer Plan for services as directors or
scientific advisors) valued at $70,000 (a portion of which is
unearned compensation) or $10.00* per share.
(q) On July 1, 1997, the Company issued 3,000 shares to an employee
as a hiring bonus for services to be rendered (a portion of which
is unearned compensation) valued at $30,000 or $10.00* per share.
* Based upon an assumed offering price of $10.00 per share.
Item 27. Exhibits
Exhibit
Number Description
3.1 Certificate of Incorporation of Registrant
3.2 Certificate of Amendment to Certificate of Incorporation of Registrant
3.3 Certificate of Amendment to Certificate of Incorporation of Registrant
3.4 Bylaws of Registrant, as amended and restated
*4.1 Form of Registrant's Common Stock Certificate
*4.2 Form of Registrant's Charitable Benefit Warrant Certificate
4.3 Charitable Benefit Warrant Agreement
4.4 Warrant Agreement with Jeffrey W. Seel, dated November 6, 1995
4.5 Warrant Agreement with the University of Florida Research Foundation,
Inc., dated November 6, 1995
4.6 Warrant Agreement with the University of Florida Research Foundation,
Inc., dated August 1, 1996
4.7 Warrant Agreement with the University of Florida Research Foundation,
Inc., dated October 1, 1996
4.8 Warrant Agreement with the University of Florida Research Foundation,
Inc., dated November 6, 1996
5.1 Opinion of Bruce Brashear, Esq. regarding legality
*5.2 Opinion of Thacher Proffitt & Wood regarding certain tax matters
10.1 Chattel Mortgage Agreement with Carl Therapeutic, Inc., dated as of
January 1, 1996
10.2 Consulting Agreement with Brandywine Consultants, Inc., dated
December 12, 1996
10.3 Consulting Agreement with Ammon B. Peck, dated February 21, 1997
10.4 Consulting Agreement with David C. Peck, dated July 1, 1996
10.5 Convertible Promissory Note with Weaver H. Gaines, dated March 31,
1993
10.6 Convertible Promissory Note with David C. Peck, dated October 15,
1993
10.7 Demand Promissory Note, Bridge Loan with Weaver H. Gaines, dated
April 15, 1996
10.8 Demand Promissory Note, Bridge Loan with David C. Peck, dated April
15, 1996
10.9 Deferred Compensation Plan Agreement with Weaver H. Gaines, dated
January 1, 1994
10.10 Deferred Compensation Plan Agreement with Ammon B. Peck, dated June
1, 1994
10.11 Deferred Compensation Plan Agreement with David C. Peck, dated April
1, 1994
10.12 Agreement to Purchase Shares, dated as of October 10, 1994
10.13 Note Purchase Agreement, dated as of September 13, 1996
10.14 Incubator License Agreement with the University of Florida Research
Foundation, Inc., dated June 26, 1995
10.15 Amendment No. 1, dated July 31, 1996 to Incubator License Agreement
with the University of Florida Research Foundation, Inc.
10.16 Amendment No. 2, dated October 1, 1996 to Incubator License
Agreement with the University of Florida Research Foundation, Inc.
10.17 Amendment No. 3, dated November 6, 1996 to Incubator License
Agreement with the University of Florida Research Foundation, Inc.
10.18 Amendment No. 4, dated January 21, 1997 to Incubator License
Agreement with the University of Florida Research Foundation, Inc.
10.19 Patent License Agreement with Randy S. Fischer and Roy A. Jensen for
U.S. Patent No. 5,187,071, "Method for the Selective Control of Weeds,
Pests, and Microbes," dated February 11, 1997
10.20 Patent License Agreement with Research Component with the University
of Florida Research Foundation, Inc. relating to Oxalobacter
formigenes, dated January 11, 1995 (1)
*10.21 Amendment No. 1 to Patent License Agreement with Research Component
with the University of Florida Research Foundation, Inc. relating to
Oxalobacter formigenes, dated December 20, 1995(1)
10.22 Amendment No. 2 to Patent License Agreement with Research Component
with the University of Florida Research Foundation, Inc. relating to
Oxalobacter formigenes, dated October 9, 1996 (1)
10.23 Patent License Agreement with Research Component with the University
of Florida Research Foundation, Inc. relating to Pancreatic Stem
Cells, dated February 17, 1995 (1)
10.24 Amendment No. 1 to Patent License Agreement with Research Component
with the University of Florida Research Foundation, Inc. relating to
Pancreatic Stem Cells, dated October 9, 1996 (1)
10.25 Patent License Agreement with Milton J. Allison, dated June 23,
1997.(1)
10.26 Sponsored Research Agreement with Genetics Institute, Inc.,
dated June 5, 1996 (1)
10.27 Employment Agreement with Weaver H. Gaines, dated August 31, 1994
10.28 Employment Agreement with David C. Peck, dated August 31, 1994
10.29 1994 Stock Option Plan, as amended
10.30 1994 Board Retainer Plan, as amended
10.31 Consulting Agreement with Ammon Peck, dated October 6, 1994
10.32 Patent License Agreement with UFRF dated February, 1995 (1)
10.33 Amendment No. 5 to Incubator License Agreement
11.1 Statement regarding computation of earnings per share (included as
Note 3 in Prospectus)
24.1 Consent of Independent Accountants.
24.2 Consent of Bruce Brashear, Esq. (included in Exhibit 5.1).
*24.3 Consent of Thacher, Proffitt & Wood (included in Exhibit 5.2)
25. Power of Attorney (included with the signature page to the
registration statement)
27 Financial Data Schedule
Confidential information is omitted and identified by a (1) and filed
separately with the Commission pursuant to a request for Confidential
Treatment.
* To be filed by amendment.
Item 28. Undertakings.
(a) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, 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 its counsel the matter had 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.
(b) The Registrant hereby undertakes that for purposes of determining
any liability under the Securities Act, (i) the information omitted from the
form of prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a 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 this Registration Statement as of the time it was
declared effective, and (ii) 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.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this
registration statement to be signed on its behalf by the undersigned, in the
city of Alachua, state of Florida, on the day of , 1997.
IXION BIOTECHNOLOGY, INC.
By: /S/ Weaver H. Gaines
Weaver H. Gaines, Chairman of the Board and Chief
Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Weaver H. Gaines and David C. Peck, and each of
them, his true and lawful attorneys-in-fact and agents, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities (including his capacity as a director and/or officer of IXION
BIOTECHNOLOGY, INC.) to sign any or all amendments (including post-effective
amendments) to this Registration Statement, 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 said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on May , 1997, by the following
persons in the capacities indicated.
SIGNATURE TITLE
Chairman of the
/S/ Weaver H. Gaines Board, Chief Executive Officer,
Weaver H. Gaines and Director
President, Chief
/S/ David C. Peck Financial Officer and Director
David C. Peck
/S/ Kimberly A. Ramsey Controller
Kimberly A. Ramsey
/S/ David M. Margulies Director
David M. Margulies
/S/ Vincent P. Mihalik Director
Vincent P. Mihalik
CERTIFICATE OF INCORPORATION
OF
IXION BIOTECHNOLOGY, INC.
__________
The undersigned, a natural person, for the purpose of organizing a
corporation for conducting the business and promoting the purposes hereinafter
stated, under the provisions and subject to the requirements of the laws of
the State of Delaware (particularly Chapter 1, Title 8 of the Delaware Code
and the acts amendatory thereof and supplemental thereto, and known,
identified, and referred to as the "General Corporation Law of the State of
Delaware"), hereby certifies that:
FIRST: The name of the corporation (hereinafter called the "corporation")
is IXION BIOTECHNOLOGY, INC.
SECOND: The address, including street, number, city, and county, of the
registered office of the corporation in the State of Delaware is 32 Loockerman
Square, Suite L-100, City of Dover 19901, County of Kent; and the name of the
registered agent of the corporation in the State of Delaware at such address
is The Prentice-Hall Corporation System, Inc.
THIRD: 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 the State of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is one thousand, all of which are without par value.
All such shares are of one class and are shares of Common Stock.
FIFTH: The name and the mailing address of the incorporator are as
follows:
NAME MAILING ADDRESS
Athena Amaxas 15 Columbus Circle
New York, N.Y. 10023-7773
SIXTH: The corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
the provisions of s 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
corporation under the provisions of s 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in
number representing three fourths in value of the creditors or class of
creditors, and/or of the stockholders or class of stockholders of this
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of this corporation, as the case may
be, and also on this corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the corporation, and in further definition, limitation, and
regulation of the powers of the corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs of
the corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total number of directors'' shall be deemed to
have the same meaning, to wit, the total number of directors which the
corporation would have if there were no vacancies. No election of
directors need be by written ballot.
2. After the original or other Bylaws of the corporation have been
adopted, amended, or repealed, as the case may be, in accordance with
the provisions of s 109 of the General Corporation Law of the State of
Delaware, and, after the corporation has received any payment for any of
its stock, the power to adopt, amend, or repeal the Bylaws of the
corporation may be exercised by the Board of Directors of the
corporation; provided, however, that any provision for the
classification of directors of the corporation for staggered terms
pursuant to the provisions of subsection (d) of s 141 of the General
Corporation Law of the State of Delaware shall be set forth in an
initial Bylaw or in a Bylaw adopted by the stockholders entitled to vote
of the corporation unless provisions for such classification shall be
set forth in this certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder thereof
to notice of, and the right to vote at, any meeting of stockholders.
Whenever the corporation shall be authorized to issue more than one
class of stock, no outstanding share of any class of stock which is
denied voting power under the provisions of the certificate of
incorporation shall entitle the holder thereof to the right to vote at
any meeting of stockholders except as the provisions of paragraph (2) of
subsection (b) of s 242 of the General Corporation Law of the State of
Delaware shall otherwise require; provided, that no share of any such
class which is otherwise denied voting power shall entitle the holder
thereof to vote upon the increase or decrease in the number of
authorized shares of said class.
NINTH: The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of
paragraph (7) of subsection (b) of s 102 of the General Corporation Law of the
State of Delaware, as the same may be amended and supplemented.
TENTH: The corporation shall, to the fullest extent permitted by the
provisions of s 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, indemnify any and all persons
whom it shall have power to indemnify under said section from and against any
and all of the expenses, liabilities, or other matters referred to in or
covered by said section, and the indemnification provided for herein shall not
be deemed exclusive of any other rights to which those indemnified may be
entitled under any Bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding such office, and shall continue as to
a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such
a person.
ELEVENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and
all rights at any time conferred upon the stockholders of the corporation by
this certificate of incorporation are granted subject to the provisions of
this Article ELEVENTH.
Signed on March 24, 1993
/s/ Athena Amaxas
Incorporator
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
Ixion Biotechnology, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company") through the Chairman of its Board of Directors certifies in
accordance with Section 103 of the General Corporation Law:
1. That the Board of Directors of the Company, by unanimous written
consent in accordance with Section 141(f) of the General Corporation Law,
adopted a resolution proposing and declaring advisable the following amendment
to the certificate of incorporation of the Company, and directed that such
proposed amendment be considered by the stockholders in accordance with
Section 242(b) of the General Corporation Law:
Resolved, that the certificate of incorporation of the Company be
amended by deleting the Article numbered "FOURTH" and replacing it in its
entirety as follows:
"FOURTH: The total number of shares of stock which the
corporation shall have authority to issue is 2,400,000 all of
which are with par value of $0.01 per share. All such shares are
of one class and are shares of Common Stock."
2. That the stockholders have given their unanimous written consent to
said amendment in accordance with the provisions of Section 228 of the General
Corporation Law, and said unanimous written consent was filed with the
Company.
3. That the above amendment was duly adopted in accordance with the
General Corporation Law.
4. That the capital of the Company shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, the Company has executed this certificate and caused
its corporate seal to be affixed hereto on August 31, 1994.
Ixion Biotechnology, Inc.
By
Weaver H. Gaines,
Chairman of the Board
[Corporate Seal]
Attest:
Theodore L. Snow, Assistant Secretary
STATE OF FLORIDA )
: ss.:
COUNTY OF ALACHUA )
On this 31st day of August, 1994, before me the undersigned, a Notary
Public for the State of Florida, appeared Weaver H. Gaines and Theodore L.
Snow (known to me), the Chairman of the Board and Assistant Secretary of the
Company that executed the forgoing certificate of amendment of certificate of
incorporation, and acknowledged to me that the forgoing are their acts and
deeds and the act and deed of the Company and that the facts stated therein
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate above written.
Notary Public for the State of Florida
(Notarial Seal)
CERTIFICATE OF SECOND AMENDMENT
OF CERTIFICATE OF INCORPORATION
Ixion Biotechnology, Inc., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware (the
"Company") through the Chairman of its Board of Directors certifies in
accordance with Section 103 of the General Corporation Law:
1. That the Board of Directors of the Company, by unanimous written
consent in accordance with Section 141(f) of the General Corporation Law,
adopted a resolution proposing and declaring advisable of the following
amendment to the certificate of incorporation of the Company, and directed
that such proposed amendment be considered by the stock holders in accordance
with Section 242(b) of the General Corporation Law:
RESOLVED, that the certificate of incorporation be amended by deleting
the Article numbered FOURTH and replacing in its entirety as follows:
"FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 4,000,000 all of which are with
par value $0.01 per share. All such shares are of one class and are shares of
Common Stock."
2. That the stockholders have given their unanimous written consent to
said amendment
in accordance with the provisions of Section 228 of the General Corporation
Law, and said unanimous consent was filed with the Company.
3. That the above amendment was duly adopted in accordance with the
General Corporation Law.
4. That the capital of the Company shall not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, the Company has executed this certificate and caused its
corporate seal to be affixed hereto on January 31, 1995
Ixion Biotechnology, Inc.
By
Weaver H. Gaines,
Chairman of the Board
[Corporate Seal]
Attest:
Theodore L. Snow, Assistant Secretary
STATE OF FLORIDA )
: ss.:
COUNTY OF ALACHUA )
On this 31st day of January, 1995, before me the undersigned, a Notary
Public for the State of Florida, appeared Weaver H. Gaines and Theodore L.
Snow (known to me), the Chairman of the Board and Assistant Secretary of the
Company that executed the forgoing certificate of amendment of certificate of
incorporation, and acknowledged to me that the forgoing are their acts and
deeds and the act and deed of the Company and that the facts stated therein
are true.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate above written.
Notary Public for the
State of Florida
(Notarial Seal)
RESTATED
BYLAWS
OF
IXION BIOTECHNOLOGY, INC.
(a Delaware corporation)
(As of August 31, 1994)
ARTICLE I
STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing
stock in the corporation shall be signed by, or in the name of, the
corporation by the Chairman or Vice-Chairman of the Board of Directors, if
any, or by the President or a Vice-President and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary of the
corporation. Any or all the signatures on any such 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 shall have
ceased to be such officer, transfer agent, or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent, or registrar at the date of
issue.
Whenever the corporation shall be authorized to issue more than one
class of stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or of any such
partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated
shares in place of any certificate theretofore issued by it, alleged to have
been lost, stolen, or destroyed, and the Board of Directors may require the
owner of the lost, stolen, or destroyed certificate, or his legal
representative, to give the corporation a bond sufficient to indemnify the
corporation against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate or uncertificated shares.
2. UNCERTIFICATED SHARES. Subject to any conditions imposed by the
General Corporation Law, 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 the stock of the corporation shall be uncertificated shares. Within a
reasonable time after the issuance or transfer of any uncertificated shares,
the corporation shall send to the registered owner thereof any written notice
prescribed by the General Corporation Law.
3. FRACTIONAL SHARE INTERESTS. The Corporation may, but shall not
be required to, issue fractions of a share. If the corporation does not issue
fractions of a share, it shall (1) arrange for the disposition of fractional
interests by those entitled thereto, (2) pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or (3) issue scrip or warrants in registered form
(either represented by a certificate or uncertificated) or bearer form
(represented by a certificate) which shall entitle the holder to receive a
full share upon the surrender of such scrip or warrants aggregating a full
share. A certificate for a fractional share or an uncertificated fractional
share shall, but scrip or warrants shall not unless otherwise provided
therein, entitle the holder to exercise voting rights, to receive dividends
thereon, and to participate in any of the assets of the corporation in the
event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not
exchanged for certificates representing the full shares or uncertificated full
shares before a specified date, or subject to the conditions that the shares
for which scrip or warrants are exchangeable may be sold by the corporation
and the proceeds thereof distributed to the holders of scrip or warrants, or
subject to any other conditions which the Board of Directors may impose.
4. STOCK TRANSFERS. Upon compliance with provisions restricting
the transfer or registration of transfer of shares of stock, if any, transfers
or registration of transfers of shares of stock of the corporation shall be
made only on the stock ledger of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of attorney duly
executed and filed with the Secretary of the corporation or with a transfer
agent or a registrar, if any, and, in the case of shares represented by
certificates, on surrender of the certificate or certificates for such shares
of stock properly endorsed and the payment of all taxes due thereon.
5. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may
determine the stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, the Board of Directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which record date shall not be more than sixty nor less than ten days before
the date of such meeting. If no record date is fixed by the Board of
Directors, 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 day next preceding the day on which notice is given, or, if notice is
waived, at the close of business on the 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; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting. In order that the
corporation may determine the stockholders entitled to consent to corporate
action in writing without a meeting, the Board of Directors may fix a record
date, which record date shall not precede the date upon which the resolution
fixing the record date is adopted by the Board of Directors, and which date
shall not be more than ten days after the date upon which the resolution
fixing the record date is adopted by the Board of Directors. If no record
date has been fixed by the Board of Directors, the record date for determining
the stockholders entitled to consent to corporate action in writing without a
meeting, when no prior action by the Board of Directors is required by the
General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to its registered office in the State of Delaware,
its principal place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders
are recorded. Delivery made to the corporation's registered office shall be
by hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by the General Corporation Law, the record date
for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the day on
which the Board of Directors adopts the resolution taking such prior action.
In order that the corporation may determine 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 a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, 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 resolution relating thereto.
6. MEANING OF CERTAIN TERMS. As used herein in respect of the
right to notice of a meeting of stockholders or a waiver thereof or to
participate or vote thereat or to consent or dissent in writing in lieu of a
meeting, as the case may be, the term "share" or "shares" or "share of stock"
or "shares of stock" or "stockholder" or "stockholders" refers to an
outstanding share or shares of stock and to a holder or holders of record of
outstanding shares of stock when the corporation is authorized to issue only
one class of shares of stock, and said reference is also intended to include
any outstanding share or shares of stock and any holder or holders of record
of outstanding shares of stock of any class upon which or upon whom the
certificate of incorporation confers such rights where there are two or more
classes or series of shares of stock or upon which or upon whom the General
Corporation Law confers such rights notwithstanding that the certificate of
incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder;
provided, however, that no such right shall vest in the event of an increase
or a decrease in the authorized number of shares of stock of any class or
series which is otherwise denied voting rights under the provisions of the
certificate of incorporation, except as any provision of law may otherwise
require.
7. STOCKHOLDER MEETINGS.
- TIME. The annual meeting shall be held on the date and at the
time fixed, from time to time, by the directors, provided, that the first
annual meeting shall be held on a date within thirteen months after the
organization of the corporation, and each successive annual meeting shall be
held on a date within thirteen months after the date of the preceding annual
meeting. A special meeting shall be held on the date and at the time fixed by
the directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from
time to time, fix. Whenever the directors shall fail to fix such place, the
meeting shall be held at the registered office of the corporation in the State
of Delaware.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall
be given, stating the place, date, and hour of the meetings and stating the
place within the city or other municipality or community at which the list of
stockholders of the corporation may be examined. The notice of an annual
meetings shall state that the meeting is called for the election of directors
and for the transaction of other business which may properly come before the
meeting, and shall (if any other action which could be taken at a special
meeting is to be taken at such annual meeting) state the purpose or purposes.
The notice of a special meeting shall in all instances state the purpose or
purposes for which the meeting is called. The notice of any meeting shall
also include, or be accompanied by, any additional statements, information, or
documents prescribed by the General Corporation Law. Except as otherwise
provided by the General Corporation Law, a copy of the notice of any meeting
shall be given, personally or by mail, not less than ten days nor more than
sixty days before the date of the meeting, unless the lapse of the prescribed
period of time shall have been waived, and directed to each stockholder at his
record address or at such other address which he may have furnished by request
in writing to the Secretary of the corporation. Notice by mail shall be
deemed to be given when deposited, with postage thereon prepaid, in the United
States Mail. If a meeting is adjourned to another time, not more than thirty
days hence, and/or to another place, and if an announcement of the adjourned
time and/or place is made at the meeting, it shall not be necessary to give
notice of the adjourned meeting unless the directors, after adjournment, fix a
new record date for the adjourned meeting. Notice need not be given to any
stockholder who submits a written waiver of notice signed by him before or
after the time stated therein. Attendance of a stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends the 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.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days before every
meeting of stockholders, a complete list of the stockholders, 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 days prior to the
meeting, either at a place within the city or other municipality or community
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. The stock ledger shall be the only evidence as to
who are the stockholders entitled to examine the stock ledger, the list
required by this section or the books of the corporation, or to vote at any
meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be
presided over by one of the following officers in the order of seniority and
if present and acting - the Chairman of the Board, if any, the Vice-Chairman
of the Board, if any, the President, a Vice-President, or, if none of the
foregoing is in office and present and acting, by a chairman to be chosen by
the stockholders. The Secretary of the corporation, or in his absence, an
Assistant Secretary, shall act as secretary of every meeting, but if neither
the Secretary nor an Assistant Secretary is present the Chairman of the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another
person or persons to act for him by proxy in all matters in which a
stockholder is entitled to participate, whether by waiving notice of any
meeting, voting or participating at a meeting, or expressing consent or
dissent without a meeting. Every proxy must be signed by the stockholder or
by his attorney-in-fact. No proxy shall be voted or acted upon after three
years from its date unless such proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and,
if, and only as long as, it is coupled with an interest sufficient in law to
support an irrevocable power. A proxy may be made irrevocable regardless of
whether the interest with which is it coupled is an interest in the stock
itself or an interest in the corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but
need not, appoint one or more inspectors of election to act at the meeting or
any adjournment thereof. If an inspector or inspectors are not appointed, the
person presiding at the meeting may, but need not, appoint one or more
inspectors. In case any person who may be appointed as an inspector fails to
appear or act, the vacancy may be filled by appointment made by the directors
in advance of the meeting or at the meeting by the person presiding thereat.
Each inspector, if any, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of inspectors at
such meeting with strict impartiality and according to the best of his
ability. The inspectors, if any, shall determine the number of shares of
stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, the validity and effect
of proxies, and shall receive votes, ballots, or consents, hear and determine
all challenges and questions arising in connection with the right to vote,
count and tabulate all votes, ballots, or consents, determine the result, and
do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question, or matter determined by him or them and execute a
certificate of any fact found by him or them. Except as otherwise required by
subsection (e) of Section 231 of the General Corporation Law, the provisions
of that Section shall not apply to the corporation.
- QUORUM. The holders of a majority of the outstanding shares of
stock shall constitute a quorum at a meeting of stockholders for the
transaction of any business. The stockholders present may adjourn the meeting
despite the absence of a quorum.
- VOTING. Each share of stock shall entitle the holder thereof to
one vote. Directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled
to vote on the election of directors. Any other action shall be authorized by
a majority of the votes cast except where the General Corporation Law
prescribes a different percentage of votes and/or a different exercise of
voting power, and except as many be otherwise prescribed by the provisions of
the certificate of incorporation and these Bylaws. In the election of
directors, and for any other action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special
meeting of stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to
those stockholders who have not consented in writing. Action taken pursuant
to this paragraph shall be subject to the provisions of Section 228 of the
General Corporation Law.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
corporation shall be managed by or under the direction of the Board of
Directors of the corporation. The Board of Directors shall have the authority
to fix the compensation of the members thereof. The use of the phrase "whole
board" herein refers to the total number of directors which the corporation
would have if there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a
stockholder, a citizen of the United States, or a resident of the State of
Delaware. The initial Board of Directors shall consist of two persons.
Thereafter the number of directors constituting the whole board shall be at
least four. Subject to the foregoing limitation and except for the first
Board of Directors, such number may be fixed from time to time by action of
the stockholders or of the directors, or, if the number if not fixed, the
number shall be two. The number of directors may be increased or decreased by
action of the stockholders or of the directors.
[Number of directors increased to three by shareholders consent of April
1, 1993 and to four by shareholder consent of April 16, 1994.]
3. ELECTION AND TERM. The first Board of Directors, unless the
members thereof shall have been named in the certificate of incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and until their successors are
elected and qualified or until their earlier resignation or removal. Any
director may resign at any time upon written notice to the corporation.
Thereafter, directors who are elected at an annual meeting of stockholders,
and directors who are elected in the interim to fill vacancies and newly
created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until
their earlier resignation or removal. Except as the General Corporation Law
may otherwise require, in the interim between annual meetings of stockholders
or of special meetings of stockholders called for the election of directors
and/or for the removal of one or more directors and for the filling of any
vacancy in that connection, newly created directorships and any vacancies in
the Board of Directors, including unfilled by vacancies resulting from the
removal of directors for cause or without cause, may be filled by the vote of
a majority of the remaining directors then in office, although less than a
quorum, or by the sole remaining director.
4. MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix,
except that the first meeting of a newly elected Board shall be held as soon
after its election as the directors may conveniently assemble.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which
the time and place have been fixed. Special meetings may be called by or at
the direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, of the President, or of a majority of the directors in office.
- NOTICE OR ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be
required for regular meetings for which the time and place have been fixed.
Written, oral, or any other mode of notice of the time and place shall be
given for special meetings in sufficient time for the convenient assembly of
the directors thereat. Notice need not be given to any director or to any
member of a committee of directors who submits a written waiver of notice
signed by him before or after the time stated therein. Attendance of any such
person at a meeting shall constitute a waiver of notice of such meeting,
except when he 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
directors need be specified in any written waiver of notice.
- QUORUM AND ACTION. A majority of the whole Board shall constitute
a quorum except when a vacancy or vacancies prevents such majority, whereupon
a majority of the directors in office shall constitute a quorum, provided,
that such majority shall constitute at least one-third of the whole Board. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by the General Corporation Law, the
vote of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board. The quorum and voting provisions
herein stated shall not be construed as conflicting with any provisions of the
General Corporation Law and these Bylaws which govern a meeting of directors
held to fill vacancies and newly created directorships in the Board or action
of disinterested directors.
Any member or members of the Board of Directors or of any committee
designated by the Board, may participate in a meeting of the Board, or any
such committee, as the case may be, by means of conference telephone or
similar communications equipment by means of which all persons participating
in the meeting can hear each other.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings. Otherwise, the Vice-
Chairman of the Board, if any and if present and acting, or the President, if
present and acting, or any other director chosen by the Board, shall preside.
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by
the General Corporation Law, 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.
6. COMMITTEES. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
Board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. In the absence or disqualification of any member of any such
committee or committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or disqualified member.
Any such committee, to the extent provided in the resolution of the Board,
shall have and may exercise the powers and authority of the Board of Directors
in the management of the business and affairs of the corporation with the
exception of any authority the delegation of which is prohibited by Section
141 of the General Corporation Law, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
[Executive Committee and Audit Benefits Committee established by Board
by resolution dated April 16, 1994.]
7. WRITTEN ACTION. Any action required or permitted to be taken at
any meeting of the Board of Directors or any committee thereof may be taken
without a meeting if all members of the Board or committee, as the case may
be, consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
The officers of the corporation shall consist of a President, a
Secretary, a Treasurer, and, if deemed necessary, expedient, or desirable by
the Board of Directors, a Chairman of the Board, a Vice-Chairman of the Board,
an Executive Vice-President, one or more other Vice-Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors choosing
them shall designate. Except as may otherwise be provided in the resolution
of the Board of Directors choosing him, no officer other than the Chairman or
Vice-Chairman of the Board, if any, need be a director. Any number of offices
may be held by the same person, as the directors may determine.
Unless otherwise provided in the resolution choosing him, each
officer shall be chosen for a term which shall continue until the meeting of
the Board of Directors following the next annual meeting of stockholders and
until his successor shall have been chosen and qualified.
All officers of the corporation shall have such authority and
perform such duties in the management and operation of the corporation as
shall be prescribed in the resolutions of the Board of Directors designating
and choosing such officers and prescribing their authority and duties, and
shall have such additional authority and duties as are incident to their
office except to the extent that such resolutions may be inconsistent
therewith. The Secretary or an Assistant Secretary of the corporation shall
record all of the proceedings of all meetings and actions in writing of
stockholders, directors, and committees of directors, and shall exercise such
additional authority and perform such additional duties as the Board shall
assign to him. Any officer may be removed, with or without cause, by the
Board of Directors. Any vacancy in any office may be filled by the Board of
Directors.
The Board of Directors may delegate to any officer or agent the
power to appoint one or more Assistant Vice Presidents, one or more Assistant
Treasurers, and one or more Assistant Secretaries and to prescribe their
respective terms of office, authorities, and duties. Any subordinate officer
appointed pursuant to such delegation may be removed, either with or without
cause, by the Board of Directors at any meeting, by the vote of a majority of
the Board of Directors present at such meeting, or by any superior officer or
agent upon whom such power of removal shall have been conferred by the Board
of Directors.
[Addition to Bylaw Article III adopted by the Board of Directors on
August 31, 1994.]
ARTICLE IV
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE V
FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be
subject to change, by the Board of Directors.
ARTICLE VI
CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and
the provisions of the General Corporation Law, the power to amend, alter, or
repeal these Bylaws and to adopt new Bylaws may be exercised by the Board of
Directors or by the stockholders.
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=
IXION BIOTECHNOLOGY, INC.
AND
SUNTRUST BANK, ATLANTA
-------------------
Charitable Benefit WARRANT AGREEMENT
DATED AS OF ___________ __, 1997
==============================================================================
=
AGREEMENT, dated this ____ day of __________, 1997, by and between Ixion
Biotechnology, Inc., a Delaware corporation (the "Company"), and SunTrust
Bank, Atlanta, as Warrant Agent (the "Warrant Agent").
W I T N E S S E T H:
WHEREAS, in connection with the offering to the public of up to 400,000
Units (the "Units"), each Unit consisting of one share of Common Stock (as
defined in Section 1) and 0.25 charitable benefit common stock purchase
warrants (the "Charitable Benefit Warrants"), each warrant entitling the
holder thereof to purchase one additional share of Common Stock; and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Charitable Benefit Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of the Charitable Benefit
Warrants, the issuance of certificates representing the Charitable Benefit
Warrants, the exercise of the Charitable Benefit Warrants and the rights of
the holders thereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Charitable Benefit Warrants and the certificates
representing the Charitable Benefit Warrants and the respective rights and
obligations thereunder of the Company, the holders of certificates
representing the Charitable Benefit Warrants, and the Warrant Agent, the
parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "Approved Qualified Charitable Organization" means a charitable
organization described in Section 501(c)(3) of the Internal Revenue Code (the
"Code"), which is excluded from the definition of a private foundation as
referred to in Section 509(a) of the Code, which is eligible to receive tax-
deductible contributions under Section 170 of the Code, and which has been
approved by the Company pursuant to Section 9 hereof. Approved Qualified
Charitable Organizations at the date of the Prospectus include the following:
the Juvenile Diabetes Foundation, the American Kidney Foundation, the Vulvar
pain Foundation, the Crohn's and Colitis Foundation of America, the Cystic
Fibrosis Foundation, the Oxalosis and Hyperoxaluria Foundation, the
Mycological Society of America, the Intestinal Disease Foundation, the Cystic
Fibrosis Alliance, the National Kidney Foundation, the National Institute of
Diabetes and Digestive and Kidney Diseases, the North American Mycological
Society, the University of Florida Research Foundation, and the Florida Cystic
Fibrosis, Inc.
(c) "Common Stock" means the authorized stock of the Company of any
class, whether now or hereafter authorized, which has the right to participate
in the voting and in the distribution of earnings and assets of the Company
without limit as to amount or percentage.
(d) "Commission" means the Securities and Exchange Commission.
(e) "Corporate Office" means the office of the Warrant Agent (or its
successor) at which at any particular time its business shall be administered,
which office is located on the date hereof at 58 Edgewood Avenue, Atlanta,
Georgia 30303.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(g) "Exercise Date" means, subject to the provisions of Section 5(b)
hereof, as to any Charitable Benefit Warrant, the date on which the Warrant
Agent shall have received both (i) the Warrant Certificate representing such
Charitable Benefit Warrant, with the exercise form thereon duly executed by
the Approved Qualified Charitable Organization Registered Holder thereof or
its attorney duly authorized in writing, and (ii) payment in cash or by
official bank or certified check made payable to the Warrant Agent for the
account of the Company, of the amount in lawful money of the United States of
America equal to the applicable Exercise Price (as hereinafter defined) in
good funds.
(h) "Exercise Price" means, subject to modification and adjustment as
provided in Section 8, $_____ [200% of the Initial Public Offering price of
the Common Stock] and further subject to the Company's right, in its sole
discretion, to decrease the Exercise Price for a period of not less than 30
days on not less than 30 days' prior written notice to the Registered Holders.
(i) "Initial Public Offering Price" means $________[initial public
offering price of the Common Stock].
(j) "Nasdaq" means the Nasdaq Stock Market.
(k) "Registered Holder" means the person in whose name any certificate
representing the Charitable Benefit Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(l) "Transfer Agent" means SunTrust Bank, Atlanta, or its authorized
successor.
(m) "Warrant Certificate" means a certificate representing each of the
Charitable Benefit Warrants substantially in the form annexed hereto as
Exhibit A.
(n) "Warrant Expiration Date" means 5:30 p.m.(Atlanta time), on
______________ __, 2007 [120 months after the date of the Prospectus];
provided that if such date shall in the State of Georgia be a holiday or a day
on which banks are authorized to close, then 5:30 p.m. (Atlanta time) on the
next following day which, in the State of Georgia, is not holiday or a day on
which banks are authorized to close. Upon five business days' prior written
notice to the Registered Holders, the Company shall have the right to extend
the Warrant Expiration Date.
SECTION 2. Charitable Benefit Warrants and Issuance of Warrant
Certificates.
(a) Each Charitable Benefit Warrant shall initially entitle any
Approved Qualified Charitable Organization which is a Registered Holder of the
Warrant Certificate representing such Charitable Benefit Warrant to purchase
at the Exercise Price therefor at any time or in part from time to time until
the Warrant Expiration Date one share of Common Stock upon the exercise
thereof in accordance with the terms hereof, subject to modification and
adjustment as provided in Section 8.
(b) After execution of this Agreement, Warrant Certificates representing
the number of Charitable Benefit Warrants sold or to be sold (subject to
modification and adjustment as provided in Section 8) pursuant to the
offering, shall be executed by the Company and delivered from time to time to
the Warrant Agent in sufficient quantity for the Warrant Agent to promptly
issue Charitable Benefit Warrants to the purchasers thereof.
(c) From time to time, up to the Warrant Expiration Date, the Warrant
Agent shall countersign and deliver Warrant Certificates in required
denominations of one or whole number multiples thereof to the person entitled
thereto in connection with any transfer or exchange permitted under this
Agreement. Except as provided herein, no Warrant Certificates shall be issued
except (i) Warrant Certificates initially issued hereunder and those issued
upon the exercise of fewer than all Charitable Benefit Warrants held by the
exercising Approved Qualified Charitable Organization Registered Holder, (ii)
Warrant Certificates issued upon any transfer or exchange permitted under
Section 6 hereof of Charitable Benefit Warrants, (iii) Warrant Certificates
issued in replacement of lost, stolen, destroyed, or mutilated Warrant
Certificates pursuant to Section 7, and (iv) at the option of the Company,
Warrant Certificates in such form as may be approved by its Board of
Directors, to reflect any adjustment or change in the Exercise Price or the
number of shares of Common Stock purchasable upon exercise of the Charitable
Benefit Warrants made pursuant to Section 8 hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form annexed
hereto as Exhibit A (the provisions of which are hereby incorporated herein)
and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed
or engraved thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or to
conform to usage. The Warrant Certificates shall be dated the date of
issuance thereof (whether upon initial issuance, transfer, exchange, or in
lieu of mutilated, lost, stolen, or destroyed Warrant Certificates) and issued
in registered form. Charitable Benefit Warrants shall be numbered serially
with the letter W on the Charitable Benefit Warrants.
(b) Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President, or any Vice President, and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant
Secretary, by manual signatures or by facsimile signatures printed thereon.
Warrant Certificates shall be manually countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned. In case any
officer of the Company who shall have signed any of the Warrant Certificates
shall cease to be such officer of the Company before the date of issuance of
the Warrant Certificates or before countersignature by the Warrant Agent and
issue and delivery thereof, such Warrant Certificates, nevertheless, may be
countersigned by the Warrant Agent, issued and delivered with the same force
and effect as though the person who signed such Warrant Certificates had not
ceased to be such officer of the Company. After countersignature by the
Warrant Agent, Warrant Certificates shall be delivered by the Warrant Agent to
the Registered Holder promptly and without further action by the Company,
except as otherwise provided by Section 4(a) hereof.
SECTION 4. Exercise.
(a) Charitable Benefit Warrants in denominations of one or whole number
multiples thereof may be exercised only by an Approved Qualified Charitable
Organization (as set forth on the listing of such organizations described in
Section 9 hereof) which is the Registered Holder thereof commencing at any
time or in part from time to time, but not after the Warrant Expiration Date,
upon the terms and subject to the conditions set forth herein and in the
applicable Warrant Certificate. A Charitable Benefit Warrant shall be deemed
to have been exercised immediately prior to the close of business on the
Exercise Date and the person entitled to receive the securities deliverable
upon such exercise shall be treated for all purposes as the holder, upon
exercise thereof, as of the close of business on the Exercise Date. If
Charitable Benefit Warrants in denominations other than whole number multiples
thereof shall be exercised at one time by the same Approved Qualified
Charitable Organization Registered Holder, the number of full shares of Common
Stock which shall be issuable upon exercise thereof shall be computed on the
basis of the aggregate number of full shares of Common Stock issuable upon
such exercise. As soon as practicable on or after the Exercise Date and in
any event within five business days after such date, if one or more Charitable
Benefit Warrants have been exercised, the Warrant Agent on behalf of the
Company shall cause to be issued to the person or persons entitled to receive
the same, a Common Stock certificate or certificates for the shares of Common
Stock deliverable upon such exercise, and the Warrant Agent shall deliver the
same to the person or persons entitled thereto. Upon the exercise of any one
or more Charitable Benefit Warrants, the Warrant Agent shall promptly notify
the Company in writing of such fact and of the number of securities delivered
upon such exercise and, subject to subsection (b) below, shall cause all
payments or other amounts in cash or by check made payable to the order of the
Company, equal to the Exercise Price, to be deposited promptly in the
Company's bank account.
(b) The Company shall not issue fractional shares on the exercise of
Charitable Benefit Warrants. If one or more Charitable Benefit Warrants shall
be presented for exercise in full at the same time by the same Approved
Qualified Charitable Organization Registered Holder, the number of whole
shares which shall be issuable upon such exercise thereof shall be computed on
the basis of the aggregate number of shares purchasable on exercise of the
Charitable Benefit Warrants so presented and any fraction of a share shall be
rounded up to the next whole share.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Charitable Benefit Warrants, such number of shares of Common
Stock as shall then be issuable upon the exercise of all outstanding
Charitable Benefit Warrants. The Company covenants that all shares of Common
Stock which shall be issuable upon exercise of the Charitable Benefit Warrants
shall, at the time of delivery thereof, be duly and validly issued and fully
paid and nonassessable and free from all preemptive or similar rights, taxes,
liens, and charges with respect to the issue thereof, and that upon issuance
such shares shall be listed on each securities exchange, if any, on which the
other shares of outstanding Common Stock of the Company are then listed.
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Charitable Benefit Warrants hereunder require
registration with, or approval of, any governmental authority under any
federal securities law before such securities may be validly issued or
delivered upon such exercise, then the Company will file a registration
statement under the federal securities laws or a post-effective amendment, use
its best efforts to cause the same to become effective and to keep such
registration statement current while any of the Charitable Benefit Warrants
are outstanding and deliver a prospectus which complies with Section 10(a)(3)
of the Act, to the registered Holder exercising the Charitable Benefit Warrant
(except, if in the opinion of counsel to the Company, such registration is not
required under the Federal securities law or if the Company receives a letter
from the staff of the Commission stating that it would not take any
enforcement action if such registration is not effected). The Company will
use its best efforts to obtain appropriate approvals or registrations under
state "blue sky" securities laws with respect to any such securities.
However, Charitable Benefit Warrants may not be exercised by, or shares of
Common Stock issued to, any Registered Holder in any state in which such
exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Charitable Benefit Warrants, or the issuance or delivery of any shares of
Common Stock upon exercise of the Charitable Benefit Warrants; provided,
however, that if shares of common Stock are to be delivered in a name other
than the name of the Registered Holder of the Warrant Certificate representing
any Charitable Benefit Warrant being exercised, then no such delivery shall be
made unless the person requesting the same has paid to the Warrant Agent the
amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the Transfer
Agent to requisition from time to time certificates representing shares of
Common Stock or other securities required upon exercise of the Charitable
Benefit Warrants, and the Company will comply with all such requisitions.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Charitable Benefit
Warrants of the same class. Charitable Benefit Warrants may not be
transferred in whole or in part except to an Approved Qualified Charitable
Organization as set forth in the list described in Section 9 hereof, or to a
testamentary trust, legatee, or heir by will or descent upon the death of a
Registered Holder. Warrant Certificates to be exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and, upon satisfaction of the
terms and provisions hereof, the Company shall execute and the Warrant Agent
shall countersign, issue and deliver in exchange therefor the Warrant
Certificate or Certificates which the Registered Holder making the exchange
shall be entitled to receive.
(b) The Warrant Agent shall keep, at its office, books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with customary
practice and this Agreement. Upon due presentment for registration of
transfer of any Warrant Certificate at such office, the Company shall execute
and the Warrant Agent shall issue and deliver to the transferee or transferees
a new Warrant Certificate or Certificates representing an equal aggregate
number of Charitable Benefit Warrants of the same class.
(c) With respect to all Warrant Certificates presented for registration
of transfer, or for exchange or exercise, the subscription or exercise form,
as the case may be, on the reverse thereof shall be duly endorsed or be
accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney-in-fact duly
authorized in writing.
(d) A service charge may be imposed by the Warrant Agent for any
exchange or registration of transfer of Warrant Certificates. In addition,
the Company may require payment by such Holder of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange
in case of mutilated Warrant Certificates shall be promptly canceled by the
Warrant Agent and thereafter retained by the Warrant Agent until termination
of this Agreement.
(f) Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof and of each Charitable
Benefit Warrant represented thereby (notwithstanding any notations of
ownership or writing thereon made by anyone other than a duly authorized
officer of the Company or the Warrant Agent) for all purposes and shall not be
affected by any notice to the contrary.
SECTION 7. Loss or Mutilation.
Upon receipt by the Company and the Warrant Agent of evidence
satisfactory to them of the ownership of and the loss, theft, destruction, or
mutilation of any Warrant Certificate and (in the case of loss, theft, or
destruction) of indemnity satisfactory to them, and (in case of mutilation)
upon surrender and cancellation thereof, the Company shall execute and the
Warrant Agent shall (in the absence of notice to the Company and/or the
Warrant Agent that a new Warrant Certificate has been acquired by a bona fide
Approved Qualified Charitable Organization) countersign and deliver to the
Registered Holder in lieu thereof a new Warrant Certificate of like tenor
representing an equal aggregate number of Charitable Benefit Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Exercise Price and Number of Shares of Common
Stock Deliverable.
(a) Except as hereinafter provided, in the event the Company shall, at
any time or from time to time after the date hereof issue any shares of Common
Stock as a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares (any such issuance, subdivision, or combination being herein called
a "Change of Shares"), then, and thereafter upon each further Change of
Shares, the Exercise Price for the Charitable Benefit Warrants (whether or not
the same shall be issued and outstanding) in effect immediately prior to such
Change of Shares shall be changed to a price (including any applicable
fraction of a cent to the nearest cent) determined by dividing (i) the sum of
(a) the total number of shares of Common Stock outstanding immediately prior
to such Change of Shares, multiplied by the Exercise Price in effect
immediately prior to such Change of Shares and (b) the consideration, if any,
received by the Company upon such sale, issuance, subdivision, or combination,
by (ii) the total number of shares of Common Stock outstanding immediately
after such Change of Shares; provided, however, that in no event shall the
Exercise Price be adjusted pursuant to this computation to an amount in
excess of the Exercise Price in effect immediately prior to such computation,
except in the case of a combination of outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
(A) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been
issued immediately after the opening of business on the day following
the record date for the determination of shareholders entitled to
receive such dividend or other distribution and shall be deemed to have
been issued without consideration.
(B) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of
shares issuable (subject to readjustment upon the actual issuance
thereof) upon the exercise of options, rights or warrants and upon the
conversion or exchange of convertible or exchangeable securities.
(b) Upon each adjustment of the Exercise Price pursuant to this Section
8, the number of shares of Common Stock purchasable upon the exercise of each
Charitable Benefit Warrant shall be the number derived by multiplying the
number of shares of common Stock purchasable immediately prior to such
adjustment by the Exercise Price in effect prior to such adjustment and
dividing the product so obtained by the applicable adjusted Exercise Price.
(c) In case of any reclassification or change of outstanding shares of
Common Stock issuable upon exercise of the Charitable Benefit Warrants (other
than a change in par value, or from par value to no par value, or from no par
value to par value or as a result of a subdivision or combination), or in case
of any consolidation or merger of the Company with or into another corporation
(other than (1) a merger with a subsidiary of the Company in which merger the
Company is the continuing corporation or (2) any consolidation or merger of
the Company with or into another corporation which, in either instance, does
not result in any reclassification or change of the then outstanding shares of
Common Stock or other capital stock issuable upon exercise of the Charitable
Benefit Warrants (other than a change in par value, or from par value to no
par value, or from no par value to par value or as a result of subdivision or
combination)) or in case of any sale or conveyance to another corporation of
the property of the Company as an entirety or substantially as an entirety,
then, as a condition of such reclassification, change, consolidation, merger,
sale, or conveyance, the Company, or such successor or purchasing corporation,
as the case may be, shall make lawful and adequate provision whereby the
Registered Holder of each Charitable Benefit Warrant then outstanding shall
have the right thereafter to receive on exercise of such Charitable Benefit
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale, or conveyance by a
holder of the number of securities issuable upon exercise of such Charitable
Benefit Warrant immediately prior to such reclassification, change,
consolidation, merger, sale, or conveyance and shall forthwith file at the
Corporate Office of the Warrant Agent a statement signed by its Chairman,
President, or a Vice President and by its Treasurer or an Assistant Treasurer
or its Secretary or an Assistant Secretary evidencing such provision. Such
provisions shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in Sections
8(a) and (b). The above provisions of this Section 8(c) shall similarly apply
to successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the Exercise Price or
the number of shares of Common Stock purchasable upon exercise of the
Charitable Benefit Warrants, the Warrant Certificates theretofore and
thereafter issued shall, unless the Company shall exercise its option to issue
new Warrant Certificates pursuant to Section 2(e) hereof, continue to express
the Exercise Price per share and the number of shares purchasable thereunder
as the Exercise Price per share and the number of shares purchasable
thereunder were expressed in the warrant Certificates when the same were
originally issued.
(e) After each adjustment of the Exercise Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman, Chief Executive Officer or President, and by the Treasurer or an
Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company
setting forth: (i) the Exercise Price as so adjusted, (ii) the number of
shares of Common Stock purchasable upon exercise of each Charitable Benefit
Warrant, after such adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly file such
certificate with the Warrant Agent and cause a brief summary thereof to be
sent by ordinary first class mail to each Registered Holder at his last
address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary
or an Assistant Secretary of the Company that such notice has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
(f) No adjustment of the Exercise Price shall be made as a result of or
in connection with (A) the issuance or sale of shares of Common Stock pursuant
to options, warrants, stock purchase agreements, and convertible or
exchangeable securities outstanding or in effect on the date hereof and on the
terms described in the Prospectus relating to the Public Offering; (B) stock
options to be granted under the Company's 1994 Stock Option Plan to employees
or consultants; (C) shares of Common Stock, options, or warrants issued to
outside parties in connection with strategic alliances, joint ventures, or
other corporate partnerships with the Company, or (D) the issuance of shares
of Common Stock if the amount of said adjustment shall be less than $.10,
provided, however, that in such case, any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at the
time of and together with the next subsequent adjustment that shall amount,
together with any adjustment so carried forward, to at least $.10. In
addition, prior to the exercise of any Charitable Benefit Warrant represented
hereby, the Registered Holder shall not be entitled to any rights of a
stockholder of the Company, including, without limitation, the right to vote
or to receive dividends or other distributions, and shall not be entitled to
receive any notice of any proceedings of the Company, except as provided in
this Charitable Benefit Warrant Agreement.
SECTION 9. Concerning Approved Qualified Charitable Organizations
(a) Charitable Benefit Warrants may only be transferred to, or exercised
by, an Approved Qualified Charitable Organization; provided, however, that
transfer to a testamentary trust, legatee, or heir by will or descent upon the
death of a Registered Holder, will be permitted upon proper proof as decided
by the Company.
(b) Qualified Charitable Organizations may be added to the approved
list by the Company, in its absolute discretion, from time to time until the
Warrant Expiration Date. In order to be added to the approved list, a
charitable organization must be tax exempt, and it must be eligible to receive
tax deductible contributions in accordance with Section 170 of the Code.
Charitable organizations may be added at the election of the Company, or they
may be nominated by a Registered Holder. Registered Holders wishing to
nominate a charitable organization must send their nomination in writing to
the Company, together with proof of such charitable organization's status as
an organization described in Section 501(c)(3) of the Code which is excluded
from the definition of a private foundation as referred to in Section 509(a)
of the Code and which is eligible to receive tax deductible contributions in
accordance with Section 170 of the Code.
(c) The Company shall provide to the Warrant Agent, from time to time,
a statement, signed by its Chairman of the Board, President, or a Vice
President and by its Treasurer or an Assistant Treasurer or its Secretary or
an Assistant Secretary, setting forth the complete list of Approved Qualified
Charitable Organizations. The Warrant Agent shall not accept for transfer
Charitable Benefit Warrants which attempt to transfer or assign such
Charitable Benefit Warrants to any person other than an organization which is
on the most recent list of Approved Qualified Charitable Organizations;
provided, however, that transfer to a testamentary trust, legatee, or heir by
will or descent upon the death of a Registered Holder, will be permitted upon
proper proof as decided by the Company.
(d) Approved Qualified Charitable Organizations at the date of this
agreement include the following:
Juvenile Diabetes Foundation
American Kidney Foundation
Vulvar Pain Foundation
National Vulvodynia Association
Crohn's and Colitis Foundation of America
Cystic Fibrosis Foundation
Oxalosis and Hyperoxaluria Foundation
Mycological Society of America
Intestinal Disease Foundation
Cystic Fibrosis Alliance
National Kidney Foundation
National Institute of Diabetes and Digestive and
Kidney Diseases
North American Mycological Society
University of Florida Research Foundation
Florida Cystic Fibrosis, Inc.
SECTION 10. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company, and its duties shall be determined solely by the
provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Charitable Benefit Warrants represented thereby or of any
securities or other property delivered upon exercise of any Charitable Benefit
Warrant or whether any stock issued upon exercise of any Charitable Benefit
Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be
made any adjustment of the Exercise Price, or to determine whether any fact
exists which may require any such adjustments, or with respect to the nature
or extent of any such adjustments, when made, or with respect to the method
employed in making the same. It shall not (i) be liable for any recital or
statement of fact contained herein or for any action taken, suffered or
omitted by it in reliance on any Warrant Certificate or other document or
instrument believed by it in good faith to be genuine and to have been signed
or presented by the proper party or parties, (ii) be responsible for any
failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or
(iii) be liable for any act or omission in connection with this Agreement
except for its own gross negligence, bad faith or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory
to it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith
in accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board of Directors, President, or any Vice President
(unless other evidence in respect thereof is herein specifically prescribed).
The Warrant Agent shall not be liable for any action taken, suffered or
omitted by it in accordance with such notice, statement, instruction, request,
direction, order or demand reasonably believed by it to be genuine.
(e) The Company agrees to pay the Warrant Agent reasonable compensation
for its services hereunder and to reimburse it for its reasonable expenses
hereunder; the Company further agrees to indemnify the Warrant Agent and save
it harmless from and against any and all losses, expenses and liabilities,
including judgments, costs and counsel fees, for anything done or omitted by
the Warrant Agent in the execution of its duties and powers hereunder except
losses, expenses and liabilities arising as a result of the Warrant Agent's
gross negligence, bad faith or willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own gross negligence or willful misconduct),
after giving 30 days' prior written notice to the Company. At least 15 days
prior to the date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to the
Registered Holder of each Warrant Certificate at the Company's expense. Upon
such resignation, or any inability of the Warrant Agent to act as such
hereunder, the Company shall appoint in writing a new warrant agent. If the
Company shall fail to make such appointment within a period of 15 days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent,
then the Company agrees to perform the duties of the Warrant Agent hereunder
until a successor Warrant Agent is appointed. After acceptance in writing of
such appointment by the new warrant agent is received by the Company, such new
warrant agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named herein as the Warrant
Agent, without any further assurance, conveyance, act or deed; but if for any
reason it shall be necessary or expedient to execute and deliver any further
assurance, conveyance, act or deed, the same shall be done at the expense of
the Company and shall be legally and validly executed and delivered by the
resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant
agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new warrant agent shall be a successor warrant agent
under this Agreement without any further act, provided that such corporation
is eligible for appointment as successor to the Warrant Agent under the
provisions of the preceding paragraph. Any such successor warrant agent shall
promptly cause notice of its succession as warrant agent to be mailed to the
Company and to the Registered Holders of each Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its
or their officers or directors, may buy and hold or sell securities of the
Company and otherwise deal with the Company in the same manner and to the same
extent and with like effect as though it were not Warrant Agent. Nothing
herein shall preclude the Warrant Agent from acting in any other capacity for
the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two years from the
date of exercise any Warrant Certificate received by it upon such exercise.
SECTION 11. Modification of Agreement.
The Warrant Agent and the Company may by supplemental agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate
to cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; or (ii) that they may deem
necessary or desirable and which shall not adversely affect the interests of
the holders of Warrant Certificates; provided, however, that no change in the
number or nature of the securities purchasable upon the exercise of any
Charitable Benefit Warrant, or to increase the Exercise Price therefor or to
accelerate the Warrant Expiration Date, shall be made without the consent in
writing of the Registered Holders representing not less than 66.667% of the
Charitable Benefit Warrants then outstanding, other than such changes as are
presently specifically prescribed by this Agreement as originally executed.
SECTION 12. Notices.
All notices, requests, consents and other communications hereunder shall
be in writing and shall be deemed to have been made when delivered or mailed
first-class registered or certified mail, postage prepaid, or by fax as
follows: if to the Registered Holder of a Warrant Certificate, at the address
of such holder as shown on the registry books maintained by the Warrant Agent;
if to the Company at 12085 Research Drive, Alachua, FL 32615, Fax 904-462-
0875, Attention: Weaver H. Gaines, Chairman and Chief Executive Officer, or at
such other address as may have been furnished to the Warrant Agent in writing
by the Company; and if to the Warrant Agent, at its Corporate Office.
SECTION 13. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida without giving effect to conflicts of laws.
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Nothing in
this Agreement is intended or shall be construed to confer upon any other
person any right, remedy, or claim, in equity or at law, or to impose upon any
other person any duty, liability or obligation.
SECTION 15. Termination.
This Agreement shall terminate at the close of business on the
Expiration Date of all of the Charitable Benefit Warrants or such earlier date
upon which all Charitable Benefit Warrants have been exercised or redeemed,
except that the Warrant Agent shall account to the Company for cash held by it
and the provisions of Section 10 hereof shall survive such termination.
SECTION 16. Counterparts.
This Agreement may be executed in counterparts, which taken together
shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
Dated:____________________
IXION BIOTECHNOLOGY, INC.
By:___________________________________
Printed Name:_________________________
(SEAL) Title:________________________________
Attest:
By:_________________________________
Printed Name:_______________________
Title:______________________________
SUNTRUST BANK, ATLANTA
As Warrant Agent
By:_____________________________________
Printed Name:___________________________
Title:__________________________________
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS WARRANT MAY BE TRANSFERRED EXCEPT IN A TRANSACTION REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THAT ACT. THE TRANSFER OF THIS WARRANT IS RESTRICTED AS
DESCRIBED HEREIN.
NO. W-001
WARRANT TO PURCHASE 2,000 SHARES OF
COMMON STOCK OF
IXION BIOTECHNOLOGY, INC.
This certifies that the Jeffrey W. Seel ("Seel") of 1290 Broadway, Denver, CO.
, or his registered assigns, (the "Warrant Holder") is entitled to purchase
from Ixion Biotechnology, (the "Company"), a Delaware corporation, at any time
after 9:00 a.m. Gainesville, Florida time, on the Expiration Date (as defined
below), up to an aggregate of 2,000 shares of Common Stock (as defined below)
at the Exercise Price (as defined below). The Exercise Price and the number
of shares of Common Stock which may be purchased from time to time upon the
exercise of this Warrant are subject to adjustment as provided in Article III.
ARTICLE I
Definitions
Section 1.01. As used in this Warrant, the following terms shall have the
following respective meanings:
(a) "Business Day" means a day other than a Saturday, Sunday, or other day
on which banks in the State of Florida are authorized by law to remain closed.
(b) "Common Stock" means the common stock, $0.01 par value per share, of
the Company, and any other capital stock of the Company into which such common
stock may be converted or reclassified or that may be issued in respect of, in
exchange for, or in substitution of, such common stock by reason of any stock
splits, stock dividends, distributions, mergers, consolidations or other like
events.
(c) "Exercise Price" means $2.00 per share of Common Stock, provided,
however, that the Exercise Price may be adjusted from time to time as provided
in Article III.
(d) "Expiration Date" means August 31, 2000.
(e) "Form of Assignment" means the form set forth at the foot of this
Warrant.
(f) "Subscription Form" means the form set forth in Exhibit A hereto.
(g) "Warrant" means this Warrant and all warrants of like tenor (together
evidencing the right to purchase a total of 2,000 shares of Common Stock,
subject to adjustment as provided in Article III), originally issued to Seel
or its designees pursuant to a License Agreement, relating to space and
services at the Biotechnology Development Institute, dated June 26, 1995
between the Company and Seel.
(h) "Warrant Register" means a register to be maintained by the Company at
its principal executive offices in which the Company shall provide for the
registration of the Warrants and of transfers or exchanges of the Warrants as
herein provided.
Section 1.02. Certain other terms are defined elsewhere in this Warrant:
Term Defined in Section
"Change of Shares" Section 3.01(a)
"Commission" Section 6.01(a)
"Common Stock Distribution" Section 3.01(b)
"Company" Preamble
"Convertible Securities" Section 3.01(c)
"Options" Section 3.01(c)
"Securities Act" Section 5.01
"Time of Determination" Section 3.01(f)
"Warrant Holder" Preamble
ARTICLE II
Duration and Exercise of Warrant
Section 2.01. This Warrant may be exercised at any time after 9:00 a.m.,
Gainesville, Florida time, on July 1, 1995, and before 5:00 p.m., Gainesville,
Florida time, on the Expiration Date. If this Warrant is not exercised at or
before 5:00 p.m., Gainesville, Florida time, on the Expiration Date, it will
become void and neither the Warrant Holder nor any other person will have any
rights under this Warrant.
Section 2.02. (a) To exercise this Warrant in whole or in part, the
Warrant Holder must surrender this Warrant, with the Subscription Form duly
executed, to the Company at its principal office accompanied by a certified or
official bank check payable to the order of the Company in an amount equal to
the aggregate Exercise Price for the shares of Common Stock as to which this
Warrant is being exercised.
(b) When the Company receives this Warrant with the Subscription Form duly
executed and accompanied by payment of the aggregate Exercise Price for the
shares of Common Stock as to which this Warrant is being exercised, the
Company will promptly issue certificates, registered in the name of the
Warrant Holder or such other names as are designated by the Warrant Holder,
representing the total number of shares of Common Stock (and other securities,
if any) as to which this Warrant is being exercised, in such denominations as
are requested by the Warrant Holder, and the Company will deliver promptly
such certificates to the Warrant Holder.
(c) If the Warrant Holder exercises this Warrant with respect to fewer
than all the shares of Common Stock to which it relates, the Company will
execute a new Warrant for the balance of the shares of Common Stock that may
be purchased upon exercise of this Warrant and will deliver promptly such new
Warrant to the Warrant Holder.
(d) The Company will pay any taxes that may be payable in respect of (i)
the issuance of shares of Common Stock or (ii) the issuance of a new Warrant
if this Warrant is exercised as to fewer than all the shares of Common Stock
to which it relates. The Company will not, however, be required to pay any
transfer tax payable because shares of Common Stock or a new Warrant are to be
registered in a name other than that of the Warrant Holder, and the Company
will not be required to issue any shares of Common Stock or to issue a new
Warrant registered in a name other than that of the Warrant Holder until (i)
the Company receives either (A) evidence that any applicable transfer taxes
have been paid or (B) funds with which to pay those taxes or (ii) it has been
established to the Company's satisfaction that no such tax is due.
ARTICLE III
Adjustment of Exercise Price
and Number of Shares of Common Stock
Section 3.01. The Exercise Price and the number of shares of Common Stock
or other securities issuable on exercise of this Warrant are subject to
adjustment as follows:
(a) Changes in Common Stock. In the event the Company shall, at any time
or from time to time after the date hereof, (i) issue any shares of Common
Stock as a stock dividend to the holders of Common Stock, (ii) subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares or (iii) issue any shares of its capital stock in a
reclassification, or reorganization of the Common Stock (any such issuance,
subdivision, combination, reclassification, or reorganization being herein
called a "Change of Shares"), then (A) in the case of (i) or (ii) above, the
number of shares of Common Stock that may be purchased upon the exercise of
this Warrant shall be adjusted to the number of shares of Common Stock that
the Warrant Holder would have owned or have been entitled to receive after the
happening of such event had this Warrant been exercised immediately prior to
the record date (or, if there is no record date, the effective date) for such
event, and the Exercise Price shall be adjusted to the price (calculated to
the nearest 1,000th of one cent) determined by multiplying the Exercise Price
immediately prior to such event by a fraction the numerator of which shall be
the number of shares of Common Stock purchasable with this Warrant immediately
prior to such event and the denominator of which shall be the number of shares
purchasable with this Warrant after the adjustment referred to above and (B)
in the case of (iii) above, paragraph (l) below shall apply. An adjustment
made pursuant to clause (A) of this paragraph shall become effective
retroactively immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in other cases.
Any shares of Common Stock purchasable solely as a result of such adjustment
shall not be issued prior to the effective date of such event.
(b) Common Stock Distribution. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, or otherwise
distribute any shares of Common Stock (other than pursuant to a Change of
Shares or the exercise of any Option, Convertible Security (each as defined in
paragraph (c) and (d) below), or Warrant (any such event including any event
described in paragraphs (c) and (d) below), being herein called a "Common
Stock Distribution") for a consideration per share less than the current
market price per share of Common Stock (as defined in paragraph (f) below) on
the date of such Common Stock Distribution, then, effective upon such Common
Stock Distribution, the Exercise Price shall be reduced to the price
(calculated to the nearest 1,000th of one cent) determined by multiplying the
Exercise Price in effect immediately prior to such Common Stock Distribution
by a fraction, the numerator of which shall be the sum of (i) the number of
shares of Common Stock outstanding (exclusive of any treasury shares)
immediately prior to such Common Stock Distribution multiplied by the current
market price per share of Common Stock on the date of such Common Stock
Distribution, plus (ii) the consideration, if any, received by the Company
upon such Common Stock Distribution, and the denominator of which shall be the
product of (A) the total number of shares of Common Stock outstanding
(exclusive of any treasury shares) immediately after such Common Stock
Distribution multiplied by (B) the current market price per share of Common
Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment of the Exercise
Price pursuant to the foregoing provisions of this paragraph (b), including by
operation of paragraph (c) or (d) below, then, effective at the time such
adjustment is made, the number of shares of Common Stock purchasable upon the
exercise of this Warrant shall be increased to a number determined by
multiplying the number of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment. In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest 1,000th
of a share.
The provisions of this paragraph (b), including by operation of paragraph (c)
or (d) below, shall not operate to increase the Exercise Price or reduce the
number of shares of Common Stock purchasable upon the exercise of this
Warrant.
(c) Issuance of Options. In the event the Company shall, at any time or
from time to time after the date hereof, issue, sell, distribute, or otherwise
grant in any manner (including by assumption) any rights to subscribe for or
to purchase, or any warrants or options for the purchase of, Common Stock or
any stock or securities convertible into or exchangeable for Common Stock (any
such rights, warrants, or options being herein called "Options" and any such
convertible or exchangeable stock or securities being herein called
"Convertible Securities"), other than pursuant to its 1994 Stock Option Plan
and its 1994 Board Retainer Plan, whether or not such Options or the rights to
convert or exchange such Convertible Securities are immediately exercisable,
and the price per share at which Common Stock is issuable upon the exercise of
such Options or upon the conversion or exchange of such Convertible Securities
(determined by dividing (i) the aggregate amount, if any, received or
receivable by the Company as consideration for the issuance, sale,
distribution, or granting of such Options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Company upon the exercise
of all such Options, plus, in the cases of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the conversion or exchange of all such Convertible Securities, by
(ii) the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options or upon the conversion or exchange of all such
Options or upon the conversion or exchange of all Convertible Securities
issuable upon the exercise of all such Options) shall be less than the current
market price per share of Common Stock on the date of the issuance, sale,
distribution, or granting of such Options then, for purposes of paragraph (b)
above, the total maximum number of shares of Common Stock issuable upon the
exercise of all such Options or upon the conversion or exchange of the total
maximum amount of the Convertible Securities issuable upon the exercise of all
such Options) shall be less than the current market price per share of Common
Stock on the date of the issuance, sale, distribution, or granting of such
Options shall be deemed to have been issued as on the date of the issuance,
sale, distribution, or granting of such Options and thereafter shall be deemed
to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual exercise of
such Options or upon conversion or exchange of the Convertible Securities
issuable upon the exercise of such Options.
(d) Issuance of Convertible Securities. In the event the Company shall,
at any time or from time to time after the date hereof, issue, sell, or
otherwise distribute (including by assumption) any Convertible Securities
(other than upon the exercise of any Option), whether or not the rights to
convert or exchange such Convertible Securities are immediately exercisable,
and the price per share at which Common Stock is issuable upon the conversion
or exchange of such Convertible Securities (determined by dividing (i) the
aggregate amount, if any, received or receivable by the Company as
consideration for the issuance, sale, or distribution of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Company upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities) shall be less than the current market price per share of Common
Stock on the date of such issuance, sale, or distribution, then, for purposes
of paragraph (b) above, the total maximum number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities
shall be deemed to have been issued as of the date of the issuance, sale, or
distribution of such Convertible Securities and thereafter shall be deemed to
be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company shall, at any
time or from time to time after the date hereof, distribute to the holders of
Common Stock any dividend or other distribution of cash, evidences of its
indebtedness, other securities, or other properties or assets (in each case
other than (i) dividends payable in Common Stock, Options, or Convertible
Securities and (ii) any cash dividend that, when added to all other cash
dividends paid in the one year prior to the declaration date of such dividend
(excluding any such other dividend included in a previous adjustment of the
Exercise Price pursuant to this paragraph (e)), does not exceed 10% of the
current market price per share of Common Stock on such declaration date), or
any options, warrants, or other rights to subscribe for or purchase any of the
foregoing, then (A) the Exercise Price shall be decreased to a price
determined by multiplying the Exercise Price then in effect by a fraction,
the numerator of which shall be the current market price per share of Common
Stock on the record date for such distribution less the sum of (X) the cash
portion, if any, of such distribution per share of Common Stock outstanding
(exclusive of any treasury shares) on the record date for such distribution
plus (Y) the then fair market value (as determined in good faith by the Board
of Directors of the Company) per share of Common Stock outstanding (exclusive
of any treasury shares) on the record date for such distribution of that
portion, if any, of such distribution consisting of evidences of indebtedness,
other securities, properties, assets, options, warrants, or subscription or
purchase rights, and the denominator of which shall be such current market
price per share of Common Stock and (B) the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall be increased to a number
determined by multiplying the number of shares of Common Stock so purchasable
immediately prior to the record date for such distribution by a fraction, the
numerator of which shall be the Exercise Price in effect immediately prior to
the adjustment required by clause (A) of this sentence and the denominator of
which shall be the Exercise Price in effect immediately after such adjustment.
The adjustments required by this paragraph (e) shall be made retroactive to
the record date for the determination of stockholders entitled to receive such
distribution.
(f) Current Market Price. For the purpose of any computation under
paragraphs (b), (c), (d), and (e) of this Section 3.01, the current market
price per share of Common Stock at any date shall be determined as follows:
until the Company has raised an aggregate of $2,000,000 in sales of its
securities, small business innovation research awards, small business
technology transfer awards, or payments by corporate partners for research
support or co-development (it being understood that at the date of this
Warrant Agreement, the Company has already raised a total of $442,806,
exclusive of deferred salaries), then the current market price per share
(prior to any adjustment resulting from a Common Stock Distribution) shall be
$2.00 per share; thereafter, the current market price per share of the Common
Stock at any date shall be the average of the daily closing prices for the
shorter of (i) the 20 consecutive trading days ending on the last full trading
day on the exchange or market specified in the second succeeding sentence
prior to the Time of Determination and (ii) the period commencing on the date
next succeeding the first public announcement of the issuance, sale,
distribution, or granting in question through such last full trading day prior
to the Time of Determination. The term "Time of Determination" as used herein
shall be the time and date of the earlier to occur of (A) the date as of which
the current market price is to be computed and (B) the last full trading day
on such exchange or market before the commencement of "ex-dividend" trading in
the Common Stock relating to the event giving rise to the adjustment required
by paragraph (b), (c), (d), or (e). The closing price for any day shall be
the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices
regular way for such day, in each case (1) on the principal national
securities exchange on which the shares of Common Stock are listed or to which
such shares are admitted to trading or (2) if the Common Stock is not listed
or admitted to trading on a national securities exchange, in the over-the-
counter market as reported by NASDAQ or any comparable system or (3) if the
Common Stock is not listed on NASDAQ or a comparable system, as furnished by
two members of the National Association of Securities Dealers, Inc. selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing or if for any other
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (f), the current market price per
share shall be the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
(g) Certain Distributions. If the Company shall pay a dividend or make
any other distribution payable in Options or Convertible Securities, then, for
purposes of paragraph (b) above (by operation of paragraph (c) or (d) above,
as the as may be), such Options or Convertible Securities shall be deemed to
have been issued or sold without consideration.
(h) Consideration Received. If any shares of Common Stock, Options or
Convertible Securities shall be issued, sold, or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board
of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration, provided, however, that if such
Options have an exercise price equal to or greater than the current market
price of the Common Stock on the date of issuance of such Options, then such
Options shall be deemed to have been issued for consideration equal to such
exercise price.
(i) Deferral of Certain Adjustments. No adjustment to the Exercise Price
(including the related adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant) shall be required hereunder
unless such adjustment, together with other adjustments carried forward as
provided below, would result in an increase or decrease of at least $.10 in
the Exercise Price; provided however, that any adjustments which by reason of
this paragraph (i) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. No adjustment need be made
for a change in the par value of the Common Stock.
(j) Changes in Options and Convertible Securities. If the exercise price
provided for in any Options referred to in paragraph (c) above, the additional
consideration, if any, payable upon the conversion or exchange of any
Convertible Securities referred to in paragraph (c) or (d) above, or the rate
at which any Convertible Securities referred to in paragraph (c) or (d) above
are convertible into or exchangeable for Common Stock shall change at any time
(other than under or by reason of provisions designed to protect against
dilution upon an event which results in a related adjustment pursuant to this
Article III), the Exercise Price then in effect and the number of shares of
Common Stock purchasable upon the exercise of this Warrant shall forthwith be
readjusted (effective only with respect to any exercise of this Warrant after
such readjustment) to the Exercise Price and number of shares of Common Stock
so purchasable that would then be in effect had the adjustment made upon the
issuance, sale, distribution, or granting of such Options or Convertible
Securities been made based upon such changed purchase price, additional
consideration, or conversion rate, as the case may be, but only with respect
to such Options and Convertible Securities as then remain outstanding.
(k) Expiration of Options and Convertible Securities. If, at any time
after any adjustment to the number of shares of Common Stock purchasable upon
the exercise of this Warrant shall have been made pursuant to paragraph (c),
(d), or (j) above or this paragraph (k), any Options or Convertible Securities
shall have expired unexercised, the number of such shares so purchasable
shall, upon such expiration, be readjusted and shall thereafter be such as
they would have been had they been originally adjusted (or had the original
adjustment not been required, as the case may be) as if (i) the only shares of
Common Stock deemed to have been issued in connection with such options or
Convertible Securities were the shares of Common Stock, if any, actually
issued or sold upon the exercise of such Options or Convertible Securities and
(ii) such shares of Common Stock, if any, were issued or sold for the
consideration actually received by the Company upon such exercise plus the
aggregate consideration, if any, actually received by the Company for the
issuance, sale, distribution, or granting of all such Options of Convertible
Securities, whether or not exercised; provided, however, that no such
readjustment shall have the effect of decreasing the number of such shares so
purchasable by an amount (calculated by adjusting such decrease to account for
all other adjustments made pursuant to this Article III following the date of
the original adjustment referred to above) in excess of the amount of the
adjustment initially made in respect of the issuance, sale, distribution, or
granting of such Options or Convertible Securities.
(l) Other Adjustments. In the event that at any time, as a result of an
adjustment made pursuant to this Article III, the Warrant Holder shall become
entitled to receive any securities of the Company other than shares of Common
Stock, thereafter the number of such other securities so receivable upon
exercise of this Warrant and the Exercise Price applicable to such exercise
shall be subject to adjustment from time to time in a manner and on terms as
nearly equivalent as practicable to the provisions with respect to the shares
of Common Stock contained in this Article III.
Section 3.02. Whenever the number of shares of Common Stock or other stock or
property issuable upon the exercise of this Warrant is adjusted, as herein
provided, the Company shall promptly mail to the Warrant Holder notice of such
adjustment or adjustments and shall deliver to the Warrant Holder a
certificate of a principal officer of the Company setting forth the number of
shares of Common Stock or other stock or property issuable upon the exercise
of this Warrant after such adjustment, setting forth a brief statement of the
facts requiring such adjustment, and setting forth the computation by which
such adjustment was made.
Section 3.03. If at any time after this Warrant is first issued
(a) the Company declares a dividend or other distribution on its Common
Stock payable other than in cash out of its undistributed net income; or
(b) the Company authorizes the granting to the holders of its Common Stock
of rights to subscribe for a purchase any shares of any class of its capital
stock or any other securities; or
(c) there is any reclassification of the Common Stock (other than a
subdivision or combination of its outstanding Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of the holders of the Common Stock is required, or a sale or transfer of all
or substantially all the assets of the Company; or
(d) there is a voluntary or involuntary dissolution, liquidation, or
winding up of the Company;
then, in each case, the Company will mail to the Warrant Holder at least 15
Business Days before the applicable record date a notice stating (i) the
record date for the dividend, distribution, or rights, or, if there will not
be a record date, the date as of which the holders of record of Common Stock
who will be entitled to the dividend, distribution, or rights will be
determined, or (ii) the date on which the reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, or winding up is expected to
become effective, and the date as of which it is expected the holders of
record of Common Stock who will be entitled to exchange their Common Stock for
securities or other property as a result of the reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation, or winding up
will be determined. Failure to give any notice or any defect in the notice
will not affect the validity of the action which should have been the subject
of the notice.
Section 3.04. The form of this Warrant need not be changed because of any
change in the Warrant Price or in the number of shares of Common Stock which
may be purchased by exercising this Warrant. The Company may, however, at any
time make any change in the form of Warrant this it deems appropriate to
reflect a change in the Exercise Price or in the number of shares of Common
Stock which may be purchased by exercising this Warrant (provided the change
in the form of Warrant does not otherwise affect the substance of the
Warrant), and any Warrant issued after the form of Warrant is so changed shall
be in the changed form.
ARTICLE IV
Other Provisions Relating to Rights of the Warrant Holder
Section 4.01. The Warrant Holder will not, as such, be entitled to vote, to
receive dividends, or to have any other of the rights of a shareholder of the
Company, except that after this Warrant is exercised in accordance with the
terms of this Warrant the persons in whose names the shares of Common Stock
purchased through exercise of this Warrant are to be issued will be deemed to
become the holders of record of those shares of Common Stock for all purposes
even if certificates representing such shares of Common Stock have not been
issued.
Section 4.02.1 (a) The Company will at all times reserve and keep available
for issuance upon exercise of this Warrant the number of authorized and
unissued shares of Common Stock equal to the maximum number of shares of
Common Stock the Company may be required to issue upon exercise of this
warrant at the Exercise Price in effect from time to time.
(b) All shares of Common Stock issued on exercise of this Warrant
will, when they are issued, be validly issued, fully paid, and nonassessable.
Section 4.03. The Company will not be required to issue any fraction of a
share upon exercise of this Warrant. If any fraction of a share of Common
Stock would, except for the provisions of this Section, be issuable on the
exercise of any Warrant (or specified portion thereof), the Company shall pay
an amount in cash calculated by it to equal to the then current market value
per share multiplied by such fraction computed to the nearest whole cent. The
Warrant Holder, by its acceptance of this Warrant, expressly waives any and
all rights to receive any fraction of a share of Common Stock or a stock
certificate representing a fraction of a share of Common Stock.
Section 4.04. The Company will maintain a Warrant Register in which the name
and address of each registered holder of Warrants will be recorded.
Section 4.05. Notices or other communications to the Warrant Holder will
be deemed given by the Company on the third Business Day after the day on
which they are sent by registered mail, return receipt requested, addressed to
the Warrant Holder at the Warrant Holder's last known address shown on the
Warrant Register.
Section 4.06. Prior to due presentment for registration of transfer of
this Warrant, the Company may treat the Warrant Holder as the absolute owner
of this Warrant for all purposes, including for the purpose of determining
the persons entitled to exercise this Warrant, despite any notice to the
contrary.
ARTICLE V
Transfer of Warrants
Section 5.01. This Warrant may be sold, transferred, assigned, or
hypothecated with the written consent of the Company, in whole or in part. At
all times, however, neither this Warrant nor the shares of Common Stock or
other securities issuable upon exercise of this Warrant may be transferred
except in a transaction which is registered under the Securities Act of 1933,
as amended (the "Securities Act"), or which is exempt from the registration
requirements of the Securities Act.
Section 5.02. Upon surrender to the Company at its principal office of
this Warrant with the Form of Assignment (or another instrument of assignment)
duly executed and accompanied by (i) (A) evidence that any transfer tax has
been paid or (B) funds sufficient to pay any transfer tax, or (C) evidence to
the Company's satisfaction that no such tax is due, and (ii) evidence
reasonably satisfactory to the Company that the proposed assignment will not
violate Section 5.01, the Company will, without charge, execute and deliver a
new Warrant registered in the name of the assignee named in the Form of
Assignment (or other instrument of assignment) and will promptly cancel this
Warrant. This Warrant may be divided or combined with other Warrants by
surrender of this Warrant and any other Warrants with which it is to be
combined at the principal office of the Company together with a written
notice, signed by the Warrant Holder, specifying the names and denominations
in which new Warrants are to be issued.
Section 5.03. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and (in the case of loss, theft, or destruction) of reasonably
satisfactory indemnification, or (in the case of mutilation) upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to
the same number of shares of Common Stock as this Warrant and the lost,
stolen, destroyed, or mutilated Warrant will become void. Any new Warrant
executed and delivered in accordance with this Section 5.03 will constitute an
additional contractual obligation of the Company, and will be valid and
enforceable whether or not the Warrant which was believed to have been lost,
stolen, or destroyed is subsequently presented for exercise.
ARTICLE VI
Registration Under the Securities Act
Section 6.01 (a) If, at any time during the period commencing on July 1, 1995
and ending on June 30, 2001, The Company shall determine or be required to
register any shares of the Company's Common Stock (whether on behalf of itself
or any other person) under the Securities Act of 1933 on Forms S-1, S-2, S-3,
SB-1, or SB-2 (or if such forms are rescinded by the Securities and Exchange
Commission (the "Commission") such forms as replace those forms), excluding
any registration for the offering and sale of securities of the Company to its
employees, it will notify the Warrant Holder in order that it may request that
all or a part of shares of Common Stock issued or issuable upon exercise of
this Warrant be included in the registration statement. If requested by any
Warrant Holder in writing within 20 days after the Company's notice, the
Company will include the requested number of shares in such registration
statement. Any such request shall include the agreement of the Warrant Holder
requesting the registration to execute and deliver the underwriting agreement,
if any, to be executed and delivered in connection with such registration.
The Company may, however, decline to include all or a part of the requested
number of shares in a registration statement pursuant to this section if it is
advised by the investment banking firm managing the underwriting that such
inclusion would adversely affect the offering of the shares to be covered by
the proposed registration statement.
(b) The Company shall use its best efforts to file such post-effective
amendments to any registration statement described in this Section 6 as shall
be necessary to keep it effective until six months after the effective date of
the registration statement or the date on which all of the shares of the
Warrant Holders covered thereunder shall have been sold, whichever is earlier.
(c) As a condition to the Company's obligation under this Article VI to
cause a registration statement or amendment to be filed or shares to be
included in a registration statement, the Warrant Holder shall provide such
information and execute such documents as may reasonably be required in
connection with such registration. In addition, the Company shall not be
required to include such shares in a registration statement if it shall have
received opinions of its and the Warrant Holder's counsel to the effect that
the proposed disposition of such shares may be effected without registration
under the Act.
(d) The expenses of the registration of Warrant Holders' shares (other
than transfer taxes, underwriting commissions, and fees of Warrant Holders'
counsel) shall be paid by the Company.
Section 6.02. Unless the resale of shares of Common Stock is the subject
of an effective registration statement under the Securities Act, the
certificates representing shares of Common Stock issued upon exercise of this
Warrant may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. THE SHARES MAY NOT BE OFFERED OR SOLD, EXCEPT (i)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR (ii) IN A TRANSACTION WHICH
IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
ARTICLE VII
Other Matters
Section 7.01. The provisions of this Warrant will bind, and inure to the
benefit of, the Company and its successors and assigns and the Warrant Holder
and its successors and assigns.
Section 7.02 (a) Any notice or other communication to the Company relating to
this Warrant will be deemed given on the day when it is delivered or sent by
facsimile transmission (with a confirmation copy sent by registered mail,
return receipt requested), or on the third Business Day after the day on which
it is sent by registered mail, return receipt requested, to the Company at the
following address (or such other address as may be specified by the Company
after the date of this Warrant):
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Attention: Chairman of the Board and Chief
Executive Officer
Facsimile No. (904) 462-0875
(b) Any notice or other communication to the Warrant Holder will be deemed
given when and as provided in Section 4.05.
Section 7.03. To the extent such documents are required to be sent by the
Company to the holders of its outstanding Common Stock, the Company shall
provide the Warrant Holder, within five Business Days after it files them with
the Commission, copies of its annual report and of the information, documents,
and other reports which the Company is required to file with the Commission
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Section 7.04. THIS WARRANT WILL BE GOVERNED BY, AND CONSTRUED UNDER, THE
LAWS OF THE STATE OF FLORIDA RELATING TO CONTRACTS AND INSTRUMENTS EXECUTED
AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
Section 7.05. The Article and Section headings in this Warrant are for
convenience only, are not part of this Warrant and are not intended to affect
the meaning or interpretation of any of the terms of this Warrant.
END OF TEXT - SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Warrant has been executed by the Company on the
___________ day of ______________, 1995.
Ixion Biotechnology, Inc.
By ___________________________
Weaver H. Gaines
Chairman of the Board and
Chief Executive Officer
[Corporate Seal]
Attest:
_________________________
Mary Trew
Secretary
<PAGE>
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned registered holder of this Warrant hereby
sells, assigns, and transfers unto the Assignee(s) named below (including the
undersigned with respect to any shares of Common Stock subject to this Warrant
not being assigned hereby) all of the rights of the undersigned under this
Warrant, with respect to the number of shares of Common Stock set forth below:
Social Security
or other identifying Number of Shares
Names of Assignee(s) Address number of assignee(s) of
Common Stock
and does hereby irrevocably constitute and appoint
______________________________, the undersigned's attorney, to make such
transfer on the Warrant Register, with full power of substitution in the
premises.
Dated: _______________, _______
______________________________________________
Signature of Owner
(Signature must conform with the name of the Warrant
Holder as specified on the face of the Warrant)
Street Address
City State Zip Code
Exhibit A
SUBSCRIPTION FORM
To: Ixion Biotechnology, Inc. (the "Company")
The undersigned irrevocably elects to purchase ____________ shares of Common
Stock of the Company by exercising the Warrant to which this form is attached
and tenders payment of the full Exercise Price with respect to such shares of
Common Stock. The undersigned requests that the certificates representing the
shares of Common Stock of the Company as to which the Warrant is being
exercised be registered as follows:
Name: ________________________________________________________________________
Social Security or Employer Identification Number:
____________________________________
Address:
______________________________________________________________________
Deliver to:
_____________________________________________________________________
Address:
______________________________________________________________________
______________________________________________________________________
If the number of shares of Common Stock of the Company as to which the Warrant
is being exercised are fewer than all the shares of Common Stock of the
Company to which the Warrant relates, please issue a new Warrant for the
balance of such shares of Common Stock registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address:
______________________________________________________________________
Date: __________________ Signature
__________________________________
(Signature must conform with the name of the
Warrant Holder as specified on the face of Warrant)
15
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE TRANSFERRED EXCEPT IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THAT ACT. THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED
HEREIN.
NO. W-002
WARRANT TO PURCHASE 7,608 SHARES OF
COMMON STOCK OF
IXION BIOTECHNOLOGY, INC.
This certifies that the University of Florida Research Foundation
("UFRFI"), a not-for-profit corporation duly organized and existing under the
laws of the State of Florida, or registered assigns, (the "Warrant Holder") is
entitled to purchase from Ixion Biotechnology, (the "Company"), a Delaware
corporation, at any time after 9:00 a.m. Gainesville, Florida time, on the
Expiration Date (as defined below), up to an aggregate of 7,608 shares of
Common Stock (as defined below) at the Exercise Price (as defined below). The
Exercise Price and the number of shares of Common Stock which may be purchased
from time to time upon the exercise of this Warrant are subject to adjustment
as provided in Article III.
ARTICLE I
Definitions
Section 1.01. As used in this Warrant, the following terms shall have
the following respective meanings:
(a) "Business Day" means a day other than a Saturday, Sunday, or
other day on which banks in the State of Florida are authorized by law to
remain closed.
(b) "Common Stock" means the common stock, $0.01 par value per
share, of the Company, and any other capital stock of the Company into which
such common stock may be converted or reclassified or that may be issued in
respect of, in exchange for, or in substitution of, such common stock by
reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other like events.
(c) "Exercise Price" means $2.00 per share of Common Stock,
provided, however, that the Exercise Price may be adjusted from time to time
as provided in Article III.
(d) "Expiration Date" means August 31, 2000.
(e) "Form of Assignment" means the form set forth at the foot of
this Warrant.
(f) "Subscription Form" means the form set forth in Exhibit A
hereto.
(g) "Warrant" means this Warrant and all warrants of like tenor
(together evidencing the right to purchase a total of 7,608 shares of Common
Stock, subject to adjustment as provided in Article III), originally issued to
UFRFI or its designees pursuant to a License Agreement, relating to space and
services at the Biotechnology Development Institute, dated June 26, 1995
between the Company and UFRFI.
(h) "Warrant Register" means a register to be maintained by the
Company at its principal executive offices in which the Company shall provide
for the registration of the Warrants and of transfers or exchanges of the
Warrants as herein provided.
Section 1.02. Certain other terms are defined elsewhere in this
Warrant:
Term Defined in Section
"Change of Shares" Section 3.01(a)
"Commission" Section 6.01(a)
"Common Stock Distribution" Section 3.01(b)
"Company" Preamble
"Convertible Securities" Section 3.01(c)
"Options" Section 3.01(c)
"Securities Act" Section 5.01
"Time of Determination" Section 3.01(f)
"Warrant Holder" Preamble
ARTICLE II
Duration and Exercise of Warrant
Section 2.01. This Warrant may be exercised at any time after 9:00
a.m., Gainesville, Florida time, on July 1, 1995, and before 5:00 p.m.,
Gainesville, Florida time, on the Expiration Date. If this Warrant is not
exercised at or before 5:00 p.m., Gainesville, Florida time, on the Expiration
Date, it will become void and neither the Warrant Holder nor any other person
will have any rights under this Warrant.
Section 2.02. (a) To exercise this Warrant in whole or in part, the
Warrant Holder must surrender this Warrant, with the Subscription Form duly
executed, to the Company at its principal office accompanied by a certified or
official bank check payable to the order of the Company in an amount equal to
the aggregate Exercise Price for the shares of Common Stock as to which this
Warrant is being exercised.
(b) When the Company receives this Warrant with the Subscription
Form duly executed and accompanied by payment of the aggregate Exercise Price
for the shares of Common Stock as to which this Warrant is being exercised,
the Company will promptly issue certificates, registered in the name of the
Warrant Holder or such other names as are designated by the Warrant Holder,
representing the total number of shares of Common Stock (and other securities,
if any) as to which this Warrant is being exercised, in such denominations as
are requested by the Warrant Holder, and the Company will deliver promptly
such certificates to the Warrant Holder.
(c) If the Warrant Holder exercises this Warrant with respect to
fewer than all the shares of Common Stock to which it relates, the Company
will execute a new Warrant for the balance of the shares of Common Stock that
may be purchased upon exercise of this Warrant and will deliver promptly such
new Warrant to the Warrant Holder.
(d) The Company will pay any taxes that may be payable in
respect of (i) the issuance of shares of Common Stock or (ii) the issuance of
a new Warrant if this Warrant is exercised as to fewer than all the shares of
Common Stock to which it relates. The Company will not, however, be required
to pay any transfer tax payable because shares of Common Stock or a new
Warrant are to be registered in a name other than that of the Warrant Holder,
and the Company will not be required to issue any shares of Common Stock or to
issue a new Warrant registered in a name other than that of the Warrant Holder
until (i) the Company receives either (A) evidence that any applicable
transfer taxes have been paid or (B) funds with which to pay those taxes or
(ii) it has been established to the Company's satisfaction that no such tax is
due.
ARTICLE III
Adjustment of Exercise Price
and Number of Shares of Common Stock
Section 3.01. The Exercise Price and the number of shares of Common
Stock or other securities issuable on exercise of this Warrant are subject to
adjustment as follows:
(a) Changes in Common Stock. In the event the Company shall, at
any time or from time to time after the date hereof, (i) issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, (ii)
subdivide or combine the outstanding shares of Common Stock into a greater or
lesser number of shares or (iii) issue any shares of its capital stock in a
reclassification, or reorganization of the Common Stock (any such issuance,
subdivision, combination, reclassification, or reorganization being herein
called a "Change of Shares"), then (A) in the case of (i) or (ii) above, the
number of shares of Common Stock that may be purchased upon the exercise of
this Warrant shall be adjusted to the number of shares of Common Stock that
the Warrant Holder would have owned or have been entitled to receive after the
happening of such event had this Warrant been exercised immediately prior to
the record date (or, if there is no record date, the effective date) for such
event, and the Exercise Price shall be adjusted to the price (calculated to
the nearest 1,000th of one cent) determined by multiplying the Exercise Price
immediately prior to such event by a fraction the numerator of which shall be
the number of shares of Common Stock purchasable with this Warrant immediately
prior to such event and the denominator of which shall be the number of shares
purchasable with this Warrant after the adjustment referred to above and (B)
in the case of (iii) above, paragraph (l) below shall apply. An adjustment
made pursuant to clause (A) of this paragraph shall become effective
retroactively immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in other cases.
Any shares of Common Stock purchasable solely as a result of such adjustment
shall not be issued prior to the effective date of such event.
(b) Common Stock Distribution. In the event the Company shall,
at any time or from time to time after the date hereof, issue, sell, or
otherwise distribute any shares of Common Stock (other than pursuant to a
Change of Shares or the exercise of any Option, Convertible Security (each as
defined in paragraph (c) and (d) below), or Warrant (any such event including
any event described in paragraphs (c) and (d) below), being herein called a
"Common Stock Distribution") for a consideration per share less than the
current market price per share of Common Stock (as defined in paragraph (f)
below) on the date of such Common Stock Distribution, then, effective upon
such Common Stock Distribution, the Exercise Price shall be reduced to the
price (calculated to the nearest 1,000th of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Common
Stock Distribution by a fraction, the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such Common Stock Distribution
multiplied by the current market price per share of Common Stock on the date
of such Common Stock Distribution, plus (ii) the consideration, if any,
received by the Company upon such Common Stock Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Common Stock Distribution multiplied by (B) the current market price per
share of Common Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment of
the Exercise Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock purchasable
upon the exercise of this Warrant shall be increased to a number determined by
multiplying the number of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment. In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest 1,000th
of a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Common Stock purchasable upon the exercise
of this Warrant.
(c) Issuance of Options. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, distribute, or
otherwise grant in any manner (including by assumption) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants, or options being herein called
"Options" and any such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), other than pursuant to its 1994 Stock
Option Plan and its 1994 Board Retainer Plan, whether or not such Options or
the rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the exercise of such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution, or granting of such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the cases of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Options or upon the conversion or exchange of all
Convertible Securities issuable upon the exercise of all such Options) shall
be less than the current market price per share of Common Stock on the date of
the issuance, sale, distribution, or granting of such Options then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options) shall be less than the current market
price per share of Common Stock on the date of the issuance, sale,
distribution, or granting of such Options shall be deemed to have been issued
as on the date of the issuance, sale, distribution, or granting of such
Options and thereafter shall be deemed to be outstanding and the Company shall
be deemed to have received as consideration such price per share, determined
as provided above, therefor. Except as otherwise provided in paragraphs (j)
and (k) below, no additional adjustment of the Exercise Price shall be made
upon the actual exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.
(d) Issuance of Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale, or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of all such Convertible Securities, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the current market price per share
of Common Stock on the date of such issuance, sale, or distribution, then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date of the issuance,
sale, or distribution of such Convertible Securities and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, distribute to
the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities, or other properties or assets
(in each case other than (i) dividends payable in Common Stock, Options, or
Convertible Securities and (ii) any cash dividend that, when added to all
other cash dividends paid in the one year prior to the declaration date of
such dividend (excluding any such other dividend included in a previous
adjustment of the Exercise Price pursuant to this paragraph (e)), does not
exceed 10% of the current market price per share of Common Stock on such
declaration date), or any options, warrants, or other rights to subscribe for
or purchase any of the foregoing, then (A) the Exercise Price shall be
decreased to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the current market price
per share of Common Stock on the record date for such distribution less the
sum of (X) the cash portion, if any, of such distribution per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date for
such distribution plus (Y) the then fair market value (as determined in good
faith by the Board of Directors of the Company) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants, or subscription or purchase rights, and the denominator of which
shall be such current market price per share of Common Stock and (B) the
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be increased to a number determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to the record date for such
distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (A) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment. The adjustments required by this paragraph
(e) shall be made retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(f) Current Market Price. For the purpose of any computation
under paragraphs (b), (c), (d), and (e) of this Section 3.01, the current
market price per share of Common Stock at any date shall be determined as
follows: until the Company has raised an aggregate of $2,000,000 in sales of
its securities, small business innovation research awards, small business
technology transfer awards, or payments by corporate partners for research
support or co-development (it being understood that at the date of this
Warrant Agreement, the Company has already raised a total of $442,806,
exclusive of deferred salaries), then the current market price per share
(prior to any adjustment resulting from a Common Stock Distribution) shall be
$2.00 per share; thereafter, the current market price per share of the Common
Stock at any date shall be the average of the daily closing prices for the
shorter of (i) the 20 consecutive trading days ending on the last full trading
day on the exchange or market specified in the second succeeding sentence
prior to the Time of Determination and (ii) the period commencing on the date
next succeeding the first public announcement of the issuance, sale,
distribution, or granting in question through such last full trading day prior
to the Time of Determination. The term "Time of Determination" as used herein
shall be the time and date of the earlier to occur of (A) the date as of which
the current market price is to be computed and (B) the last full trading day
on such exchange or market before the commencement of "ex-dividend" trading in
the Common Stock relating to the event giving rise to the adjustment required
by paragraph (b), (c), (d), or (e). The closing price for any day shall be
the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices
regular way for such day, in each case (1) on the principal national
securities exchange on which the shares of Common Stock are listed or to which
such shares are admitted to trading or (2) if the Common Stock is not listed
or admitted to trading on a national securities exchange, in the over-the-
counter market as reported by NASDAQ or any comparable system or (3) if the
Common Stock is not listed on NASDAQ or a comparable system, as furnished by
two members of the National Association of Securities Dealers, Inc. selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing or if for any other
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (f), the current market price per
share shall be the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
(g) Certain Distributions. If the Company shall pay a dividend
or make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (b) above (by operation of paragraph (c) or
(d) above, as the as may be), such Options or Convertible Securities shall be
deemed to have been issued or sold without consideration.
(h) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold, or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board
of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration, provided, however, that if such
Options have an exercise price equal to or greater than the current market
price of the Common Stock on the date of issuance of such Options, then such
Options shall be deemed to have been issued for consideration equal to such
exercise price.
(i) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of this Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
$.10 in the Exercise Price; provided however, that any adjustments which by
reason of this paragraph (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need be made for a change in the par value of the Common Stock.
(j) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraph (c) above,
the additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) or (d) above, or
the rate at which any Convertible Securities referred to in paragraph (c) or
(d) above are convertible into or exchangeable for Common Stock shall change
at any time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant
to this Article III), the Exercise Price then in effect and the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall
forthwith be readjusted (effective only with respect to any exercise of this
Warrant after such readjustment) to the Exercise Price and number of shares of
Common Stock so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution, or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration, or conversion rate, as the case may be, but only
with respect to such Options and Convertible Securities as then remain
outstanding.
(k) Expiration of Options and Convertible Securities. If, at
any time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall have been made pursuant to
paragraph (c), (d), or (j) above or this paragraph (k), any Options or
Convertible Securities shall have expired unexercised, the number of such
shares so purchasable shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only shares of Common Stock deemed to have been issued in connection
with such options or Convertible Securities were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such Options or
Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received by
the Company for the issuance, sale, distribution, or granting of all such
Options of Convertible Securities, whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of such shares so purchasable by an amount (calculated by adjusting
such decrease to account for all other adjustments made pursuant to this
Article III following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution, or granting of such Options or Convertible
Securities.
(l) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Article III, the Warrant Holder
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price applicable to
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Article III.
Section 3.02. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of this Warrant is adjusted, as
herein provided, the Company shall promptly mail to the Warrant Holder notice
of such adjustment or adjustments and shall deliver to the Warrant Holder a
certificate of a principal officer of the Company setting forth the number of
shares of Common Stock or other stock or property issuable upon the exercise
of this Warrant after such adjustment, setting forth a brief statement of the
facts requiring such adjustment, and setting forth the computation by which
such adjustment was made.
Section 3.03. If at any time after this Warrant is first issued
(a) the Company declares a dividend or other distribution on its
Common Stock payable other than in cash out of its undistributed net income;
or
(b) the Company authorizes the granting to the holders of its
Common Stock of rights to subscribe for a purchase any shares of any class of
its capital stock or any other securities; or
(c) there is any reclassification of the Common Stock (other
than a subdivision or combination of its outstanding Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of the holders of the Common Stock is required, or a sale or transfer of all
or substantially all the assets of the Company; or
(d) there is a voluntary or involuntary dissolution,
liquidation, or winding up of the Company;
then, in each case, the Company will mail to the Warrant Holder at least 15
Business Days before the applicable record date a notice stating (i) the
record date for the dividend, distribution, or rights, or, if there will not
be a record date, the date as of which the holders of record of Common Stock
who will be entitled to the dividend, distribution, or rights will be
determined, or (ii) the date on which the reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, or winding up is expected to
become effective, and the date as of which it is expected the holders of
record of Common Stock who will be entitled to exchange their Common Stock for
securities or other property as a result of the reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation, or winding up
will be determined. Failure to give any notice or any defect in the notice
will not affect the validity of the action which should have been the subject
of the notice.
Section 3.04. The form of this Warrant need not be changed because of
any change in the Warrant Price or in the number of shares of Common Stock
which may be purchased by exercising this Warrant. The Company may, however,
at any time make any change in the form of Warrant this it deems appropriate
to reflect a change in the Exercise Price or in the number of shares of Common
Stock which may be purchased by exercising this Warrant (provided the change
in the form of Warrant does not otherwise affect the substance of the
Warrant), and any Warrant issued after the form of Warrant is so changed shall
be in the changed form.
ARTICLE IV
Other Provisions Relating to Rights of the Warrant Holder
Section 4.01. The Warrant Holder will not, as such, be entitled to
vote, to receive dividends, or to have any other of the rights of a
shareholder of the Company, except that after this Warrant is exercised in
accordance with the terms of this Warrant the persons in whose names the
shares of Common Stock purchased through exercise of
this Warrant are to be issued will be deemed to become the holders of record
of those shares of Common Stock for all purposes even if certificates
representing such shares of Common Stock have not been issued.
Section 4.02.1 (a) The Company will at all times reserve and keep
available for issuance upon exercise of this Warrant the number of authorized
and unissued shares of Common Stock equal to the maximum number of shares of
Common Stock the Company may be required to issue upon exercise of this
warrant at the Exercise Price in effect from time to time.
(b) All shares of Common Stock issued on exercise of this
Warrant will, when they are issued, be validly issued, fully paid, and
nonassessable.
Section 4.03. The Company will not be required to issue any fraction
of a share upon exercise of this Warrant. If any fraction of a share of
Common Stock would, except for the provisions of this Section, be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to equal to the then current market
value per share multiplied by such fraction computed to the nearest whole
cent. The Warrant Holder, by its acceptance of this Warrant, expressly waives
any and all rights to receive any fraction of a share of Common Stock or a
stock certificate representing a fraction of a share of Common Stock.
Section 4.04. The Company will maintain a Warrant Register in which the
name and address of each registered holder of Warrants will be recorded.
Section 4.05. Notices or other communications to the Warrant Holder
will be deemed given by the Company on the third Business Day after the day on
which they are sent by registered mail, return receipt requested, addressed to
the Warrant Holder at the Warrant Holder's last known address shown on the
Warrant Register.
Section 4.06. Prior to due presentment for registration of transfer
of this Warrant, the Company may treat the Warrant Holder as the absolute
owner of this Warrant for all purposes, including for the purpose of
determining the persons entitled to exercise this Warrant, despite any notice
to the contrary.
ARTICLE V
Transfer of Warrants
Section 5.01. This Warrant may be sold, transferred, assigned, or
hypothecated with the written consent of the Company, in whole or in part. At
all times, however, neither this Warrant nor the shares of Common Stock or
other securities issuable upon exercise of this Warrant may be transferred
except in a transaction which is registered under the Securities Act of 1933,
as amended (the "Securities Act"), or which is exempt from the registration
requirements of the Securities Act.
Section 5.02. Upon surrender to the Company at its principal office
of this Warrant with the Form of Assignment (or another instrument of
assignment) duly executed and accompanied by (i) (A) evidence that any
transfer tax has been paid or (B) funds sufficient to pay any transfer tax, or
(C) evidence to the Company's satisfaction that no such tax is due, and (ii)
evidence reasonably satisfactory to the Company that the proposed assignment
will not violate Section 5.01, the Company will, without charge, execute and
deliver a new Warrant registered in the name of the assignee named in the Form
of Assignment (or other instrument of assignment) and will promptly cancel
this Warrant. This Warrant may be divided or combined with other Warrants by
surrender of this Warrant and any other Warrants with which it is to be
combined at the principal office of the Company together with a written
notice, signed by the Warrant Holder, specifying the names and denominations
in which new Warrants are to be issued.
Section 5.03. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and (in the case of loss, theft, or destruction) of reasonably
satisfactory indemnification, or (in the case of mutilation) upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to
the same number of shares of Common Stock as this Warrant and the lost,
stolen, destroyed, or mutilated Warrant will become void. Any new Warrant
executed and delivered in accordance with this Section 5.03 will constitute an
additional contractual obligation of the Company, and will be valid and
enforceable whether or not the Warrant which was believed to have been lost,
stolen, or destroyed is subsequently presented for exercise.
ARTICLE VI
Registration Under the Securities Act
Section 6.01 (a) If, at any time during the period commencing on July 1,
1995 and ending on June 30, 2001, The Company shall determine or be required
to register any shares of the Company's Common Stock (whether on behalf of
itself or any other person) under the Securities Act of 1933 on Forms S-1, S-
2, S-3, SB-1, or SB-2 (or if such forms are rescinded by the Securities and
Exchange Commission (the "Commission") such forms as replace those forms),
excluding any registration for the offering and sale of securities of the
Company to its employees, it will notify the Warrant Holder in order that it
may request that all or a part of shares of Common Stock issued or issuable
upon exercise of this Warrant be included in the registration statement. If
requested by any Warrant Holder in writing within 20 days after the Company's
notice, the Company will include the requested number of shares in such
registration statement. Any such request shall include the agreement of the
Warrant Holder requesting the registration to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with such registration. The Company may, however, decline to include all or a
part of the requested number of shares in a registration statement pursuant to
this section if it is advised by the investment banking firm managing the
underwriting that such inclusion would adversely affect the offering of the
shares to be covered by the proposed registration statement.
(b) The Company shall use its best efforts to file such post-
effective amendments to any registration statement described in this Section 6
as shall be necessary to keep it effective until six months after the
effective date of the registration statement or the date on which all of the
shares of the Warrant Holders covered thereunder shall have been sold,
whichever is earlier.
(c) As a condition to the Company's obligation under this
Article VI to cause a registration statement or amendment to be filed or
shares to be included in a registration statement, the Warrant Holder shall
provide such information and execute such documents as may reasonably be
required in connection with such registration. In addition, the Company shall
not be required to include such shares in a registration statement if it shall
have received opinions of its and the Warrant Holder's counsel to the effect
that the proposed disposition of such shares may be effected without
registration under the Act.
(d) The expenses of the registration of Warrant Holders' shares
(other than transfer taxes, underwriting commissions, and fees of Warrant
Holders' counsel) shall be paid by the Company.
Section 6.02. Unless the resale of shares of Common Stock is the
subject of an effective registration statement under the Securities Act, the
certificates representing shares of Common Stock issued upon exercise of this
Warrant may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT
BE OFFERED OR SOLD, EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR (ii) IN A TRANSACTION WHICH IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
ARTICLE VII
Other Matters
Section 7.01. The provisions of this Warrant will bind, and inure to
the benefit of, the Company and its successors and assigns and the Warrant
Holder and its successors and assigns.
Section 7.02 (a) Any notice or other communication to the Company
relating to this Warrant will be deemed given on the day when it is delivered
or sent by facsimile transmission (with a confirmation copy sent by registered
mail, return receipt requested), or on the third Business Day after the day on
which it is sent by registered mail, return receipt requested, to the Company
at the following address (or such other address as may be specified by the
Company after the date of this Warrant):
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Attention: Chairman of the Board and Chief
Executive Officer
Facsimile No. (904) 462-0875
(b) Any notice or other communication to the Warrant Holder will
be deemed given when and as provided in Section 4.05.
Section 7.03. To the extent such documents are required to be sent
by the Company to the holders of its outstanding Common Stock, the Company
shall provide the Warrant Holder, within five Business Days after it files
them with the Commission, copies of its annual report and of the information,
documents, and other reports which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Section 7.04. THIS WARRANT WILL BE GOVERNED BY, AND CONSTRUED UNDER,
THE LAWS OF THE STATE OF FLORIDA RELATING TO CONTRACTS AND INSTRUMENTS
EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
Section 7.05. The Article and Section headings in this Warrant are
for convenience only, are not part of this Warrant and are not intended to
affect the meaning or interpretation of any of the terms of this Warrant.
END OF TEXT - SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Warrant has been executed by the Company on the
___________ day of ______________, 1995.
Ixion Biotechnology, Inc.
By ___________________________
Weaver H. Gaines
Chairman of the Board and
Chief Executive Officer
[Corporate Seal]
Attest:
_________________________
Mary Trew
Secretary
<PAGE>
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned registered holder of this Warrant
hereby sells, assigns, and transfers unto the Assignee(s) named below
(including the undersigned with respect to any shares of Common Stock subject
to this Warrant not being assigned hereby) all of the rights of the
undersigned under this Warrant, with respect to the number of shares of Common
Stock set forth below:
Social Security
or other identifying Number of
Shares
Names of Assignee(s) Address number of assignee(s) of
Common Stock
and does hereby irrevocably constitute and appoint
______________________________, the undersigned's attorney, to make such
transfer on the Warrant Register, with full power of substitution in the
premises.
Dated: _______________, _______
______________________________________________
Signature of Owner
(Signature must conform with the name of the
Warrant
Holder as specified on the face of the
Warrant)
Street Address
City State Zip Code
Exhibit A
SUBSCRIPTION FORM
To: Ixion Biotechnology, Inc. (the "Company")
The undersigned irrevocably elects to purchase ____________ shares
of Common Stock of the Company by exercising the Warrant to which this form is
attached and tenders payment of the full Exercise Price with respect to such
shares of Common Stock. The undersigned requests that the certificates
representing the shares of Common Stock of the Company as to which the Warrant
is being exercised be registered as follows:
Name: ________________________________________________________________________
Social Security or Employer Identification Number:
____________________________________
Address:
______________________________________________________________________
Deliver to:
_____________________________________________________________________
Address:
______________________________________________________________________
______________________________________________________________________
If the number of shares of Common Stock of the Company as to which
the Warrant is being exercised are fewer than all the shares of Common Stock
of the Company to which the Warrant relates, please issue a new Warrant for
the balance of such shares of Common Stock registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address:
______________________________________________________________________
Date: __________________ Signature
__________________________________
(Signature must conform with the name of
the Warrant Holder as specified on
the face of Warrant)
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE TRANSFERRED EXCEPT IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THAT ACT. THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED
HEREIN.
NO. W-003
WARRANT TO PURCHASE 6,657 SHARES OF
COMMON STOCK OF
IXION BIOTECHNOLOGY, INC.
This certifies that the University of Florida Research Foundation
("UFRFI"), a not-for-profit corporation duly organized and existing under the
laws of the State of Florida, or registered assigns, (the "Warrant Holder") is
entitled to purchase from Ixion Biotechnology, (the "Company"), a Delaware
corporation, at any time after 9:00 a.m. Gainesville, Florida time, on the
Expiration Date (as defined below), up to an aggregate of 6,657 shares of
Common Stock (as defined below) at the Exercise Price (as defined below). The
Exercise Price and the number of shares of Common Stock which may be purchased
from time to time upon the exercise of this Warrant are subject to adjustment
as provided in Article III.
ARTICLE I
Definitions
Section 1.01. As used in this Warrant, the following terms shall have
the following respective meanings:
(a) "Business Day" means a day other than a Saturday, Sunday, or
other day on which banks in the State of Florida are authorized by law to
remain closed.
(b) "Common Stock" means the common stock, $0.01 par value per
share, of the Company, and any other capital stock of the Company into which
such common stock may be converted or reclassified or that may be issued in
respect of, in exchange for, or in substitution of, such common stock by
reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other like events.
(c) "Exercise Price" means $2.00 per share of Common Stock,
provided, however, that the Exercise Price may be adjusted from time to time
as provided in Article III.
(d) "Expiration Date" means August 31, 2000.
(e) "Form of Assignment" means the form set forth at the foot of
this Warrant.
(f) "Subscription Form" means the form set forth in Exhibit A
hereto.
(g) "Warrant" means this Warrant and all warrants of like tenor
(together evidencing the right to purchase a total of 6,657 shares of Common
Stock, subject to adjustment as provided in Article III), originally issued to
UFRFI or its designees pursuant to a License Agreement, relating to space and
services at the Biotechnology Development Institute, dated June 26, 1995
between the Company and UFRFI.
(h) "Warrant Register" means a register to be maintained by the
Company at its principal executive offices in which the Company shall provide
for the registration of the Warrants and of transfers or exchanges of the
Warrants as herein provided.
Section 1.02. Certain other terms are defined elsewhere in this
Warrant:
Term Defined in Section
"Change of Shares" Section 3.01(a)
"Commission" Section 6.01(a)
"Common Stock Distribution" Section 3.01(b)
"Company" Preamble
"Convertible Securities" Section 3.01(c)
"Options" Section 3.01(c)
"Securities Act" Section 5.01
"Time of Determination" Section 3.01(f)
"Warrant Holder" Preamble
ARTICLE II
Duration and Exercise of Warrant
Section 2.01. This Warrant may be exercised at any time after 9:00
a.m., Gainesville, Florida time, on July 1, 1995, and before 5:00 p.m.,
Gainesville, Florida time, on the Expiration Date. If this Warrant is not
exercised at or before 5:00 p.m., Gainesville, Florida time, on the Expiration
Date, it will become void and neither the Warrant Holder nor any other person
will have any rights under this Warrant.
Section 2.02. (a) To exercise this Warrant in whole or in part, the
Warrant Holder must surrender this Warrant, with the Subscription Form duly
executed, to the Company at its principal office accompanied by a certified or
official bank check payable to the order of the Company in an amount equal to
the aggregate Exercise Price for the shares of Common Stock as to which this
Warrant is being exercised.
(b) When the Company receives this Warrant with the Subscription
Form duly executed and accompanied by payment of the aggregate Exercise Price
for the shares of Common Stock as to which this Warrant is being exercised,
the Company will promptly issue certificates, registered in the name of the
Warrant Holder or such other names as are designated by the Warrant Holder,
representing the total number of shares of Common Stock (and other securities,
if any) as to which this Warrant is being exercised, in such denominations as
are requested by the Warrant Holder, and the Company will deliver promptly
such certificates to the Warrant Holder.
(c) If the Warrant Holder exercises this Warrant with respect to
fewer than all the shares of Common Stock to which it relates, the Company
will execute a new Warrant for the balance of the shares of Common Stock that
may be purchased upon exercise of this Warrant and will deliver promptly such
new Warrant to the Warrant Holder.
(d) The Company will pay any taxes that may be payable in
respect of (i) the issuance of shares of Common Stock or (ii) the issuance of
a new Warrant if this Warrant is exercised as to fewer than all the shares of
Common Stock to which it relates. The Company will not, however, be required
to pay any transfer tax payable because shares of Common Stock or a new
Warrant are to be registered in a name other than that of the Warrant Holder,
and the Company will not be required to issue any shares of Common Stock or to
issue a new Warrant registered in a name other than that of the Warrant Holder
until (i) the Company receives either (A) evidence that any applicable
transfer taxes have been paid or (B) funds with which to pay those taxes or
(ii) it has been established to the Company's satisfaction that no such tax is
due.
ARTICLE III
Adjustment of Exercise Price
and Number of Shares of Common Stock
Section 3.01. The Exercise Price and the number of shares of Common
Stock or other securities issuable on exercise of this Warrant are subject to
adjustment as follows:
(a) Changes in Common Stock. In the event the Company shall, at
any time or from time to time after the date hereof, (i) issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, (ii)
subdivide or combine the outstanding shares of Common Stock into a greater or
lesser number of shares or (iii) issue any shares of its capital stock in a
reclassification, or reorganization of the Common Stock (any such issuance,
subdivision, combination, reclassification, or reorganization being herein
called a "Change of Shares"), then (A) in the case of (i) or (ii) above, the
number of shares of Common Stock that may be purchased upon the exercise of
this Warrant shall be adjusted to the number of shares of Common Stock that
the Warrant Holder would have owned or have been entitled to receive after the
happening of such event had this Warrant been exercised immediately prior to
the record date (or, if there is no record date, the effective date) for such
event, and the Exercise Price shall be adjusted to the price (calculated to
the nearest 1,000th of one cent) determined by multiplying the Exercise Price
immediately prior to such event by a fraction the numerator of which shall be
the number of shares of Common Stock purchasable with this Warrant immediately
prior to such event and the denominator of which shall be the number of shares
purchasable with this Warrant after the adjustment referred to above and (B)
in the case of (iii) above, paragraph (l) below shall apply. An adjustment
made pursuant to clause (A) of this paragraph shall become effective
retroactively immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in other cases.
Any shares of Common Stock purchasable solely as a result of such adjustment
shall not be issued prior to the effective date of such event.
(b) Common Stock Distribution. In the event the Company shall,
at any time or from time to time after the date hereof, issue, sell, or
otherwise distribute any shares of Common Stock (other than pursuant to a
Change of Shares or the exercise of any Option, Convertible Security (each as
defined in paragraph (c) and (d) below), or Warrant (any such event including
any event described in paragraphs (c) and (d) below), being herein called a
"Common Stock Distribution") for a consideration per share less than the
current market price per share of Common Stock (as defined in paragraph (f)
below) on the date of such Common Stock Distribution, then, effective upon
such Common Stock Distribution, the Exercise Price shall be reduced to the
price (calculated to the nearest 1,000th of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Common
Stock Distribution by a fraction, the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such Common Stock Distribution
multiplied by the current market price per share of Common Stock on the date
of such Common Stock Distribution, plus (ii) the consideration, if any,
received by the Company upon such Common Stock Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Common Stock Distribution multiplied by (B) the current market price per
share of Common Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment of
the Exercise Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock purchasable
upon the exercise of this Warrant shall be increased to a number determined by
multiplying the number of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment. In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest 1,000th
of a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Common Stock purchasable upon the exercise
of this Warrant.
(c) Issuance of Options. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, distribute, or
otherwise grant in any manner (including by assumption) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants, or options being herein called
"Options" and any such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), other than pursuant to its 1994 Stock
Option Plan and its 1994 Board Retainer Plan, whether or not such Options or
the rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the exercise of such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution, or granting of such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the cases of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Options or upon the conversion or exchange of all
Convertible Securities issuable upon the exercise of all such Options) shall
be less than the current market price per share of Common Stock on the date of
the issuance, sale, distribution, or granting of such Options then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options) shall be less than the current market
price per share of Common Stock on the date of the issuance, sale,
distribution, or granting of such Options shall be deemed to have been issued
as on the date of the issuance, sale, distribution, or granting of such
Options and thereafter shall be deemed to be outstanding and the Company shall
be deemed to have received as consideration such price per share, determined
as provided above, therefor. Except as otherwise provided in paragraphs (j)
and (k) below, no additional adjustment of the Exercise Price shall be made
upon the actual exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.
(d) Issuance of Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale, or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of all such Convertible Securities, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the current market price per share
of Common Stock on the date of such issuance, sale, or distribution, then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date of the issuance,
sale, or distribution of such Convertible Securities and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, distribute to
the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities, or other properties or assets
(in each case other than (i) dividends payable in Common Stock, Options, or
Convertible Securities and (ii) any cash dividend that, when added to all
other cash dividends paid in the one year prior to the declaration date of
such dividend (excluding any such other dividend included in a previous
adjustment of the Exercise Price pursuant to this paragraph (e)), does not
exceed 10% of the current market price per share of Common Stock on such
declaration date), or any options, warrants, or other rights to subscribe for
or purchase any of the foregoing, then (A) the Exercise Price shall be
decreased to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the current market price
per share of Common Stock on the record date for such distribution less the
sum of (X) the cash portion, if any, of such distribution per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date for
such distribution plus (Y) the then fair market value (as determined in good
faith by the Board of Directors of the Company) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants, or subscription or purchase rights, and the denominator of which
shall be such current market price per share of Common Stock and (B) the
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be increased to a number determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to the record date for such
distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (A) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment. The adjustments required by this paragraph
(e) shall be made retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(f) Current Market Price. For the purpose of any computation
under paragraphs (b), (c), (d), and (e) of this Section 3.01, the current
market price per share of Common Stock at any date shall be determined as
follows: until the Company has raised an aggregate of $2,000,000 in sales of
its securities, small business innovation research awards, small business
technology transfer awards, or payments by corporate partners for research
support or co-development (it being understood that at the date of this
Warrant Agreement, the Company has already raised a total of $442,806,
exclusive of deferred salaries), then the current market price per share
(prior to any adjustment resulting from a Common Stock Distribution) shall be
$2.00 per share; thereafter, the current market price per share of the Common
Stock at any date shall be the average of the daily closing prices for the
shorter of (i) the 20 consecutive trading days ending on the last full trading
day on the exchange or market specified in the second succeeding sentence
prior to the Time of Determination and (ii) the period commencing on the date
next succeeding the first public announcement of the issuance, sale,
distribution, or granting in question through such last full trading day prior
to the Time of Determination. The term "Time of Determination" as used herein
shall be the time and date of the earlier to occur of (A) the date as of which
the current market price is to be computed and (B) the last full trading day
on such exchange or market before the commencement of "ex-dividend" trading in
the Common Stock relating to the event giving rise to the adjustment required
by paragraph (b), (c), (d), or (e). The closing price for any day shall be
the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices
regular way for such day, in each case (1) on the principal national
securities exchange on which the shares of Common Stock are listed or to which
such shares are admitted to trading or (2) if the Common Stock is not listed
or admitted to trading on a national securities exchange, in the over-the-
counter market as reported by NASDAQ or any comparable system or (3) if the
Common Stock is not listed on NASDAQ or a comparable system, as furnished by
two members of the National Association of Securities Dealers, Inc. selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing or if for any other
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (f), the current market price per
share shall be the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
(g) Certain Distributions. If the Company shall pay a dividend
or make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (b) above (by operation of paragraph (c) or
(d) above, as the as may be), such Options or Convertible Securities shall be
deemed to have been issued or sold without consideration.
(h) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold, or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board
of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration, provided, however, that if such
Options have an exercise price equal to or greater than the current market
price of the Common Stock on the date of issuance of such Options, then such
Options shall be deemed to have been issued for consideration equal to such
exercise price.
(i) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of this Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
$.10 in the Exercise Price; provided however, that any adjustments which by
reason of this paragraph (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need be made for a change in the par value of the Common Stock.
(j) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraph (c) above,
the additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) or (d) above, or
the rate at which any Convertible Securities referred to in paragraph (c) or
(d) above are convertible into or exchangeable for Common Stock shall change
at any time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant
to this Article III), the Exercise Price then in effect and the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall
forthwith be readjusted (effective only with respect to any exercise of this
Warrant after such readjustment) to the Exercise Price and number of shares of
Common Stock so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution, or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration, or conversion rate, as the case may be, but only
with respect to such Options and Convertible Securities as then remain
outstanding.
(k) Expiration of Options and Convertible Securities. If, at
any time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall have been made pursuant to
paragraph (c), (d), or (j) above or this paragraph (k), any Options or
Convertible Securities shall have expired unexercised, the number of such
shares so purchasable shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only shares of Common Stock deemed to have been issued in connection
with such options or Convertible Securities were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such Options or
Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received by
the Company for the issuance, sale, distribution, or granting of all such
Options of Convertible Securities, whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of such shares so purchasable by an amount (calculated by adjusting
such decrease to account for all other adjustments made pursuant to this
Article III following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution, or granting of such Options or Convertible
Securities.
(l) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Article III, the Warrant Holder
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price applicable to
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Article III.
Section 3.02. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of this Warrant is adjusted, as
herein provided, the Company shall promptly mail to the Warrant Holder notice
of such adjustment or adjustments and shall deliver to the Warrant Holder a
certificate of a principal officer of the Company setting forth the number of
shares of Common Stock or other stock or property issuable upon the exercise
of this Warrant after such adjustment, setting forth a brief statement of the
facts requiring such adjustment, and setting forth the computation by which
such adjustment was made.
Section 3.03. If at any time after this Warrant is first issued
(a) the Company declares a dividend or other distribution on its
Common Stock payable other than in cash out of its undistributed net income;
or
(b) the Company authorizes the granting to the holders of its
Common Stock of rights to subscribe for a purchase any shares of any class of
its capital stock or any other securities; or
(c) there is any reclassification of the Common Stock (other
than a subdivision or combination of its outstanding Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of the holders of the Common Stock is required, or a sale or transfer of all
or substantially all the assets of the Company; or
(d) there is a voluntary or involuntary dissolution,
liquidation, or winding up of the Company;
then, in each case, the Company will mail to the Warrant Holder at least 15
Business Days before the applicable record date a notice stating (i) the
record date for the dividend, distribution, or rights, or, if there will not
be a record date, the date as of which the holders of record of Common Stock
who will be entitled to the dividend, distribution, or rights will be
determined, or (ii) the date on which the reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, or winding up is expected to
become effective, and the date as of which it is expected the holders of
record of Common Stock who will be entitled to exchange their Common Stock for
securities or other property as a result of the reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation, or winding up
will be determined. Failure to give any notice or any defect in the notice
will not affect the validity of the action which should have been the subject
of the notice.
Section 3.04. The form of this Warrant need not be changed because of
any change in the Warrant Price or in the number of shares of Common Stock
which may be purchased by exercising this Warrant. The Company may, however,
at any time make any change in the form of Warrant this it deems appropriate
to reflect a change in the Exercise Price or in the number of shares of Common
Stock which may be purchased by exercising this Warrant (provided the change
in the form of Warrant does not otherwise affect the substance of the
Warrant), and any Warrant issued after the form of Warrant is so changed shall
be in the changed form.
ARTICLE IV
Other Provisions Relating to Rights of the Warrant Holder
Section 4.01. The Warrant Holder will not, as such, be entitled to
vote, to receive dividends, or to have any other of the rights of a
shareholder of the Company, except that after this Warrant is exercised in
accordance with the terms of this Warrant the persons in whose names the
shares of Common Stock purchased through exercise of
this Warrant are to be issued will be deemed to become the holders of record
of those shares of Common Stock for all purposes even if certificates
representing such shares of Common Stock have not been issued.
Section 4.02.1 (a) The Company will at all times reserve and keep
available for issuance upon exercise of this Warrant the number of authorized
and unissued shares of Common Stock equal to the maximum number of shares of
Common Stock the Company may be required to issue upon exercise of this
warrant at the Exercise Price in effect from time to time.
(b) All shares of Common Stock issued on exercise of this
Warrant will, when they are issued, be validly issued, fully paid, and
nonassessable.
Section 4.03. The Company will not be required to issue any fraction
of a share upon exercise of this Warrant. If any fraction of a share of
Common Stock would, except for the provisions of this Section, be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to equal to the then current market
value per share multiplied by such fraction computed to the nearest whole
cent. The Warrant Holder, by its acceptance of this Warrant, expressly waives
any and all rights to receive any fraction of a share of Common Stock or a
stock certificate representing a fraction of a share of Common Stock.
Section 4.04. The Company will maintain a Warrant Register in which the
name and address of each registered holder of Warrants will be recorded.
Section 4.05. Notices or other communications to the Warrant Holder
will be deemed given by the Company on the third Business Day after the day on
which they are sent by registered mail, return receipt requested, addressed to
the Warrant Holder at the Warrant Holder's last known address shown on the
Warrant Register.
Section 4.06. Prior to due presentment for registration of transfer
of this Warrant, the Company may treat the Warrant Holder as the absolute
owner of this Warrant for all purposes, including for the purpose of
determining the persons entitled to exercise this Warrant, despite any notice
to the contrary.
ARTICLE V
Transfer of Warrants
Section 5.01. This Warrant may be sold, transferred, assigned, or
hypothecated with the written consent of the Company, in whole or in part. At
all times, however, neither this Warrant nor the shares of Common Stock or
other securities issuable upon exercise of this Warrant may be transferred
except in a transaction which is registered under the Securities Act of 1933,
as amended (the "Securities Act"), or which is exempt from the registration
requirements of the Securities Act.
Section 5.02. Upon surrender to the Company at its principal office
of this Warrant with the Form of Assignment (or another instrument of
assignment) duly executed and accompanied by (i) (A) evidence that any
transfer tax has been paid or (B) funds sufficient to pay any transfer tax, or
(C) evidence to the Company's satisfaction that no such tax is due, and (ii)
evidence reasonably satisfactory to the Company that the proposed assignment
will not violate Section 5.01, the Company will, without charge, execute and
deliver a new Warrant registered in the name of the assignee named in the Form
of Assignment (or other instrument of assignment) and will promptly cancel
this Warrant. This Warrant may be divided or combined with other Warrants by
surrender of this Warrant and any other Warrants with which it is to be
combined at the principal office of the Company together with a written
notice, signed by the Warrant Holder, specifying the names and denominations
in which new Warrants are to be issued.
Section 5.03. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and (in the case of loss, theft, or destruction) of reasonably
satisfactory indemnification, or (in the case of mutilation) upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to
the same number of shares of Common Stock as this Warrant and the lost,
stolen, destroyed, or mutilated Warrant will become void. Any new Warrant
executed and delivered in accordance with this Section 5.03 will constitute an
additional contractual obligation of the Company, and will be valid and
enforceable whether or not the Warrant which was believed to have been lost,
stolen, or destroyed is subsequently presented for exercise.
ARTICLE VI
Registration Under the Securities Act
Section 6.01 (a) If, at any time during the period commencing on July 1,
1995 and ending on June 30, 2001, The Company shall determine or be required
to register any shares of the Company's Common Stock (whether on behalf of
itself or any other person) under the Securities Act of 1933 on Forms S-1, S-
2, S-3, SB-1, or SB-2 (or if such forms are rescinded by the Securities and
Exchange Commission (the "Commission") such forms as replace those forms),
excluding any registration for the offering and sale of securities of the
Company to its employees, it will notify the Warrant Holder in order that it
may request that all or a part of shares of Common Stock issued or issuable
upon exercise of this Warrant be included in the registration statement. If
requested by any Warrant Holder in writing within 20 days after the Company's
notice, the Company will include the requested number of shares in such
registration statement. Any such request shall include the agreement of the
Warrant Holder requesting the registration to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with such registration. The Company may, however, decline to include all or a
part of the requested number of shares in a registration statement pursuant to
this section if it is advised by the investment banking firm managing the
underwriting that such inclusion would adversely affect the offering of the
shares to be covered by the proposed registration statement.
(b) The Company shall use its best efforts to file such post-
effective amendments to any registration statement described in this Section 6
as shall be necessary to keep it effective until six months after the
effective date of the registration statement or the date on which all of the
shares of the Warrant Holders covered thereunder shall have been sold,
whichever is earlier.
(c) As a condition to the Company's obligation under this
Article VI to cause a registration statement or amendment to be filed or
shares to be included in a registration statement, the Warrant Holder shall
provide such information and execute such documents as may reasonably be
required in connection with such registration. In addition, the Company shall
not be required to include such shares in a registration statement if it shall
have received opinions of its and the Warrant Holder's counsel to the effect
that the proposed disposition of such shares may be effected without
registration under the Act.
(d) The expenses of the registration of Warrant Holders' shares
(other than transfer taxes, underwriting commissions, and fees of Warrant
Holders' counsel) shall be paid by the Company.
Section 6.02. Unless the resale of shares of Common Stock is the
subject of an effective registration statement under the Securities Act, the
certificates representing shares of Common Stock issued upon exercise of this
Warrant may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT
BE OFFERED OR SOLD, EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR (ii) IN A TRANSACTION WHICH IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
ARTICLE VII
Other Matters
Section 7.01. The provisions of this Warrant will bind, and inure to
the benefit of, the Company and its successors and assigns and the Warrant
Holder and its successors and assigns.
Section 7.02 (a) Any notice or other communication to the Company
relating to this Warrant will be deemed given on the day when it is delivered
or sent by facsimile transmission (with a confirmation copy sent by registered
mail, return receipt requested), or on the third Business Day after the day on
which it is sent by registered mail, return receipt requested, to the Company
at the following address (or such other address as may be specified by the
Company after the date of this Warrant):
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Attention: Chairman of the Board and Chief
Executive Officer
Facsimile No. (904) 462-0875
(b) Any notice or other communication to the Warrant Holder will
be deemed given when and as provided in Section 4.05.
Section 7.03. To the extent such documents are required to be sent
by the Company to the holders of its outstanding Common Stock, the Company
shall provide the Warrant Holder, within five Business Days after it files
them with the Commission, copies of its annual report and of the information,
documents, and other reports which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Section 7.04. THIS WARRANT WILL BE GOVERNED BY, AND CONSTRUED UNDER,
THE LAWS OF THE STATE OF FLORIDA RELATING TO CONTRACTS AND INSTRUMENTS
EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
Section 7.05. The Article and Section headings in this Warrant are
for convenience only, are not part of this Warrant and are not intended to
affect the meaning or interpretation of any of the terms of this Warrant.
END OF TEXT - SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Warrant has been executed by the Company on the
1st day of August, 1996.
Ixion Biotechnology, Inc.
By ___________________________
Weaver H. Gaines
Chairman of the Board and
Chief Executive Officer
[Corporate Seal]
Attest:
_________________________
Gwenyth E. Thompson
Assistant Secretary
<PAGE>
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned registered holder of this Warrant
hereby sells, assigns, and transfers unto the Assignee(s) named below
(including the undersigned with respect to any shares of Common Stock subject
to this Warrant not being assigned hereby) all of the rights of the
undersigned under this Warrant, with respect to the number of shares of Common
Stock set forth below:
Social Security
or other identifying Number of
Shares
Names of Assignee(s) Address number of assignee(s) of
Common Stock
and does hereby irrevocably constitute and appoint
______________________________, the undersigned's attorney, to make such
transfer on the Warrant Register, with full power of substitution in the
premises.
Dated: _______________, _______
______________________________________________
Signature of Owner
(Signature must conform with the name of the
Warrant
Holder as specified on the face of the
Warrant)
Street Address
City State Zip Code
Exhibit A
SUBSCRIPTION FORM
To: Ixion Biotechnology, Inc. (the "Company")
The undersigned irrevocably elects to purchase ____________ shares
of Common Stock of the Company by exercising the Warrant to which this form is
attached and tenders payment of the full Exercise Price with respect to such
shares of Common Stock. The undersigned requests that the certificates
representing the shares of Common Stock of the Company as to which the Warrant
is being exercised be registered as follows:
Name: ________________________________________________________________________
Social Security or Employer Identification Number:
____________________________________
Address:
______________________________________________________________________
Deliver to:
_____________________________________________________________________
Address:
______________________________________________________________________
______________________________________________________________________
If the number of shares of Common Stock of the Company as to which
the Warrant is being exercised are fewer than all the shares of Common Stock
of the Company to which the Warrant relates, please issue a new Warrant for
the balance of such shares of Common Stock registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address:
______________________________________________________________________
Date: __________________ Signature
__________________________________
(Signature must conform with the name of
the Warrant Holder as specified on
the face of Warrant)
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE TRANSFERRED EXCEPT IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THAT ACT. THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED
HEREIN.
NO. W-004
WARRANT TO PURCHASE 548 SHARES OF
COMMON STOCK OF
IXION BIOTECHNOLOGY, INC.
This certifies that the University of Florida Research Foundation
("UFRFI"), a not-for-profit corporation duly organized and existing under the
laws of the State of Florida, or registered assigns, (the "Warrant Holder") is
entitled to purchase from Ixion Biotechnology, (the "Company"), a Delaware
corporation, at any time after 9:00 a.m. Gainesville, Florida time, on the
Expiration Date (as defined below), up to an aggregate of 548 shares of Common
Stock (as defined below) at the Exercise Price (as defined below). The
Exercise Price and the number of shares of Common Stock which may be purchased
from time to time upon the exercise of this Warrant are subject to adjustment
as provided in Article III.
ARTICLE I
Definitions
Section 1.01. As used in this Warrant, the following terms shall have
the following respective meanings:
(a) "Business Day" means a day other than a Saturday, Sunday, or
other day on which banks in the State of Florida are authorized by law to
remain closed.
(b) "Common Stock" means the common stock, $0.01 par value per
share, of the Company, and any other capital stock of the Company into which
such common stock may be converted or reclassified or that may be issued in
respect of, in exchange for, or in substitution of, such common stock by
reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other like events.
(c) "Exercise Price" means $2.00 per share of Common Stock,
provided, however, that the Exercise Price may be adjusted from time to time
as provided in Article III.
(d) "Expiration Date" means August 31, 2000.
(e) "Form of Assignment" means the form set forth at the foot of
this Warrant.
(f) "Subscription Form" means the form set forth in Exhibit A
hereto.
(g) "Warrant" means this Warrant and all warrants of like tenor
(together evidencing the right to purchase a total of 548 shares of Common
Stock, subject to adjustment as provided in Article III), originally issued to
UFRFI or its designees pursuant to a License Agreement, relating to space and
services at the Biotechnology Development Institute, dated June 26, 1995
between the Company and UFRFI.
(h) "Warrant Register" means a register to be maintained by the
Company at its principal executive offices in which the Company shall provide
for the registration of the Warrants and of transfers or exchanges of the
Warrants as herein provided.
Section 1.02. Certain other terms are defined elsewhere in this
Warrant:
Term Defined in Section
"Change of Shares" Section 3.01(a)
"Commission" Section 6.01(a)
"Common Stock Distribution" Section 3.01(b)
"Company" Preamble
"Convertible Securities" Section 3.01(c)
"Options" Section 3.01(c)
"Securities Act" Section 5.01
"Time of Determination" Section 3.01(f)
"Warrant Holder" Preamble
ARTICLE II
Duration and Exercise of Warrant
Section 2.01. This Warrant may be exercised at any time after 9:00
a.m., Gainesville, Florida time, on July 1, 1995, and before 5:00 p.m.,
Gainesville, Florida time, on the Expiration Date. If this Warrant is not
exercised at or before 5:00 p.m., Gainesville, Florida time, on the Expiration
Date, it will become void and neither the Warrant Holder nor any other person
will have any rights under this Warrant.
Section 2.02. (a) To exercise this Warrant in whole or in part, the
Warrant Holder must surrender this Warrant, with the Subscription Form duly
executed, to the Company at its principal office accompanied by a certified or
official bank check payable to the order of the Company in an amount equal to
the aggregate Exercise Price for the shares of Common Stock as to which this
Warrant is being exercised.
(b) When the Company receives this Warrant with the Subscription
Form duly executed and accompanied by payment of the aggregate Exercise Price
for the shares of Common Stock as to which this Warrant is being exercised,
the Company will promptly issue certificates, registered in the name of the
Warrant Holder or such other names as are designated by the Warrant Holder,
representing the total number of shares of Common Stock (and other securities,
if any) as to which this Warrant is being exercised, in such denominations as
are requested by the Warrant Holder, and the Company will deliver promptly
such certificates to the Warrant Holder.
(c) If the Warrant Holder exercises this Warrant with respect to
fewer than all the shares of Common Stock to which it relates, the Company
will execute a new Warrant for the balance of the shares of Common Stock that
may be purchased upon exercise of this Warrant and will deliver promptly such
new Warrant to the Warrant Holder.
(d) The Company will pay any taxes that may be payable in
respect of (i) the issuance of shares of Common Stock or (ii) the issuance of
a new Warrant if this Warrant is exercised as to fewer than all the shares of
Common Stock to which it relates. The Company will not, however, be required
to pay any transfer tax payable because shares of Common Stock or a new
Warrant are to be registered in a name other than that of the Warrant Holder,
and the Company will not be required to issue any shares of Common Stock or to
issue a new Warrant registered in a name other than that of the Warrant Holder
until (i) the Company receives either (A) evidence that any applicable
transfer taxes have been paid or (B) funds with which to pay those taxes or
(ii) it has been established to the Company's satisfaction that no such tax is
due.
ARTICLE III
Adjustment of Exercise Price
and Number of Shares of Common Stock
Section 3.01. The Exercise Price and the number of shares of Common
Stock or other securities issuable on exercise of this Warrant are subject to
adjustment as follows:
(a) Changes in Common Stock. In the event the Company shall, at
any time or from time to time after the date hereof, (i) issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, (ii)
subdivide or combine the outstanding shares of Common Stock into a greater or
lesser number of shares or (iii) issue any shares of its capital stock in a
reclassification, or reorganization of the Common Stock (any such issuance,
subdivision, combination, reclassification, or reorganization being herein
called a "Change of Shares"), then (A) in the case of (i) or (ii) above, the
number of shares of Common Stock that may be purchased upon the exercise of
this Warrant shall be adjusted to the number of shares of Common Stock that
the Warrant Holder would have owned or have been entitled to receive after the
happening of such event had this Warrant been exercised immediately prior to
the record date (or, if there is no record date, the effective date) for such
event, and the Exercise Price shall be adjusted to the price (calculated to
the nearest 1,000th of one cent) determined by multiplying the Exercise Price
immediately prior to such event by a fraction the numerator of which shall be
the number of shares of Common Stock purchasable with this Warrant immediately
prior to such event and the denominator of which shall be the number of shares
purchasable with this Warrant after the adjustment referred to above and (B)
in the case of (iii) above, paragraph (l) below shall apply. An adjustment
made pursuant to clause (A) of this paragraph shall become effective
retroactively immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in other cases.
Any shares of Common Stock purchasable solely as a result of such adjustment
shall not be issued prior to the effective date of such event.
(b) Common Stock Distribution. In the event the Company shall,
at any time or from time to time after the date hereof, issue, sell, or
otherwise distribute any shares of Common Stock (other than pursuant to a
Change of Shares or the exercise of any Option, Convertible Security (each as
defined in paragraph (c) and (d) below), or Warrant (any such event including
any event described in paragraphs (c) and (d) below), being herein called a
"Common Stock Distribution") for a consideration per share less than the
current market price per share of Common Stock (as defined in paragraph (f)
below) on the date of such Common Stock Distribution, then, effective upon
such Common Stock Distribution, the Exercise Price shall be reduced to the
price (calculated to the nearest 1,000th of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Common
Stock Distribution by a fraction, the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such Common Stock Distribution
multiplied by the current market price per share of Common Stock on the date
of such Common Stock Distribution, plus (ii) the consideration, if any,
received by the Company upon such Common Stock Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Common Stock Distribution multiplied by (B) the current market price per
share of Common Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment of
the Exercise Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock purchasable
upon the exercise of this Warrant shall be increased to a number determined by
multiplying the number of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment. In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest 1,000th
of a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Common Stock purchasable upon the exercise
of this Warrant.
(c) Issuance of Options. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, distribute, or
otherwise grant in any manner (including by assumption) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants, or options being herein called
"Options" and any such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), other than pursuant to its 1994 Stock
Option Plan and its 1994 Board Retainer Plan, whether or not such Options or
the rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the exercise of such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution, or granting of such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the cases of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Options or upon the conversion or exchange of all
Convertible Securities issuable upon the exercise of all such Options) shall
be less than the current market price per share of Common Stock on the date of
the issuance, sale, distribution, or granting of such Options then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options) shall be less than the current market
price per share of Common Stock on the date of the issuance, sale,
distribution, or granting of such Options shall be deemed to have been issued
as on the date of the issuance, sale, distribution, or granting of such
Options and thereafter shall be deemed to be outstanding and the Company shall
be deemed to have received as consideration such price per share, determined
as provided above, therefor. Except as otherwise provided in paragraphs (j)
and (k) below, no additional adjustment of the Exercise Price shall be made
upon the actual exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.
(d) Issuance of Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale, or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of all such Convertible Securities, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the current market price per share
of Common Stock on the date of such issuance, sale, or distribution, then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date of the issuance,
sale, or distribution of such Convertible Securities and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, distribute to
the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities, or other properties or assets
(in each case other than (i) dividends payable in Common Stock, Options, or
Convertible Securities and (ii) any cash dividend that, when added to all
other cash dividends paid in the one year prior to the declaration date of
such dividend (excluding any such other dividend included in a previous
adjustment of the Exercise Price pursuant to this paragraph (e)), does not
exceed 10% of the current market price per share of Common Stock on such
declaration date), or any options, warrants, or other rights to subscribe for
or purchase any of the foregoing, then (A) the Exercise Price shall be
decreased to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the current market price
per share of Common Stock on the record date for such distribution less the
sum of (X) the cash portion, if any, of such distribution per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date for
such distribution plus (Y) the then fair market value (as determined in good
faith by the Board of Directors of the Company) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants, or subscription or purchase rights, and the denominator of which
shall be such current market price per share of Common Stock and (B) the
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be increased to a number determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to the record date for such
distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (A) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment. The adjustments required by this paragraph
(e) shall be made retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(f) Current Market Price. For the purpose of any computation
under paragraphs (b), (c), (d), and (e) of this Section 3.01, the current
market price per share of Common Stock at any date shall be determined as
follows: until the Company has raised an aggregate of $2,000,000 in sales of
its securities, small business innovation research awards, small business
technology transfer awards, or payments by corporate partners for research
support or co-development, then the current market price per share (prior to
any adjustment resulting from a Common Stock Distribution) shall be $2.00 per
share; thereafter, the current market price per share of the Common Stock at
any date shall be the average of the daily closing prices for the shorter of
(i) the 20 consecutive trading days ending on the last full trading day on the
exchange or market specified in the second succeeding sentence prior to the
Time of Determination and (ii) the period commencing on the date next
succeeding the first public announcement of the issuance, sale, distribution,
or granting in question through such last full trading day prior to the Time
of Determination. The term "Time of Determination" as used herein shall be
the time and date of the earlier to occur of (A) the date as of which the
current market price is to be computed and (B) the last full trading day on
such exchange or market before the commencement of "ex-dividend" trading in
the Common Stock relating to the event giving rise to the adjustment required
by paragraph (b), (c), (d), or (e). The closing price for any day shall be
the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices
regular way for such day, in each case (1) on the principal national
securities exchange on which the shares of Common Stock are listed or to which
such shares are admitted to trading or (2) if the Common Stock is not listed
or admitted to trading on a national securities exchange, in the over-the-
counter market as reported by NASDAQ or any comparable system or (3) if the
Common Stock is not listed on NASDAQ or a comparable system, as furnished by
two members of the National Association of Securities Dealers, Inc. selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing or if for any other
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (f), the current market price per
share shall be the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
(g) Certain Distributions. If the Company shall pay a dividend
or make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (b) above (by operation of paragraph (c) or
(d) above, as the as may be), such Options or Convertible Securities shall be
deemed to have been issued or sold without consideration.
(h) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold, or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board
of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration, provided, however, that if such
Options have an exercise price equal to or greater than the current market
price of the Common Stock on the date of issuance of such Options, then such
Options shall be deemed to have been issued for consideration equal to such
exercise price.
(i) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of this Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
$.10 in the Exercise Price; provided however, that any adjustments which by
reason of this paragraph (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need be made for a change in the par value of the Common Stock.
(j) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraph (c) above,
the additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) or (d) above, or
the rate at which any Convertible Securities referred to in paragraph (c) or
(d) above are convertible into or exchangeable for Common Stock shall change
at any time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant
to this Article III), the Exercise Price then in effect and the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall
forthwith be readjusted (effective only with respect to any exercise of this
Warrant after such readjustment) to the Exercise Price and number of shares of
Common Stock so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution, or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration, or conversion rate, as the case may be, but only
with respect to such Options and Convertible Securities as then remain
outstanding.
(k) Expiration of Options and Convertible Securities. If, at
any time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall have been made pursuant to
paragraph (c), (d), or (j) above or this paragraph (k), any Options or
Convertible Securities shall have expired unexercised, the number of such
shares so purchasable shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only shares of Common Stock deemed to have been issued in connection
with such options or Convertible Securities were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such Options or
Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received by
the Company for the issuance, sale, distribution, or granting of all such
Options of Convertible Securities, whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of such shares so purchasable by an amount (calculated by adjusting
such decrease to account for all other adjustments made pursuant to this
Article III following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution, or granting of such Options or Convertible
Securities.
(l) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Article III, the Warrant Holder
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price applicable to
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Article III.
Section 3.02. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of this Warrant is adjusted, as
herein provided, the Company shall promptly mail to the Warrant Holder notice
of such adjustment or adjustments and shall deliver to the Warrant Holder a
certificate of a principal officer of the Company setting forth the number of
shares of Common Stock or other stock or property issuable upon the exercise
of this Warrant after such adjustment, setting forth a brief statement of the
facts requiring such adjustment, and setting forth the computation by which
such adjustment was made.
Section 3.03. If at any time after this Warrant is first issued
(a) the Company declares a dividend or other distribution on its
Common Stock payable other than in cash out of its undistributed net income;
or
(b) the Company authorizes the granting to the holders of its
Common Stock of rights to subscribe for a purchase any shares of any class of
its capital stock or any other securities; or
(c) there is any reclassification of the Common Stock (other
than a subdivision or combination of its outstanding Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of the holders of the Common Stock is required, or a sale or transfer of all
or substantially all the assets of the Company; or
(d) there is a voluntary or involuntary dissolution,
liquidation, or winding up of the Company;
then, in each case, the Company will mail to the Warrant Holder at least 15
Business Days before the applicable record date a notice stating (i) the
record date for the dividend, distribution, or rights, or, if there will not
be a record date, the date as of which the holders of record of Common Stock
who will be entitled to the dividend, distribution, or rights will be
determined, or (ii) the date on which the reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, or winding up is expected to
become effective, and the date as of which it is expected the holders of
record of Common Stock who will be entitled to exchange their Common Stock for
securities or other property as a result of the reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation, or winding up
will be determined. Failure to give any notice or any defect in the notice
will not affect the validity of the action which should have been the subject
of the notice.
Section 3.04. The form of this Warrant need not be changed because of
any change in the Warrant Price or in the number of shares of Common Stock
which may be purchased by exercising this Warrant. The Company may, however,
at any time make any change in the form of Warrant this it deems appropriate
to reflect a change in the Exercise Price or in the number of shares of Common
Stock which may be purchased by exercising this Warrant (provided the change
in the form of Warrant does not otherwise affect the substance of the
Warrant), and any Warrant issued after the form of Warrant is so changed shall
be in the changed form.
ARTICLE IV
Other Provisions Relating to Rights of the Warrant Holder
Section 4.01. The Warrant Holder will not, as such, be entitled to
vote, to receive dividends, or to have any other of the rights of a
shareholder of the Company, except that after this Warrant is exercised in
accordance with the terms of this Warrant the persons in whose names the
shares of Common Stock purchased through exercise of
this Warrant are to be issued will be deemed to become the holders of record
of those shares of Common Stock for all purposes even if certificates
representing such shares of Common Stock have not been issued.
Section 4.02.1 (a) The Company will at all times reserve and keep
available for issuance upon exercise of this Warrant the number of authorized
and unissued shares of Common Stock equal to the maximum number of shares of
Common Stock the Company may be required to issue upon exercise of this
warrant at the Exercise Price in effect from time to time.
(b) All shares of Common Stock issued on exercise of this
Warrant will, when they are issued, be validly issued, fully paid, and
nonassessable.
Section 4.03. The Company will not be required to issue any fraction
of a share upon exercise of this Warrant. If any fraction of a share of
Common Stock would, except for the provisions of this Section, be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to equal to the then current market
value per share multiplied by such fraction computed to the nearest whole
cent. The Warrant Holder, by its acceptance of this Warrant, expressly waives
any and all rights to receive any fraction of a share of Common Stock or a
stock certificate representing a fraction of a share of Common Stock.
Section 4.04. The Company will maintain a Warrant Register in which the
name and address of each registered holder of Warrants will be recorded.
Section 4.05. Notices or other communications to the Warrant Holder
will be deemed given by the Company on the third Business Day after the day on
which they are sent by registered mail, return receipt requested, addressed to
the Warrant Holder at the Warrant Holder's last known address shown on the
Warrant Register.
Section 4.06. Prior to due presentment for registration of transfer
of this Warrant, the Company may treat the Warrant Holder as the absolute
owner of this Warrant for all purposes, including for the purpose of
determining the persons entitled to exercise this Warrant, despite any notice
to the contrary.
ARTICLE V
Transfer of Warrants
Section 5.01. This Warrant may be sold, transferred, assigned, or
hypothecated with the written consent of the Company, in whole or in part. At
all times, however, neither this Warrant nor the shares of Common Stock or
other securities issuable upon exercise of this Warrant may be transferred
except in a transaction which is registered under the Securities Act of 1933,
as amended (the "Securities Act"), or which is exempt from the registration
requirements of the Securities Act.
Section 5.02. Upon surrender to the Company at its principal office
of this Warrant with the Form of Assignment (or another instrument of
assignment) duly executed and accompanied by (i) (A) evidence that any
transfer tax has been paid or (B) funds sufficient to pay any transfer tax, or
(C) evidence to the Company's satisfaction that no such tax is due, and (ii)
evidence reasonably satisfactory to the Company that the proposed assignment
will not violate Section 5.01, the Company will, without charge, execute and
deliver a new Warrant registered in the name of the assignee named in the Form
of Assignment (or other instrument of assignment) and will promptly cancel
this Warrant. This Warrant may be divided or combined with other Warrants by
surrender of this Warrant and any other Warrants with which it is to be
combined at the principal office of the Company together with a written
notice, signed by the Warrant Holder, specifying the names and denominations
in which new Warrants are to be issued.
Section 5.03. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and (in the case of loss, theft, or destruction) of reasonably
satisfactory indemnification, or (in the case of mutilation) upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to
the same number of shares of Common Stock as this Warrant and the lost,
stolen, destroyed, or mutilated Warrant will become void. Any new Warrant
executed and delivered in accordance with this Section 5.03 will constitute an
additional contractual obligation of the Company, and will be valid and
enforceable whether or not the Warrant which was believed to have been lost,
stolen, or destroyed is subsequently presented for exercise.
ARTICLE VI
Registration Under the Securities Act
Section 6.01 (a) If, at any time during the period commencing on July 1,
1995 and ending on June 30, 2001, The Company shall determine or be required
to register any shares of the Company's Common Stock (whether on behalf of
itself or any other person) under the Securities Act of 1933 on Forms S-1, S-
2, S-3, SB-1, or SB-2 (or if such forms are rescinded by the Securities and
Exchange Commission (the "Commission") such forms as replace those forms),
excluding any registration for the offering and sale of securities of the
Company to its employees, it will notify the Warrant Holder in order that it
may request that all or a part of shares of Common Stock issued or issuable
upon exercise of this Warrant be included in the registration statement. If
requested by any Warrant Holder in writing within 20 days after the Company's
notice, the Company will include the requested number of shares in such
registration statement. Any such request shall include the agreement of the
Warrant Holder requesting the registration to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with such registration. The Company may, however, decline to include all or a
part of the requested number of shares in a registration statement pursuant to
this section if it is advised by the investment banking firm managing the
underwriting that such inclusion would adversely affect the offering of the
shares to be covered by the proposed registration statement.
(b) The Company shall use its best efforts to file such post-
effective amendments to any registration statement described in this Section 6
as shall be necessary to keep it effective until six months after the
effective date of the registration statement or the date on which all of the
shares of the Warrant Holders covered thereunder shall have been sold,
whichever is earlier.
(c) As a condition to the Company's obligation under this
Article VI to cause a registration statement or amendment to be filed or
shares to be included in a registration statement, the Warrant Holder shall
provide such information and execute such documents as may reasonably be
required in connection with such registration. In addition, the Company shall
not be required to include such shares in a registration statement if it shall
have received opinions of its and the Warrant Holder's counsel to the effect
that the proposed disposition of such shares may be effected without
registration under the Act.
(d) The expenses of the registration of Warrant Holders' shares
(other than transfer taxes, underwriting commissions, and fees of Warrant
Holders' counsel) shall be paid by the Company.
Section 6.02. Unless the resale of shares of Common Stock is the
subject of an effective registration statement under the Securities Act, the
certificates representing shares of Common Stock issued upon exercise of this
Warrant may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT
BE OFFERED OR SOLD, EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR (ii) IN A TRANSACTION WHICH IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
ARTICLE VII
Other Matters
Section 7.01. The provisions of this Warrant will bind, and inure to
the benefit of, the Company and its successors and assigns and the Warrant
Holder and its successors and assigns.
Section 7.02 (a) Any notice or other communication to the Company
relating to this Warrant will be deemed given on the day when it is delivered
or sent by facsimile transmission (with a confirmation copy sent by registered
mail, return receipt requested), or on the third Business Day after the day on
which it is sent by registered mail, return receipt requested, to the Company
at the following address (or such other address as may be specified by the
Company after the date of this Warrant):
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Attention: Chairman of the Board and Chief
Executive Officer
Facsimile No. (904) 462-0875
(b) Any notice or other communication to the Warrant Holder will
be deemed given when and as provided in Section 4.05.
Section 7.03. To the extent such documents are required to be sent
by the Company to the holders of its outstanding Common Stock, the Company
shall provide the Warrant Holder, within five Business Days after it files
them with the Commission, copies of its annual report and of the information,
documents, and other reports which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Section 7.04. THIS WARRANT WILL BE GOVERNED BY, AND CONSTRUED UNDER,
THE LAWS OF THE STATE OF FLORIDA RELATING TO CONTRACTS AND INSTRUMENTS
EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
Section 7.05. The Article and Section headings in this Warrant are
for convenience only, are not part of this Warrant and are not intended to
affect the meaning or interpretation of any of the terms of this Warrant.
END OF TEXT - SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Warrant has been executed by the Company on the
1st day of October, 1996.
Ixion Biotechnology, Inc.
By ___________________________
Weaver H. Gaines
Chairman of the Board and
Chief Executive Officer
[Corporate Seal]
Attest:
_________________________
Gwenyth E. Thompson
Assistant Secretary
<PAGE>
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned registered holder of this Warrant
hereby sells, assigns, and transfers unto the Assignee(s) named below
(including the undersigned with respect to any shares of Common Stock subject
to this Warrant not being assigned hereby) all of the rights of the
undersigned under this Warrant, with respect to the number of shares of Common
Stock set forth below:
Social Security
or other identifying Number of
Shares
Names of Assignee(s) Address number of assignee(s) of
Common Stock
and does hereby irrevocably constitute and appoint
______________________________, the undersigned's attorney, to make such
transfer on the Warrant Register, with full power of substitution in the
premises.
Dated: _______________, _______
______________________________________________
Signature of Owner
(Signature must conform with the name of the
Warrant
Holder as specified on the face of the
Warrant)
Street Address
City State Zip Code
Exhibit A
SUBSCRIPTION FORM
To: Ixion Biotechnology, Inc. (the "Company")
The undersigned irrevocably elects to purchase ____________ shares
of Common Stock of the Company by exercising the Warrant to which this form is
attached and tenders payment of the full Exercise Price with respect to such
shares of Common Stock. The undersigned requests that the certificates
representing the shares of Common Stock of the Company as to which the Warrant
is being exercised be registered as follows:
Name: ________________________________________________________________________
Social Security or Employer Identification Number:
____________________________________
Address:
______________________________________________________________________
Deliver to:
_____________________________________________________________________
Address:
______________________________________________________________________
______________________________________________________________________
If the number of shares of Common Stock of the Company as to which
the Warrant is being exercised are fewer than all the shares of Common Stock
of the Company to which the Warrant relates, please issue a new Warrant for
the balance of such shares of Common Stock registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address:
______________________________________________________________________
Date: __________________ Signature
__________________________________
(Signature must conform with the name of
the Warrant Holder as specified on
the face of Warrant)
NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THIS WARRANT MAY BE TRANSFERRED EXCEPT IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR WHICH IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THAT ACT. THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED
HEREIN.
NO. W-005
WARRANT TO PURCHASE 817 SHARES OF
COMMON STOCK OF
IXION BIOTECHNOLOGY, INC.
This certifies that the University of Florida Research Foundation
("UFRFI"), a not-for-profit corporation duly organized and existing under the
laws of the State of Florida, or registered assigns, (the "Warrant Holder") is
entitled to purchase from Ixion Biotechnology, (the "Company"), a Delaware
corporation, at any time after 9:00 a.m. Gainesville, Florida time, on the
Expiration Date (as defined below), up to an aggregate of 817 shares of Common
Stock (as defined below) at the Exercise Price (as defined below). The
Exercise Price and the number of shares of Common Stock which may be purchased
from time to time upon the exercise of this Warrant are subject to adjustment
as provided in Article III.
ARTICLE I
Definitions
Section 1.01. As used in this Warrant, the following terms shall have
the following respective meanings:
(a) "Business Day" means a day other than a Saturday, Sunday, or
other day on which banks in the State of Florida are authorized by law to
remain closed.
(b) "Common Stock" means the common stock, $0.01 par value per
share, of the Company, and any other capital stock of the Company into which
such common stock may be converted or reclassified or that may be issued in
respect of, in exchange for, or in substitution of, such common stock by
reason of any stock splits, stock dividends, distributions, mergers,
consolidations or other like events.
(c) "Exercise Price" means $2.00 per share of Common Stock,
provided, however, that the Exercise Price may be adjusted from time to time
as provided in Article III.
(d) "Expiration Date" means August 31, 2000.
(e) "Form of Assignment" means the form set forth at the foot of
this Warrant.
(f) "Subscription Form" means the form set forth in Exhibit A
hereto.
(g) "Warrant" means this Warrant and all warrants of like tenor
(together evidencing the right to purchase a total of 817 shares of Common
Stock, subject to adjustment as provided in Article III), originally issued to
UFRFI or its designees pursuant to a License Agreement, relating to space and
services at the Biotechnology Development Institute, dated June 26, 1995
between the Company and UFRFI.
(h) "Warrant Register" means a register to be maintained by the
Company at its principal executive offices in which the Company shall provide
for the registration of the Warrants and of transfers or exchanges of the
Warrants as herein provided.
Section 1.02. Certain other terms are defined elsewhere in this
Warrant:
Term Defined in Section
"Change of Shares" Section 3.01(a)
"Commission" Section 6.01(a)
"Common Stock Distribution" Section 3.01(b)
"Company" Preamble
"Convertible Securities" Section 3.01(c)
"Options" Section 3.01(c)
"Securities Act" Section 5.01
"Time of Determination" Section 3.01(f)
"Warrant Holder" Preamble
ARTICLE II
Duration and Exercise of Warrant
Section 2.01. This Warrant may be exercised at any time after 9:00
a.m., Gainesville, Florida time, on July 1, 1995, and before 5:00 p.m.,
Gainesville, Florida time, on the Expiration Date. If this Warrant is not
exercised at or before 5:00 p.m., Gainesville, Florida time, on the Expiration
Date, it will become void and neither the Warrant Holder nor any other person
will have any rights under this Warrant.
Section 2.02. (a) To exercise this Warrant in whole or in part, the
Warrant Holder must surrender this Warrant, with the Subscription Form duly
executed, to the Company at its principal office accompanied by a certified or
official bank check payable to the order of the Company in an amount equal to
the aggregate Exercise Price for the shares of Common Stock as to which this
Warrant is being exercised.
(b) When the Company receives this Warrant with the Subscription
Form duly executed and accompanied by payment of the aggregate Exercise Price
for the shares of Common Stock as to which this Warrant is being exercised,
the Company will promptly issue certificates, registered in the name of the
Warrant Holder or such other names as are designated by the Warrant Holder,
representing the total number of shares of Common Stock (and other securities,
if any) as to which this Warrant is being exercised, in such denominations as
are requested by the Warrant Holder, and the Company will deliver promptly
such certificates to the Warrant Holder.
(c) If the Warrant Holder exercises this Warrant with respect to
fewer than all the shares of Common Stock to which it relates, the Company
will execute a new Warrant for the balance of the shares of Common Stock that
may be purchased upon exercise of this Warrant and will deliver promptly such
new Warrant to the Warrant Holder.
(d) The Company will pay any taxes that may be payable in
respect of (i) the issuance of shares of Common Stock or (ii) the issuance of
a new Warrant if this Warrant is exercised as to fewer than all the shares of
Common Stock to which it relates. The Company will not, however, be required
to pay any transfer tax payable because shares of Common Stock or a new
Warrant are to be registered in a name other than that of the Warrant Holder,
and the Company will not be required to issue any shares of Common Stock or to
issue a new Warrant registered in a name other than that of the Warrant Holder
until (i) the Company receives either (A) evidence that any applicable
transfer taxes have been paid or (B) funds with which to pay those taxes or
(ii) it has been established to the Company's satisfaction that no such tax is
due.
ARTICLE III
Adjustment of Exercise Price
and Number of Shares of Common Stock
Section 3.01. The Exercise Price and the number of shares of Common
Stock or other securities issuable on exercise of this Warrant are subject to
adjustment as follows:
(a) Changes in Common Stock. In the event the Company shall, at
any time or from time to time after the date hereof, (i) issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, (ii)
subdivide or combine the outstanding shares of Common Stock into a greater or
lesser number of shares or (iii) issue any shares of its capital stock in a
reclassification, or reorganization of the Common Stock (any such issuance,
subdivision, combination, reclassification, or reorganization being herein
called a "Change of Shares"), then (A) in the case of (i) or (ii) above, the
number of shares of Common Stock that may be purchased upon the exercise of
this Warrant shall be adjusted to the number of shares of Common Stock that
the Warrant Holder would have owned or have been entitled to receive after the
happening of such event had this Warrant been exercised immediately prior to
the record date (or, if there is no record date, the effective date) for such
event, and the Exercise Price shall be adjusted to the price (calculated to
the nearest 1,000th of one cent) determined by multiplying the Exercise Price
immediately prior to such event by a fraction the numerator of which shall be
the number of shares of Common Stock purchasable with this Warrant immediately
prior to such event and the denominator of which shall be the number of shares
purchasable with this Warrant after the adjustment referred to above and (B)
in the case of (iii) above, paragraph (l) below shall apply. An adjustment
made pursuant to clause (A) of this paragraph shall become effective
retroactively immediately after the record date in the case of a dividend and
shall become effective immediately after the effective date in other cases.
Any shares of Common Stock purchasable solely as a result of such adjustment
shall not be issued prior to the effective date of such event.
(b) Common Stock Distribution. In the event the Company shall,
at any time or from time to time after the date hereof, issue, sell, or
otherwise distribute any shares of Common Stock (other than pursuant to a
Change of Shares or the exercise of any Option, Convertible Security (each as
defined in paragraph (c) and (d) below), or Warrant (any such event including
any event described in paragraphs (c) and (d) below), being herein called a
"Common Stock Distribution") for a consideration per share less than the
current market price per share of Common Stock (as defined in paragraph (f)
below) on the date of such Common Stock Distribution, then, effective upon
such Common Stock Distribution, the Exercise Price shall be reduced to the
price (calculated to the nearest 1,000th of one cent) determined by
multiplying the Exercise Price in effect immediately prior to such Common
Stock Distribution by a fraction, the numerator of which shall be the sum of
(i) the number of shares of Common Stock outstanding (exclusive of any
treasury shares) immediately prior to such Common Stock Distribution
multiplied by the current market price per share of Common Stock on the date
of such Common Stock Distribution, plus (ii) the consideration, if any,
received by the Company upon such Common Stock Distribution, and the
denominator of which shall be the product of (A) the total number of shares of
Common Stock outstanding (exclusive of any treasury shares) immediately after
such Common Stock Distribution multiplied by (B) the current market price per
share of Common Stock on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment of
the Exercise Price pursuant to the foregoing provisions of this paragraph (b),
including by operation of paragraph (c) or (d) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock purchasable
upon the exercise of this Warrant shall be increased to a number determined by
multiplying the number of such shares so purchasable immediately prior to such
Common Stock Distribution by a fraction, the numerator of which shall be the
Exercise Price in effect immediately prior to such adjustment and the
denominator of which shall be the Exercise Price in effect immediately after
such adjustment. In computing adjustments under this paragraph, fractional
interests in Common Stock shall be taken into account to the nearest 1,000th
of a share.
The provisions of this paragraph (b), including by operation of
paragraph (c) or (d) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Common Stock purchasable upon the exercise
of this Warrant.
(c) Issuance of Options. In the event the Company shall, at any
time or from time to time after the date hereof, issue, sell, distribute, or
otherwise grant in any manner (including by assumption) any rights to
subscribe for or to purchase, or any warrants or options for the purchase of,
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (any such rights, warrants, or options being herein called
"Options" and any such convertible or exchangeable stock or securities being
herein called "Convertible Securities"), other than pursuant to its 1994 Stock
Option Plan and its 1994 Board Retainer Plan, whether or not such Options or
the rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the exercise of such Options or upon the conversion or exchange of such
Convertible Securities (determined by dividing (i) the aggregate amount, if
any, received or receivable by the Company as consideration for the issuance,
sale, distribution, or granting of such Options, plus the minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such Options, plus, in the cases of Options to acquire
Convertible Securities, the minimum aggregate amount of additional
consideration, if any, payable upon the conversion or exchange of all such
Convertible Securities, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of all such Options or upon the conversion or exchange of all
Convertible Securities issuable upon the exercise of all such Options) shall
be less than the current market price per share of Common Stock on the date of
the issuance, sale, distribution, or granting of such Options then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the exercise of all such Options or upon the conversion or
exchange of the total maximum amount of the Convertible Securities issuable
upon the exercise of all such Options) shall be less than the current market
price per share of Common Stock on the date of the issuance, sale,
distribution, or granting of such Options shall be deemed to have been issued
as on the date of the issuance, sale, distribution, or granting of such
Options and thereafter shall be deemed to be outstanding and the Company shall
be deemed to have received as consideration such price per share, determined
as provided above, therefor. Except as otherwise provided in paragraphs (j)
and (k) below, no additional adjustment of the Exercise Price shall be made
upon the actual exercise of such Options or upon conversion or exchange of the
Convertible Securities issuable upon the exercise of such Options.
(d) Issuance of Convertible Securities. In the event the
Company shall, at any time or from time to time after the date hereof, issue,
sell, or otherwise distribute (including by assumption) any Convertible
Securities (other than upon the exercise of any Option), whether or not the
rights to convert or exchange such Convertible Securities are immediately
exercisable, and the price per share at which Common Stock is issuable upon
the conversion or exchange of such Convertible Securities (determined by
dividing (i) the aggregate amount, if any, received or receivable by the
Company as consideration for the issuance, sale, or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
of all such Convertible Securities, by (ii) the total maximum number of shares
of Common Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the current market price per share
of Common Stock on the date of such issuance, sale, or distribution, then, for
purposes of paragraph (b) above, the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such Convertible
Securities shall be deemed to have been issued as of the date of the issuance,
sale, or distribution of such Convertible Securities and thereafter shall be
deemed to be outstanding and the Company shall be deemed to have received as
consideration such price per share, determined as provided above, therefor.
Except as otherwise provided in paragraphs (j) and (k) below, no additional
adjustment of the Exercise Price shall be made upon the actual conversion or
exchange of such Convertible Securities.
(e) Dividends and Distributions. In the event the Company
shall, at any time or from time to time after the date hereof, distribute to
the holders of Common Stock any dividend or other distribution of cash,
evidences of its indebtedness, other securities, or other properties or assets
(in each case other than (i) dividends payable in Common Stock, Options, or
Convertible Securities and (ii) any cash dividend that, when added to all
other cash dividends paid in the one year prior to the declaration date of
such dividend (excluding any such other dividend included in a previous
adjustment of the Exercise Price pursuant to this paragraph (e)), does not
exceed 10% of the current market price per share of Common Stock on such
declaration date), or any options, warrants, or other rights to subscribe for
or purchase any of the foregoing, then (A) the Exercise Price shall be
decreased to a price determined by multiplying the Exercise Price then in
effect by a fraction, the numerator of which shall be the current market price
per share of Common Stock on the record date for such distribution less the
sum of (X) the cash portion, if any, of such distribution per share of Common
Stock outstanding (exclusive of any treasury shares) on the record date for
such distribution plus (Y) the then fair market value (as determined in good
faith by the Board of Directors of the Company) per share of Common Stock
outstanding (exclusive of any treasury shares) on the record date for such
distribution of that portion, if any, of such distribution consisting of
evidences of indebtedness, other securities, properties, assets, options,
warrants, or subscription or purchase rights, and the denominator of which
shall be such current market price per share of Common Stock and (B) the
number of shares of Common Stock purchasable upon the exercise of this Warrant
shall be increased to a number determined by multiplying the number of shares
of Common Stock so purchasable immediately prior to the record date for such
distribution by a fraction, the numerator of which shall be the Exercise Price
in effect immediately prior to the adjustment required by clause (A) of this
sentence and the denominator of which shall be the Exercise Price in effect
immediately after such adjustment. The adjustments required by this paragraph
(e) shall be made retroactive to the record date for the determination of
stockholders entitled to receive such distribution.
(f) Current Market Price. For the purpose of any computation
under paragraphs (b), (c), (d), and (e) of this Section 3.01, the current
market price per share of Common Stock at any date shall be determined as
follows: until the Company has raised an aggregate of $2,000,000 in sales of
its securities, small business innovation research awards, small business
technology transfer awards, or payments by corporate partners for research
support or co-development, then the current market price per share (prior to
any adjustment resulting from a Common Stock Distribution) shall be $2.00 per
share; thereafter, the current market price per share of the Common Stock at
any date shall be the average of the daily closing prices for the shorter of
(i) the 20 consecutive trading days ending on the last full trading day on the
exchange or market specified in the second succeeding sentence prior to the
Time of Determination and (ii) the period commencing on the date next
succeeding the first public announcement of the issuance, sale, distribution,
or granting in question through such last full trading day prior to the Time
of Determination. The term "Time of Determination" as used herein shall be
the time and date of the earlier to occur of (A) the date as of which the
current market price is to be computed and (B) the last full trading day on
such exchange or market before the commencement of "ex-dividend" trading in
the Common Stock relating to the event giving rise to the adjustment required
by paragraph (b), (c), (d), or (e). The closing price for any day shall be
the last reported sale price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked prices
regular way for such day, in each case (1) on the principal national
securities exchange on which the shares of Common Stock are listed or to which
such shares are admitted to trading or (2) if the Common Stock is not listed
or admitted to trading on a national securities exchange, in the over-the-
counter market as reported by NASDAQ or any comparable system or (3) if the
Common Stock is not listed on NASDAQ or a comparable system, as furnished by
two members of the National Association of Securities Dealers, Inc. selected
from time to time in good faith by the Board of Directors of the Company for
that purpose. In the absence of all of the foregoing or if for any other
reason the current market price per share cannot be determined pursuant to the
foregoing provisions of this paragraph (f), the current market price per
share shall be the fair market value thereof as determined in good faith by
the Board of Directors of the Company.
(g) Certain Distributions. If the Company shall pay a dividend
or make any other distribution payable in Options or Convertible Securities,
then, for purposes of paragraph (b) above (by operation of paragraph (c) or
(d) above, as the as may be), such Options or Convertible Securities shall be
deemed to have been issued or sold without consideration.
(h) Consideration Received. If any shares of Common Stock,
Options or Convertible Securities shall be issued, sold, or distributed for a
consideration other than cash, the amount of the consideration other than cash
received by the Company in respect thereof shall be deemed to be the then fair
market value of such consideration (as determined in good faith by the Board
of Directors of the Company). If any Options shall be issued in connection
with the issuance and sale of other securities of the Company, together
comprising one integral transaction in which no specific consideration is
allocated to such Options by the parties thereto, such Options shall be deemed
to have been issued without consideration, provided, however, that if such
Options have an exercise price equal to or greater than the current market
price of the Common Stock on the date of issuance of such Options, then such
Options shall be deemed to have been issued for consideration equal to such
exercise price.
(i) Deferral of Certain Adjustments. No adjustment to the
Exercise Price (including the related adjustment to the number of shares of
Common Stock purchasable upon the exercise of this Warrant) shall be required
hereunder unless such adjustment, together with other adjustments carried
forward as provided below, would result in an increase or decrease of at least
$.10 in the Exercise Price; provided however, that any adjustments which by
reason of this paragraph (i) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. No adjustment
need be made for a change in the par value of the Common Stock.
(j) Changes in Options and Convertible Securities. If the
exercise price provided for in any Options referred to in paragraph (c) above,
the additional consideration, if any, payable upon the conversion or exchange
of any Convertible Securities referred to in paragraph (c) or (d) above, or
the rate at which any Convertible Securities referred to in paragraph (c) or
(d) above are convertible into or exchangeable for Common Stock shall change
at any time (other than under or by reason of provisions designed to protect
against dilution upon an event which results in a related adjustment pursuant
to this Article III), the Exercise Price then in effect and the number of
shares of Common Stock purchasable upon the exercise of this Warrant shall
forthwith be readjusted (effective only with respect to any exercise of this
Warrant after such readjustment) to the Exercise Price and number of shares of
Common Stock so purchasable that would then be in effect had the adjustment
made upon the issuance, sale, distribution, or granting of such Options or
Convertible Securities been made based upon such changed purchase price,
additional consideration, or conversion rate, as the case may be, but only
with respect to such Options and Convertible Securities as then remain
outstanding.
(k) Expiration of Options and Convertible Securities. If, at
any time after any adjustment to the number of shares of Common Stock
purchasable upon the exercise of this Warrant shall have been made pursuant to
paragraph (c), (d), or (j) above or this paragraph (k), any Options or
Convertible Securities shall have expired unexercised, the number of such
shares so purchasable shall, upon such expiration, be readjusted and shall
thereafter be such as they would have been had they been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only shares of Common Stock deemed to have been issued in connection
with such options or Convertible Securities were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such Options or
Convertible Securities and (ii) such shares of Common Stock, if any, were
issued or sold for the consideration actually received by the Company upon
such exercise plus the aggregate consideration, if any, actually received by
the Company for the issuance, sale, distribution, or granting of all such
Options of Convertible Securities, whether or not exercised; provided,
however, that no such readjustment shall have the effect of decreasing the
number of such shares so purchasable by an amount (calculated by adjusting
such decrease to account for all other adjustments made pursuant to this
Article III following the date of the original adjustment referred to above)
in excess of the amount of the adjustment initially made in respect of the
issuance, sale, distribution, or granting of such Options or Convertible
Securities.
(l) Other Adjustments. In the event that at any time, as a
result of an adjustment made pursuant to this Article III, the Warrant Holder
shall become entitled to receive any securities of the Company other than
shares of Common Stock, thereafter the number of such other securities so
receivable upon exercise of this Warrant and the Exercise Price applicable to
such exercise shall be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions with respect to
the shares of Common Stock contained in this Article III.
Section 3.02. Whenever the number of shares of Common Stock or other
stock or property issuable upon the exercise of this Warrant is adjusted, as
herein provided, the Company shall promptly mail to the Warrant Holder notice
of such adjustment or adjustments and shall deliver to the Warrant Holder a
certificate of a principal officer of the Company setting forth the number of
shares of Common Stock or other stock or property issuable upon the exercise
of this Warrant after such adjustment, setting forth a brief statement of the
facts requiring such adjustment, and setting forth the computation by which
such adjustment was made.
Section 3.03. If at any time after this Warrant is first issued
(a) the Company declares a dividend or other distribution on its
Common Stock payable other than in cash out of its undistributed net income;
or
(b) the Company authorizes the granting to the holders of its
Common Stock of rights to subscribe for a purchase any shares of any class of
its capital stock or any other securities; or
(c) there is any reclassification of the Common Stock (other
than a subdivision or combination of its outstanding Common Stock), or any
consolidation or merger to which the Company is a party and for which approval
of the holders of the Common Stock is required, or a sale or transfer of all
or substantially all the assets of the Company; or
(d) there is a voluntary or involuntary dissolution,
liquidation, or winding up of the Company;
then, in each case, the Company will mail to the Warrant Holder at least 15
Business Days before the applicable record date a notice stating (i) the
record date for the dividend, distribution, or rights, or, if there will not
be a record date, the date as of which the holders of record of Common Stock
who will be entitled to the dividend, distribution, or rights will be
determined, or (ii) the date on which the reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation, or winding up is expected to
become effective, and the date as of which it is expected the holders of
record of Common Stock who will be entitled to exchange their Common Stock for
securities or other property as a result of the reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation, or winding up
will be determined. Failure to give any notice or any defect in the notice
will not affect the validity of the action which should have been the subject
of the notice.
Section 3.04. The form of this Warrant need not be changed because of
any change in the Warrant Price or in the number of shares of Common Stock
which may be purchased by exercising this Warrant. The Company may, however,
at any time make any change in the form of Warrant this it deems appropriate
to reflect a change in the Exercise Price or in the number of shares of Common
Stock which may be purchased by exercising this Warrant (provided the change
in the form of Warrant does not otherwise affect the substance of the
Warrant), and any Warrant issued after the form of Warrant is so changed shall
be in the changed form.
ARTICLE IV
Other Provisions Relating to Rights of the Warrant Holder
Section 4.01. The Warrant Holder will not, as such, be entitled to
vote, to receive dividends, or to have any other of the rights of a
shareholder of the Company, except that after this Warrant is exercised in
accordance with the terms of this Warrant the persons in whose names the
shares of Common Stock purchased through exercise of
this Warrant are to be issued will be deemed to become the holders of record
of those shares of Common Stock for all purposes even if certificates
representing such shares of Common Stock have not been issued.
Section 4.02.1 (a) The Company will at all times reserve and keep
available for issuance upon exercise of this Warrant the number of authorized
and unissued shares of Common Stock equal to the maximum number of shares of
Common Stock the Company may be required to issue upon exercise of this
warrant at the Exercise Price in effect from time to time.
(b) All shares of Common Stock issued on exercise of this
Warrant will, when they are issued, be validly issued, fully paid, and
nonassessable.
Section 4.03. The Company will not be required to issue any fraction
of a share upon exercise of this Warrant. If any fraction of a share of
Common Stock would, except for the provisions of this Section, be issuable on
the exercise of any Warrant (or specified portion thereof), the Company shall
pay an amount in cash calculated by it to equal to the then current market
value per share multiplied by such fraction computed to the nearest whole
cent. The Warrant Holder, by its acceptance of this Warrant, expressly waives
any and all rights to receive any fraction of a share of Common Stock or a
stock certificate representing a fraction of a share of Common Stock.
Section 4.04. The Company will maintain a Warrant Register in which the
name and address of each registered holder of Warrants will be recorded.
Section 4.05. Notices or other communications to the Warrant Holder
will be deemed given by the Company on the third Business Day after the day on
which they are sent by registered mail, return receipt requested, addressed to
the Warrant Holder at the Warrant Holder's last known address shown on the
Warrant Register.
Section 4.06. Prior to due presentment for registration of transfer
of this Warrant, the Company may treat the Warrant Holder as the absolute
owner of this Warrant for all purposes, including for the purpose of
determining the persons entitled to exercise this Warrant, despite any notice
to the contrary.
ARTICLE V
Transfer of Warrants
Section 5.01. This Warrant may be sold, transferred, assigned, or
hypothecated with the written consent of the Company, in whole or in part. At
all times, however, neither this Warrant nor the shares of Common Stock or
other securities issuable upon exercise of this Warrant may be transferred
except in a transaction which is registered under the Securities Act of 1933,
as amended (the "Securities Act"), or which is exempt from the registration
requirements of the Securities Act.
Section 5.02. Upon surrender to the Company at its principal office
of this Warrant with the Form of Assignment (or another instrument of
assignment) duly executed and accompanied by (i) (A) evidence that any
transfer tax has been paid or (B) funds sufficient to pay any transfer tax, or
(C) evidence to the Company's satisfaction that no such tax is due, and (ii)
evidence reasonably satisfactory to the Company that the proposed assignment
will not violate Section 5.01, the Company will, without charge, execute and
deliver a new Warrant registered in the name of the assignee named in the Form
of Assignment (or other instrument of assignment) and will promptly cancel
this Warrant. This Warrant may be divided or combined with other Warrants by
surrender of this Warrant and any other Warrants with which it is to be
combined at the principal office of the Company together with a written
notice, signed by the Warrant Holder, specifying the names and denominations
in which new Warrants are to be issued.
Section 5.03. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction, or mutilation of this
Warrant, and (in the case of loss, theft, or destruction) of reasonably
satisfactory indemnification, or (in the case of mutilation) upon surrender of
this Warrant, the Company will execute and deliver a new Warrant relating to
the same number of shares of Common Stock as this Warrant and the lost,
stolen, destroyed, or mutilated Warrant will become void. Any new Warrant
executed and delivered in accordance with this Section 5.03 will constitute an
additional contractual obligation of the Company, and will be valid and
enforceable whether or not the Warrant which was believed to have been lost,
stolen, or destroyed is subsequently presented for exercise.
ARTICLE VI
Registration Under the Securities Act
Section 6.01 (a) If, at any time during the period commencing on July 1,
1995 and ending on June 30, 2001, The Company shall determine or be required
to register any shares of the Company's Common Stock (whether on behalf of
itself or any other person) under the Securities Act of 1933 on Forms S-1, S-
2, S-3, SB-1, or SB-2 (or if such forms are rescinded by the Securities and
Exchange Commission (the "Commission") such forms as replace those forms),
excluding any registration for the offering and sale of securities of the
Company to its employees, it will notify the Warrant Holder in order that it
may request that all or a part of shares of Common Stock issued or issuable
upon exercise of this Warrant be included in the registration statement. If
requested by any Warrant Holder in writing within 20 days after the Company's
notice, the Company will include the requested number of shares in such
registration statement. Any such request shall include the agreement of the
Warrant Holder requesting the registration to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with such registration. The Company may, however, decline to include all or a
part of the requested number of shares in a registration statement pursuant to
this section if it is advised by the investment banking firm managing the
underwriting that such inclusion would adversely affect the offering of the
shares to be covered by the proposed registration statement.
(b) The Company shall use its best efforts to file such post-
effective amendments to any registration statement described in this Section 6
as shall be necessary to keep it effective until six months after the
effective date of the registration statement or the date on which all of the
shares of the Warrant Holders covered thereunder shall have been sold,
whichever is earlier.
(c) As a condition to the Company's obligation under this
Article VI to cause a registration statement or amendment to be filed or
shares to be included in a registration statement, the Warrant Holder shall
provide such information and execute such documents as may reasonably be
required in connection with such registration. In addition, the Company shall
not be required to include such shares in a registration statement if it shall
have received opinions of its and the Warrant Holder's counsel to the effect
that the proposed disposition of such shares may be effected without
registration under the Act.
(d) The expenses of the registration of Warrant Holders' shares
(other than transfer taxes, underwriting commissions, and fees of Warrant
Holders' counsel) shall be paid by the Company.
Section 6.02. Unless the resale of shares of Common Stock is the
subject of an effective registration statement under the Securities Act, the
certificates representing shares of Common Stock issued upon exercise of this
Warrant may bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES MAY NOT
BE OFFERED OR SOLD, EXCEPT (i) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR (ii) IN A TRANSACTION WHICH IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THAT ACT."
ARTICLE VII
Other Matters
Section 7.01. The provisions of this Warrant will bind, and inure to
the benefit of, the Company and its successors and assigns and the Warrant
Holder and its successors and assigns.
Section 7.02 (a) Any notice or other communication to the Company
relating to this Warrant will be deemed given on the day when it is delivered
or sent by facsimile transmission (with a confirmation copy sent by registered
mail, return receipt requested), or on the third Business Day after the day on
which it is sent by registered mail, return receipt requested, to the Company
at the following address (or such other address as may be specified by the
Company after the date of this Warrant):
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Attention: Chairman of the Board and Chief
Executive Officer
Facsimile No. (904) 462-0875
(b) Any notice or other communication to the Warrant Holder will
be deemed given when and as provided in Section 4.05.
Section 7.03. To the extent such documents are required to be sent
by the Company to the holders of its outstanding Common Stock, the Company
shall provide the Warrant Holder, within five Business Days after it files
them with the Commission, copies of its annual report and of the information,
documents, and other reports which the Company is required to file with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Section 7.04. THIS WARRANT WILL BE GOVERNED BY, AND CONSTRUED UNDER,
THE LAWS OF THE STATE OF FLORIDA RELATING TO CONTRACTS AND INSTRUMENTS
EXECUTED AND TO BE PERFORMED ENTIRELY IN SUCH STATE.
Section 7.05. The Article and Section headings in this Warrant are
for convenience only, are not part of this Warrant and are not intended to
affect the meaning or interpretation of any of the terms of this Warrant.
END OF TEXT - SIGNATURE PAGE FOLLOWS
IN WITNESS WHEREOF, this Warrant has been executed by the Company on the
6th day of November, 1996.
Ixion Biotechnology, Inc.
By ___________________________
Weaver H. Gaines
Chairman of the Board and
Chief Executive Officer
[Corporate Seal]
Attest:
_________________________
Gwenyth E. Thompson
Assistant Secretary
<PAGE>
FORM OF ASSIGNMENT
(To Be Signed Only Upon Assignment)
FOR VALUE RECEIVED, the undersigned registered holder of this Warrant
hereby sells, assigns, and transfers unto the Assignee(s) named below
(including the undersigned with respect to any shares of Common Stock subject
to this Warrant not being assigned hereby) all of the rights of the
undersigned under this Warrant, with respect to the number of shares of Common
Stock set forth below:
Social Security
or other identifying Number of
Shares
Names of Assignee(s) Address number of assignee(s) of
Common Stock
and does hereby irrevocably constitute and appoint
______________________________, the undersigned's attorney, to make such
transfer on the Warrant Register, with full power of substitution in the
premises.
Dated: _______________, _______
______________________________________________
Signature of Owner
(Signature must conform with the name of the
Warrant
Holder as specified on the face of the
Warrant)
Street Address
City State Zip Code
<PAGE>
Exhibit A
SUBSCRIPTION FORM
To: Ixion Biotechnology, Inc. (the "Company")
The undersigned irrevocably elects to purchase ____________ shares
of Common Stock of the Company by exercising the Warrant to which this form is
attached and tenders payment of the full Exercise Price with respect to such
shares of Common Stock. The undersigned requests that the certificates
representing the shares of Common Stock of the Company as to which the Warrant
is being exercised be registered as follows:
Name: ________________________________________________________________________
Social Security or Employer Identification Number:
____________________________________
Address:
______________________________________________________________________
Deliver to:
_____________________________________________________________________
Address:
______________________________________________________________________
______________________________________________________________________
If the number of shares of Common Stock of the Company as to which
the Warrant is being exercised are fewer than all the shares of Common Stock
of the Company to which the Warrant relates, please issue a new Warrant for
the balance of such shares of Common Stock registered in the name of the
undersigned and deliver it to the undersigned at the following address:
Address:
______________________________________________________________________
Date: __________________ Signature
__________________________________
(Signature must conform with the name of
the Warrant Holder as specified on
the face of Warrant)
August 26, 1997
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: Registration Statement on Form SB-2
Ixion Biotechnology, Inc.
Gentlemen:
I have acted as counsel for Ixion Biotechnology, Inc. (the "Company")
in connection with the proposed public offering by the Company of four
hundred thousand (400,000) Units, each Unit being comprised of one (1) voting
Common Share (par value $.01) and .25 Charitable Benefit Warrant to purchase
voting common share at $20.00 per share (the "Units"). In connection with the
proposed public offering and above-described registration statement, I have
reviewed the following:
1. The Certificate of Incorporation and amendments thereto of the Company;
2. The By-Laws and amendments thereto of the Company;
3. The minute books of the Company; and
On the basis of such investigation and the examination of such other records
as I deemed necessary, I am of the opinion that:
a) the Company has been duly incorporated and is validly existing under
the laws of the State of Delaware; and
b) The 400,000 Units, the 400,000 Common Shares, and the 100,000 Charitable
Benefit Warrants have been duly authorized and the 400,000 common shares and
the underlying shares purchasable pursuant to the Charitable Benefit Warrants,
when issued, will be legally issued by the Company and will be fully paid and
nonassessable.
I consent to the filing of this opinion as an Exhibit for the purpose of
registering all or a portion of the Common Shares described in Registration
Statement on Form SB-2 under the relevant state securities laws.
Sincerely,
/s/ Bruce Brashear
Bruce Brashear, Esq.
Chattel Mortgage - Installment Sale of Equipment Agreement
This Chattel Mortgage - Installment Sale of Equipment Agreement, dated as
of January 1, 1996, is between Ixion Biotechnology, Inc., a Delaware
corporation with offices at 12085 Research Drive, Alachua, Florida (the
"mortgagor") and Carl Therapeutic, Inc., a Florida corporation with offices at
149 Turkey Creek, Alachua, Florida (the "mortgagee").
The mortgagor hereby purchases from the mortgagee, subject to the terms
and conditions set forth below, the laboratory equipment and disposables
listed in Appendices A and B, in "as is condition," complete with manuals and
standard attachments and equipment, delivery and acceptance of which is hereby
acknowledged by the mortgagor as of the date first above stated.
The total time price for the Appendix A property is $32,309.00, of which
nothing is payable on delivery, leaving a deferred balance of $32,309.00,
payable in 36 monthly installments of $897.47 on the same day of each
successive month, and commencing on August 1, 1996. The final installment
payable hereunder shall equal the amount of the deferred balance remaining
due. The total time price of the Appendix B property shall not exceed $2,610,
of which nothing is payable on delivery. If mortgagor places any Appendix B
property into service during the period of this mortgage, the fair market
value of such item shall be added to the final installment payable for the
Appendix A property. If no Appendix B property is placed in service during
the term of this mortgage, mortgagor shall own such property free and clear
without further payment. Interest is due on installments after maturity at the
highest lawful contract rate, and if this mortgage be placed with an attorney
for collection, 25% of the amount due hereunder shall be paid by the mortgagor
as attorney's fees, or if prohibited, the amount permitted by law.
1. Grant. To secure payment of the purchase price, the mortgagor
grants, bargains, sells, and mortgages to the mortgagee, the above property
described on Appendices A and B, to have and to hold unto the mortgagee, its
representatives, successors, and assigns forever.
2. Defeasance. Provided always that if the mortgagor shall perform all
agreements and covenants herein, then this instrument shall be void, otherwise
to remain in full force and effect.
3. Assignment. No transfer, renewal, extension, or assignment of this
mortgage, or any interest hereunder, or loss, injury, or destruction of the
property shall release the mortgagor from its obligations hereunder; the
assignee shall be entitled to all the rights of the mortgagee.
4. Acceleration. In the event the mortgagor defaults on any payment or
fails to comply with any condition of this mortgage or a proceeding in
bankruptcy, receivership, or insolvency be instituted against the mortgagor or
its property, the full amount shall be immediately due and payable.
The mortgagee's acceptance, after the full amount may have become
immediately due and payable as hereinbefore provided, of any installment or
payment shall not be deemed to alter or affect the mortgagor's obligations
and/or the mortgagee's rights hereunder with respect to any subsequent
payments or default therein.
5. Possession. The property may remain in possession of the mortgagor
as long as the conditions of this mortgage are fulfilled and shall remain
strictly personal property.
6. Exclusion of Warranties. There are no warranties, expressed or
implied, representations, promises, or statements in connection with the sale
of the property listed in Appendices A and B, except as set forth in
manufacturer's warranty applying to equipment covered by this mortgage.
7. Taxes, Use, Transfer, Insurance. The mortgagor shall keep said
property free of all taxes, liens, and encumbrances; shall not use the same
illegally or improperly; shall not transfer any interest in this mortgage or
said property, except as set forth below; and shall not remove the same from
the premises stated (except that such property may be moved pursuant to a
general transfer of operations from the current premises to another location)
without the permission of the holder of this chattel mortgage. The mortgagor
shall keep the property insured against loss by fire to properly protect all
interests therein. The proceeds of any insurance, whether paid by reason of
loss, injury, return premium, or otherwise, shall be applied toward the
replacement of the property or payment of this obligation at the option of the
mortgagee. The mortgagor may sell any item of the property not necessary to
the conduct of its operations (as determined by the mortgagor), provided it
shall receive not less than the sales price therefor set forth in Appendix A
or B, and provided further that the proceeds of such sale up to such sales
price be added to the next monthly installment due to the mortgagee.
8. Repossession, Right of Entry, Sale, Application of Proceeds. If the
mortgagor defaults in complying with the terms hereof, and fails to cure such
default within 30 days of receiving written notice thereof from the mortgagee,
the mortgagee may take possession of said property without further demand,
including any equipment or accessories thereto, possession by the mortgagor
after such expired grace period being unlawful; and for this purpose the
mortgagee may enter upon the premises where said property may be and remove
same. The mortgagee may resell said property, so retaken, at public or
private sale, without demand for performance, with or without notice to the
mortgagor (if given, notice by mail to the address given above being
sufficient) with or without having such property at the place of sale, and
upon such terms and in such manner as the mortgagee may determine; the
mortgagee may bid at any public sale. For the proceeds of any such sale, the
mortgagee shall deduct all expenses for retaking, repairing, and selling such
property, including a reasonable attorney's fee. The balance thereof shall be
applied to the deferred balance due; any surplus shall be paid over to the
mortgagor; in case of deficiency the mortgagor shall pay the same with
interest.
9. Waiver. The mortgagor hereby waives the right to remove any legal
action from the court originally acquiring jurisdiction.
IN WITNESS WHEREOF, the undersigned have given their hand and seal this
day of April, 1996.
Mortgagor Mortgagee
Ixion Biotechnology, Inc. Carl Therapeutic, Inc.
By By
Weaver H. Gaines, Chairman Stephen W. Maddock,
President
Draft of 12/20/96
IXION
Consulting Agreement
This Consulting Agreement (the "Agreement"), dated December , 1996, is
between Ixion Biotechnology, Inc., a Delaware corporation with offices at
12085 Research Drive, Alachua, Florida, 32615 ("Ixion," the "Company," or
"we") and Brandywine Consultants, Inc., a corporation with
offices at 542 Blackhorse Road, Chester Springs, PA 19425 ("Brandywine").
1. Brandywine will perform such consulting services as Ixion may
request during the term of this Agreement in connection the strategic planning
and execution of Ixion's drug and device development efforts including the
following:
Preparation of the Drug Development Plan.
Evaluation of needs and capabilities for each product/program.
Assistance and advice regarding research and development priorities
relating to each candidate product.
Cost analysis with respect to outsourcing vs. internalization of
specific activities such as analysis and manufacture of candidate
products.
Assessment of potential alternatives for the analysis,
characterization, and manufacture of candidate products to achieve
the most cost effective strategies not compromising product or
program quality.
Development of timelines and budgets for product development and
clinical/approval studies for candidate products.
Assist in corporate development and financing.
Representation of Ixion at relevant tade shows, scientific meetings,
etc., upon prior request.
Prepare for, attend, present, and be responsible for regulatory
meetings.
Serve as the Responsible Head with respect to the regulation of Ixion
products and the compliance of Ixion with current Good Manufacturing
Practices and other relevant regulations.
Prepare Ixion's Master Plan.
2. In full compensation for Brandywine's services and agreements
hereunder, Ixion will pay up to $5,000 per month, payable within 10 business
days of the receipt of an invoice. Invoices will be sent monthly in
accordance with Ixion's Billing Policy and Procedure. Brandywine will devote
not less than xxxx hours per month to the Ixion engagement. In addition,
Ixion will reimburse Brandywine for all reasonable traveling and living
expenses incurred while a Brandywine associate is away from his or her normal
regular place of business at our request and are engaged in the performance of
services for us under this Agreement. Brandywine will submit invoices
promptly showing any disbursements for reasonable and necessary expenses
incurred on this engagement. Expenses which would be reasonably expected to
exceed $1,000.00 shall be reported to Ixion by Brandywine in advance of any
expense commitment.
3. The manner in which Brandywine render services to us will be within
its sole control and discretion.
4. Brandywine will observe our rules, policies, and regulations with
respect to scientific and other conduct and the health, safety, and protection
of persons and property, while on our premises or performing services under
this Agreement. Brandywine will comply with all governmental laws,
ordinances, rules and regulations applicable to Brandywine's services
hereunder, or to the performance thereof.
5. All patentable and unpatentable inventions, discoveries,
intellectual property and ideas, which are made, conceived, or written by
Brandywine during the term of this Agreement and arising out of work and
services performed under this Agreement, shall be our sole and exclusive
property throughout the world. Promptly upon conception of such invention,
discovery, or idea, Brandywine will disclose it to us, and we shall have full
power and authority to file and prosecute patent applications throughout the
world thereon and to procure and maintain patents thereon. Brandywine shall,
at our request and expense, execute documents and perform such acts as our
counsel may deem advisable, to confirm in us all right, title, and interest
throughout the world, in and to, such invention, discovery, or idea, and all
patent applications, patents, and copyrights thereon, and to enable and assist
us in procuring, maintaining, enforcing and defending patents, petty patents,
copyrights, and other applicable statutory protection throughout the world on
any such invention, discovery, or idea which may be patentable or
copyrightable.
6. All information and know-how which Brandywine in any way obtain from
us and all inventions, discoveries, and ideas which shall become our property
pursuant to paragraph 5 hereof, shall be held secret and confidential by
Brandywine and shall not be used or revealed by Brandywine unless, until, and
to the extent we shall consent thereto in writing, or such information, know-
how, inventions, discoveries, and ideas are generally available to the public
through no action or inaction of Brandywine's.
7. Brandywine will not disclose to us any knowledge, information,
inventions, discoveries, or ideas which Brandywine possess under an obligation
of secrecy to a third party.
8. Brandywine do not have any express or implied obligation to a third
party which in any way conflicts with any of Brandywine's obligations under
this Agreement.
9. It is understood that we will have the royalty-free and unrestricted
right to use and disclose to third parties, any unpatented information, know-
how, inventions, discoveries, and ideas disclosed to us by Brandywine in the
course of Brandywine's services under this Agreement.
10. All written information, drawings, documents, and materials
prepared by Brandywine in the course of Brandywine's service hereunder shall
be our sole and exclusive property, and will be delivered to us by Brandywine
promptly after expiration or termination of this Agreement, together with all
written information, drawings, documents, and materials, if any, furnished by
us to Brandywine in connection with Brandywine's services hereunder and not
consumed by Brandywine in the performance of such services.
11. Brandywine assume all risk and liability for loss of, or damage to,
Brandywine's property, and for personal injury, sickness and/or disease,
including death resulting therefrom, sustained by Brandywine, if or where such
loss or damage is incurred or such injury, sickness, or disease is sustained,
in connection with the presence of a Brandywine consultant on our property
and/or any services hereunder, unless caused by our negligence or the
negligence of our employees or agents.
12. During the period of this Agreement, and for the two years
thereafter, Brandywine will not, directly or indirectly, engage in any
business which is substantially competitive with any business then actively
being conducted by us, or known to Brandywine to be contemplated by us in the
near future, nor will Brandywine consult with or advise any such directly
competitive business or otherwise, directly or indirectly, engage in any
activity which is substantially competitive with or in any way adversely
affects any material activity of ours.
13. The term of this Agreement shall commence on December xx, 1996, and
shall terminate upon thirty days notice by either party, unless sooner
terminated in accordance with the terms of this Agreement.
14. The provisions of paragraphs 5, 6, 9, 10, and 11 shall survive and
continue after expiration or termination of this Agreement.
15. Any assignment by Brandywine of this Agreement or of any of the
rights or obligations hereunder, without our written consent, shall be void.
No modifications of this Agreement or waiver of any of the terms or conditions
contained hereunder shall be binding unless in writing and signed by both
parties. This Agreement shall be governed by the laws of the State of
Florida.
IN WITNESS THEREOF, the parties have signed this Agreement as of the
date first above mentioned.
Ixion Biotechnology, Inc. Brandywine Consultants, Inc.
By By
Weaver H. Gaines Stephen W. Maddock, Ph.D.
Chairman and Chief Executive Officer President
consult.bci
IXION
THIS CONSULTING AGREEMENT, dated February 21, 1997 is between Dr. Ammon
B. Peck, Department of Pathology, University of Florida College of Medicine
and Ixion Biotechnology, Inc., a Delaware corporation with principal
offices at 12085 Research Drive, Alachua, Florida 32615.
WHEREAS, you have been performing consulting services for us pursuant to
a consulting agreement dated October 6, 1994, and
WHEREAS, we propose that you continue to perform consulting services for
us, and
WHEREAS, we understand you are willing to perform such services for us,
upon revised terms and conditions set forth below.
NOW, THEREFORE, we agree with you as follows:
1. You will perform such consulting services as we may request during
the term of this Agreement as Chief Scientist of the Company and as Chairman
of the Company=s Scientific Advisory Board. You will be available to perform
such services at reasonable times during the term of this Agreement as may be
determined by you in your discretion taking into account your obligations as a
full-time professor in the Department of Pathology at the University of
Florida College of Medicine. In no event shall you be obligated to perform
services hereunder for a total of more than four days in any calendar month
during the term of this agreement.
2. In full compensation for your services and agreements hereunder, we
will pay you at the rate of $50,000.00 per year. Should your services exceed
the 48 days referred to above, an appropriate adjustment will be made in your
payments. In addition, we will reimburse you (as discussed below) for all
reasonable traveling and living expenses necessarily incurred by you while you
are away from your regular place of business or at our premises at our request
and are engaged in the performance of services for us under this Agreement.
You will submit invoices promptly showing any disbursements for reasonable and
necessary expenses incurred on this engagement.
3. The manner in which you render services to us will be within your
sole control and discretion.
4. You will observe our rules, policies, and regulations with respect
to conduct, scientific misconduct, and the health, safety, and protection of
persons and property, while on our premises. You will comply with all
governmental laws, ordinances, rules and regulations applicable to your
services hereunder, or to the performance thereof.
5. All of the following sections 5 and 6 are subject to your
obligations to the University of Florida under its patent policy (including
the University=s policy respecting publication of the results of scientific
investigation). All inventions, improvements, discoveries, patent
applications, patents, trade secrets, know-how, biological material, data,
reagents, or other intellectual property, patentable or unpatentable
(Ainvention@), which are made or conceived by you during the term of this
Agreement (i) relating to Oxalobacter formigenes, oxalate, or oxalate-related
disorders, (ii) relating to islet progenitor/stem cells (AIPSCs@), or (iii)
relating to any other invention, provided rights thereto shall be waived or
not owned by the University of Florida, shall be our sole and exclusive
property throughout the world. Promptly upon conception of such invention,
you will disclose it us, and we shall have full power and authority to file
and prosecute patent applications throughout the world thereon and to procure
and maintain patents thereon. You shall, at our request and expense, execute
documents and perform such acts as our counsel may deem advisable, to confirm
in us all right, title, and interest throughout the world, in and to, such
invention, discovery, or idea, and all patent applications, patents, and
copyrights thereon, and to enable and assist us in procuring, maintaining,
enforcing and defending patents, petty patents, copyrights, and other
applicable statutory protection throughout the world on any such invention,
discovery, or idea which may be patentable or copyrightable.
6. All information and know-how which you in any way obtain from us
and all inventions which shall become our property pursuant to this Agreement,
shall be held secret and confidential by you and shall not be used or revealed
by you unless, until, and to the extent we shall consent thereto in writing,
or such information, know-how, inventions, discoveries, and ideas are
generally available to the public through no action or inaction of yours.
7. You will not disclose to us any knowledge, information, inventions,
discoveries, or ideas which you possess under an obligation of secrecy to a
third party.
8. You do not have any express or implied obligation to a third party
which in any way conflicts with any of your obligations under this Agreement,
except your obligations as an employee of the University of Florida, of which
we are aware.
9. It is understood that we will have the royalty-free and unrestricted
right to use and disclose to third parties, any inventions disclosed to us by
you in the course of your services under this Agreement.
10. All written information, drawings, documents and materials prepared
by you in the course of your service hereunder shall be our sole and exclusive
property, and will be delivered to us by you promptly after expiration or
termination of this Agreement, together with all written information,
drawings, documents and materials, if any, furnished by us to you in
connection with your services hereunder and not consumed by you in the
performance of such services.
11. You assume all risk and liability for loss of, or damage to, your
property, and for personal injury, sickness and/or disease, including death
resulting therefrom, sustained by you, if or where such loss or damage is
incurred or such injury, sickness, or disease is sustained, in connection with
your presence on our property and/or any services hereunder, unless caused by
our negligence or the negligence of our employees or agents.
12. During the term of this Agreement, you agree not to perform for a
third party any services which are in the field of this Agreement. During
the period of this Agreement, and for the two years thereafter, you will not,
directly or indirectly, engage in any business which is substantially
competitive with any business then actively being conducted by us, or
contemplated by us in the near future, nor will you consult with or advise any
such competitive business or otherwise, directly or indirectly, engage in any
activity which is substantially competitive with or in any way adversely
affects any material activity of ours.
13. The term of this Agreement shall commence on the date first above
mentioned, and shall terminate a) on December 31, 2000, or b) upon thirty days
notice by either party, unless sooner terminated by your death, or in
accordance with the terms of this Agreement.
14. The provisions of paragraphs 5, 6, 7, 9, 10, 11, and 16 shall
survive and continue after expiration or termination of this Agreement.
15. Any assignment by you of this Agreement or of any of the rights or
obligations hereunder, without our written consent, shall be void. No
modifications of this Agreement or waiver of any of the terms or conditions
contained hereunder shall be binding unless in writing and signed by both
parties. This Agreement shall be governed by the laws of the State of
Florida.
16. We will have the sole and exclusive power to determine when we have
adequate resources available to pay your cash compensation, otherwise, such
compensation shall be deferred.
If you agree to the foregoing, please indicate your acceptance thereof
by signing the enclosed duplicate copy of this Agreement and returning it to
us.
Very truly yours,
Ixion Biotechnology, Inc.
By
Weaver H. Gaines
Chairman and Chief Executive Officer
Accepted and Agreed
Ammon B. Peck, Ph.D.
IXION
Consulting Agreement
This Consulting Agreement (the "Agreement"), dated as of July 1, 1996, is
between Ixion Biotechnology, Inc., a Delaware corporation with offices at
12085 Research Drive, Alachua, Florida, 32615 ("Ixion," the "Company," or
"we") and David C. Peck of 115 Golfview Drive, Homosassa, Florida 34446
("Consultant" or "you").
WHEREAS, Consultant has been employed by the Company pursuant to an
Employment Agreement dated as of August 31, 1994 as President and Chief
Executive Officer (the "Employment Agreement"); and
WHEREAS, Consultant does not wish to devote his full time to the business
of the Company and wishes to be able to work for other entities, provided they
are not competitors, until further notice; and
WHEREAS, Consultant and the Company wish to suspend the terms of the
Employment Agreement until further notice and replace it with this Consulting
Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Consultant will perform such consulting services as Ixion may request
during the term of this Agreement in connection with financial affairs and
capital raising. Consultant may continue to use the titles of President and
Chief Financial Officer
2. In full compensation for your services and agreements hereunder,
Ixion will pay you a retainer of $5,000 per month. Payment will be made
monthly. In addition, Ixion will reimburse you for all reasonable traveling
and living expenses incurred while you are away from your normal regular place
of business or our premises at our request and are engaged in the performance
of services for us under this Agreement. You will submit invoices promptly
showing any disbursements for reasonable and necessary expenses incurred on
this engagement. Expenses which would be reasonably expected to exceed
$1,000.00 shall be reported to Ixion by Consultant in advance of any expense
commitment.
3. The manner, place, and time in which you render services to us will
be within your sole control and discretion.
4. You will observe our rules, policies, and regulations with respect to
scientific and other conduct and the health, safety, and protection of persons
and property, while on our premises or performing services under this
Agreement. You will comply with all governmental laws, ordinances, rules and
regulations applicable to your services hereunder, or to the performance
thereof.
5. All patentable and unpatentable inventions, discoveries, intellectual
property and ideas, which are made, conceived, or written by you during the
term of this Agreement and arising out of work and services performed under
this Agreement, shall be our sole and exclusive property throughout the world.
Promptly upon conception of such invention, discovery, or idea, you will
disclose it to us, and we shall have full power and authority to file and
prosecute patent applications throughout the world thereon and to procure and
maintain patents thereon. You shall, at our request and expense, execute
documents and perform such acts as our counsel may deem advisable, to confirm
in us all right, title, and interest throughout the world, in and to, such
invention, discovery, or idea, and all patent applications, patents, and
copyrights thereon, and to enable and assist us in procuring, maintaining,
enforcing and defending patents, petty patents, copyrights, and other
applicable statutory protection throughout the world on any such invention,
discovery, or idea which may be patentable or copyrightable.
6. All information and know-how which you in any way obtain from us and
all inventions, discoveries, and ideas which shall become our property
pursuant to paragraph 5 hereof, shall be held secret and confidential by you
and shall not be used or revealed by you unless, until, and to the extent we
shall consent thereto in writing, or such information, know-how, inventions,
discoveries, and ideas are generally available to the public through no action
or inaction of yours.
7. You will not disclose to us any knowledge, information, inventions,
discoveries, or ideas which you possess under an obligation of secrecy to a
third party.
8. You do not have any express or implied obligation to a third party
which in any way conflicts with any of your obligations under this Agreement.
9. It is understood that we will have the royalty-free and unrestricted
right to use and disclose to third parties, any unpatented information, know-
how, inventions, discoveries, and ideas disclosed to us by you in the course
of your services under this Agreement.
10. All written information, drawings, documents, and materials prepared
by you in the course of your service hereunder shall be our sole and exclusive
property, and will be delivered to us by you promptly after expiration or
termination of this Agreement, together with all written information,
drawings, documents, and materials, if any, furnished by us to you in
connection with your services hereunder and not consumed by you in the
performance of such services.
11. You assume all risk and liability for loss of, or damage to, your
property, and for personal injury, sickness and/or disease, including death
resulting therefrom, sustained by you, if or where such loss or damage is
incurred or such injury, sickness, or disease is sustained, in connection with
your presence on our property and/or any services hereunder, unless caused by
our negligence or the negligence of our employees or agents.
12. During the period of this Agreement, and for the two years
thereafter, you will not, directly or indirectly, engage in any business which
is substantially competitive with any business then actively being conducted
by us, or known to you to be contemplated by us in the near future, nor will
you consult with or advise any such directly competitive business or
otherwise, directly or indirectly, engage in any activity which is
substantially competitive with or in any way adversely affects any material
activity of ours.
13. The term of this Agreement shall commence on July 1, 1996, and shall
terminate immediately upon written notice by either party, unless sooner
terminated by your death, or in accordance with the terms of this Agreement.
Death or disability shall be deemed notice of termination effective
immediately prior to such event. Upon termination, the provisions of the
Employment Agreement shall immediately be reinstated, except as otherwise
provided herein.
14. The provisions of paragraphs 5, 6, 9, 10, and 11 shall survive and
continue after expiration or termination of this Agreement.
15. During the pendency of this Consulting Agreement, the provisions of
the Employment Agreement shall be suspended except as follows:
a) The term of the Employment Agreement set forth in Section 1 (A)
thereof;
b) The requirement of giving notice not later than September 30 of
the preceding year of intent to not extend the Expiration Date of
the Employment Agreement as required by Section 1 (A) thereof;
c) The restrictive covenants set forth in Section 4 thereof;
d) The indemnification provisions of Section 11 thereof; and
e) The registration rights provisions of Section 13 thereof.
16. Any assignment by you of this Agreement or of any of the rights or
obligations hereunder, without our written consent, shall be void. No
modifications of this Agreement or waiver of any of the terms or conditions
contained hereunder shall be binding unless in writing and signed by both
parties. This Agreement shall be governed by the laws of the State of
Florida.
IN WITNESS THEREOF, the parties have signed this Agreement as of the date
first above mentioned.
Ixion Biotechnology, Inc. Consultant
By
Weaver H. Gaines David C. Peck
Chairman and Chief Executive Officer Consultant
Convertible Promissory Note
$ (See Schedule Attached) Alachua, Florida October 15, 1993
1. FOR VALUE RECEIVED, Ixion Biotechnology, Inc., a Delaware
corporation (the "Maker") hereby promises to pay to the order of Weaver H.
Gaines, a director and executive officer of the Maker, the amount outstanding
from time to time in the Schedule attached hereto as provided below, together
with interest accruing from the date hereof at the rate of 8% per annum on the
unpaid principal amount of this Note. Interest shall remain 8% per annum
until notice is given as set forth below.
2. Upon written notice by either party given prior to January 31 of any
given year, interest shall be reset for the year. Such reset interest shall
be the prime rate in effect on January 1 of such year for the customers of
SunBank Gainesville, plus 3%. Interest will be computed on the basis of a
360-day year, 30 day month.
3. Payments of both principal and interest are to be made in lawful
money of the United States of America at the residence of the holder, or at
such other place within the United States of America as the holder hereof may
designate to the Maker in writing.
4. Maker shall pay interest on this Note monthly on the last day of the
month for such month and on the date that principal is paid. Such interest
shall be payable out of the net earnings of the Maker, determined in
accordance with generally accepted accounting principles, increased by
depreciation, amortization, and the interest payable on this Note. In the
event Maker shall have no net earnings, the interest shall be added to the
principal of the Note on the date interest is due.
5. Notwithstanding the provisions of section 4, above, Maker shall pay
the outstanding balance of principal and interest on this Note at the end of
the first calendar year that sufficient financing or operating revenue has
been obtained to permit the payment of the Note, but not later than December
31, 1998. The Board of Directors of the Maker shall have sole discretion to
determine when such condition has been met.
6. This Note is pre-payable at any time or from time to time, in whole
or in part without penalty.
7. If suit is instituted to collect this Note or any portion thereof,
the Maker hereby promises to pay to the holder, in addition to the principal
and interest due hereunder, all costs of collection hereof, together with such
amount as any court of competent jurisdiction may adjudge reasonable as said
holder's attorney's fees in said suit.
8. Accrued interest shall be entered by the Maker on the Schedule
attached to the copy of the Note held at the Maker's principle offices.
Advances shall also so be so entered, with a receipt issued to the Holder for
such advance. Holder shall be entitled to a copy of the Schedule, certified
by the Treasurer as of a particular date, upon written request.
9. So long as Weaver H. Gaines is the holder of this Note, this Note
may be converted at his election into Common Stock of the Maker at a price per
share not greater than the lowest price per share (adjusted for stock splits,
stock dividends, or other dilution) at which shares of the Maker's Common
Stock have been issued after the date hereof. Notice of such election must be
in writing and must specify the amount of this Note to be so converted, and
the effective date of the conversion.
10. This Note shall be construed in accordance with and governed by the
laws of the State of Florida.
11. The Maker hereby waives presentment and demand for payment, notice
of dishonor, protest, and any and all other notices or demands in connection
with the delivery, acceptance, performance, default or enforcement of this
Note.
Ixion Biotechnology, Inc.
By
Weaver H. Gaines, Chairman
Attest:
Mary Trew, Secretary
Schedule Attached to Note dated March 31, 1993
Ixion to Weaver H. Gaines
Date
Principal
Outstanding
Advance
Interest
Balance
<PAGE>
Schedule Attached to Note dated March 31, 1993
Ixion to Weaver H. Gaines
Date
Principal
Outstanding
Advance
Interest
Balance
Convertible Promissory Note
$ (See Schedule Attached) Alachua, Florida October 15, 1993
1. FOR VALUE RECEIVED, Ixion Biotechnology, Inc., a Delaware
corporation (the "Maker") hereby promises to pay to the order of David C.
Peck, a director of the Maker, the amount outstanding from time to time in the
Schedule attached hereto as provided below, together with interest accruing
from the date hereof at the rate of 8% per annum on the unpaid principal
amount of this Note. Interest shall remain 8% per annum until notice is given
as set forth below.
2. Upon written notice by either party given prior to January 31 of any
given year, interest shall be reset for the year. Such reset interest shall
be the prime rate in effect on January 1 of such year for the customers of
SunBank Gainesville, plus 3%. Interest will be computed on the basis of a
360-day year, 30 day month.
3. Payments of both principal and interest are to be made in lawful
money of the United States of America at the residence of the holder, or at
such other place within the United States of America as the holder hereof may
designate to the Maker in writing.
4. Maker shall pay interest on this Note monthly on the last day of the
month for such month and on the date that principal is paid. Such interest
shall be payable out of the net earnings of the Maker, determined in
accordance with generally accepted accounting principles, increased by
depreciation, amortization, and the interest payable on this Note. In the
event Maker shall have no net earnings, the interest shall be added to the
principal of the Note on the date interest is due.
5. Notwithstanding the provisions of section 4, above, Maker shall pay
the outstanding balance of principal and interest on this Note at the end of
the first calendar year that sufficient financing or operating revenue has
been obtained to permit the payment of the Note, but not later than December
31, 1998. The Board of Directors of the Maker shall have sole discretion to
determine when such condition has been met.
6. This Note is pre-payable at any time or from time to time, in whole
or in part without penalty.
7. If suit is instituted to collect this Note or any portion thereof,
the Maker hereby promises to pay to the holder, in addition to the principal
and interest due hereunder, all costs of collection hereof, together with such
amount as any court of competent jurisdiction may adjudge reasonable as said
holder's attorney's fees in said suit.
8. Accrued interest shall be entered by the Maker on the Schedule
attached to the copy of the Note held at the Maker's principle offices.
Advances shall also so be so entered, with a receipt issued to the Holder for
such advance. Holder shall be entitled to a copy of the Schedule, certified
by the Treasurer as of a particular date, upon written request.
9. So long as David C. Peck is the holder of this Note, this Note may be
converted at his election into Common Stock of the Maker at a price per share
not greater than the lowest price per share (adjusted for stock splits, stock
dividends, or other dilution) at which shares of the Maker's Common Stock have
been issued after the date hereof. Notice of such election must be in writing
and must specify the amount of this Note to be so converted, and the effective
date of the conversion.
10. This Note shall be construed in accordance with and governed by the
laws of the State of Florida.
11. The Maker hereby waives presentment and demand for payment, notice
of dishonor, protest, and any and all other notices or demands in connection
with the delivery, acceptance, performance, default or enforcement of this
Note.
Ixion Biotechnology, Inc.
By
Weaver H. Gaines, Chairman
Attest:
Mary Trew, Secretary
<PAGE>
Schedule Attached to Note dated October 15, 1993
Ixion to David C. Peck
Date
Principal
Outstanding
Advance
Interest
Balance
Demand Promissory Note
Bridge Loan
$ (See Schedule Attached) Alachua, Florida April 15, 1996
1. FOR VALUE RECEIVED, Ixion Biotechnology, Inc., a Delaware
corporation (the "Maker") hereby promises to pay to the order of Weaver H.
Gaines, a director and Chairman and CEO of the Maker, the amount outstanding
from time to time in the Schedule attached hereto as provided below, together
with interest accruing from the date hereof at the rate of 8% per annum on the
unpaid principal amount of this Note. Interest shall remain 8% per annum
until notice is given as set forth below.
2. Upon written notice by either party given prior to January 31 of any
given year, interest shall be reset for the year. Such reset interest shall
be the prime rate in effect on January 1 of such year for the customers of
SunTrust Bank, North Central Florida, plus 3%. Interest will be computed on
the basis of a 360-day year, 30 day month.
3. Payments of both principal and interest are to be made in lawful
money of the United States of America at the residence of the holder, or at
such other place within the United States of America as the holder hereof may
designate to the Maker in writing.
4. Maker shall pay interest on this Note monthly on the last day of the
month for such month and on the date that principal is paid. In the event
Maker shall have no cash, the interest shall be added to the principal of the
Note on the date interest is due and paid as soon thereafter as Maker has
funds available.
5. This Note is a demand promissory note, but is pre-payable at any time
or from time to time, in whole or in part without penalty.
6. If suit is instituted to collect this Note or any portion thereof,
the Maker hereby promises to pay to the Holder, in addition to the principal
and interest due hereunder, all costs of collection hereof, together with such
amount as any court of competent jurisdiction may adjudge reasonable as said
holder's attorney's fees in said suit.
7. Accrued interest shall be entered by the Maker on the Schedule
attached to the copy of the Note held at the Maker's principle offices.
Advances shall also so be so entered, with a receipt issued to the Holder for
such advance. Holder shall be entitled to a copy of the Schedule, certified
by the Treasurer as of a particular date, upon written request.
8. This Note shall be construed in accordance with and governed by the
laws of the State of Florida.
9. The Maker hereby waives presentment and demand for payment, notice of
dishonor, protest, and any and all other notices or demands in connection with
the delivery, acceptance, performance, default or enforcement of this Note.
Ixion Biotechnology, Inc.
By
David C. Peck, President
Attest:
Mary Trew, Secretary
<PAGE>
Schedule Attached to Note dated April 15, 1996
Ixion to Weaver H. Gaines
Date Principal Outstanding Advance Interest Balance
Schedule Attached to Note dated March 31, 1993
Ixion to Weaver H. Gaines
Date Principal Outstanding Advance Interest Balance
Demand Promissory Note
Bridge Loan
$ (See Schedule Attached) Alachua, Florida April 15, 1996
1. FOR VALUE RECEIVED, Ixion Biotechnology, Inc., a Delaware
corporation (the "Maker") hereby promises to pay to the order of David C.
Peck, a director and President and Chief Financial Officer of the Maker, the
amount outstanding from time to time in the Schedule attached hereto as
provided below, together with interest accruing from the date hereof at the
rate of 8% per annum on the unpaid principal amount of this Note. Interest
shall remain 8% per annum until notice is given as set forth below.
2. Upon written notice by either party given prior to January 31 of any
given year, interest shall be reset for the year. Such reset interest shall
be the prime rate in effect on January 1 of such year for the customers of
SunTrust Bank, North Central Florida, plus 3%. Interest will be computed on
the basis of a 360-day year, 30 day month.
3. Payments of both principal and interest are to be made in lawful
money of the United States of America at the residence of the holder, or at
such other place within the United States of America as the holder hereof may
designate to the Maker in writing.
4. Maker shall pay interest on this Note monthly on the last day of the
month for such month and on the date that principal is paid. In the event
Maker shall have no cash, the interest shall be added to the principal of the
Note on the date interest is due and paid as soon thereafter as Maker has
funds available.
5. This Note is a demand promissory note, but is pre-payable at any time
or from time to time, in whole or in part without penalty.
6. If suit is instituted to collect this Note or any portion thereof,
the Maker hereby promises to pay to the Holder, in addition to the principal
and interest due hereunder, all costs of collection hereof, together with such
amount as any court of competent jurisdiction may adjudge reasonable as said
holder's attorney's fees in said suit.
7. Accrued interest shall be entered by the Maker on the Schedule
attached to the copy of the Note held at the Maker's principle offices.
Advances shall also so be so entered, with a receipt issued to the Holder for
such advance. Holder shall be entitled to a copy of the Schedule, certified
by the Treasurer as of a particular date, upon written request.
8. This Note shall be construed in accordance with and governed by the
laws of the State of Florida.
9. The Maker hereby waives presentment and demand for payment, notice of
dishonor, protest, and any and all other notices or demands in connection with
the delivery, acceptance, performance, default or enforcement of this Note.
Ixion Biotechnology, Inc.
By
Weaver H. Gaines, Chairman
Attest:
Mary Trew, Secretary
<PAGE>
Schedule Attached to Note dated April 15, 1996
Ixion to David C. Peck
Date Principal Outstanding Advance Interest Balance
Schedule Attached to Note dated March 31, 1993
Ixion to Weaver H. Gaines
Date Principal Outstanding Advance Interest Balance
IXION BIOTECHNOLOGY, INC.
DEFERRED COMPENSATION PLAN AGREEMENT
THIS AGREEMENT made this 1st day of January, 1994 by and between Ixion
Biotechnology, Inc. (the "Company") and Weaver H. Gaines (the "Employee"):
WITNESSETH:
WHEREAS, the Employee occupies a position of key significance with the
Company and the Company desires to encourage the Employee to remain with the
Company, to make and to continue to make contributions to the Company's
growth;
WHEREAS, by consent dated January 3, 1994, the Company's Board of
Directors adopted a Deferred Compensation Plan for officers, key employees,
and key consultants of the Company (the "Plan"), permitting the Employee to
defer receipt of all or a portion of his compensation to be paid in the future
in accordance with the terms and conditions herein set forth.
NOW, THEREFORE, the parties agree as follows:
1. Payment of Compensation.
Beginning January 3, 1994, and thereafter for all future calendar years
until the Employee provides the Company with written notice to discontinue or
reduce the deferral of future compensation hereunder, 100% of each installment
of Employee's annual compensation (including annual or long term incentive
compensation, if any) shall be deferred and credited in accordance with
Section 2 below. (The beginning date in the preceding sentence shall be the
first business day of a future calendar year, unless the Employee executes
this Agreement within thirty days of becoming eligible for the Plan, in which
event the beginning date may be the first day of any future month.) Any
remaining portion of the Employee's compensation shall be paid currently in
accordance with the Company's normal payroll procedures. The Employee's
regular stipulated rate of pay from the Company for full-time service shall
not be affected by the deferral provided for herein and, therefore, none of
the Company's non-qualified welfare plans, if any, the benefits of which are a
function of the regular stipulated rate of pay, shall be affected by such
deferral.
2. Employee's Account: Credits and Interest.
(a) An unfunded deferred compensation account (the "Account")
will be established for the Employee. The only obligation of the Company with
respect to the Account is to make the payments provided for under this
Agreement when they become payable, and that any amount credited to such
Account will be solely for record-keeping purposes and shall not be considered
to be held in trust or in escrow or in any way vested in the Employee.
(b) The Company will credit to the Account an amount equal to the
percent of compensation specified in Section 1.
(c) (i) Until payments under this Agreement begin, the
Company will also credit additional amounts to the Account. The Board of
Directors will establish an annual interest rate which shall remain in effect
until changed by the Board at the beginning of each year. The initial rate
shall be 8%.
(ii) After payments under this Agreement begin, the
Company will also credit additional amounts to the Account. Such additional
amounts shall be equal to the amount of interest set forth in Subsection
2(c)(i) above, unless greater additional amounts are otherwise ordered by the
Board of Directors.
3. Payments from Deferred Compensation Account.
(a) The amount in the Employee's Account will be paid out as
indicated below provided, in all cases, the Company has sufficient cash to be
able prudently to make such payments.
(i) In the event of the Employee's termination of employment by
death, payment to the beneficiary will commence on the first day of the
calendar month following the 90th day after the Employee's death, provided
that the Company has been provided with the necessary documents.
(ii) In the event of the Employee's termination of employment,
other than by death, disability or retirement: [Initial one.]
on the first day of the calendar month following
the 90th day after the Employee's termination of employment; or
on the first day of the calendar month following
the month in which the Employee attained 65 years of age.
(b) Cash payment shall be in the form of monthly installments, as
nearly equal as may be practicable, but with appropriate adjustment for
changes required under Subsection (c)(ii) of Section 2, over a period of years
to be selected by Employee or in a single sum. A change in either the elected
form of payment or the number of years for installment payments may be made at
any time prior to the calendar year during which the initial benefit becomes
payable. The Employee, in the same manner as his may make beneficiary
designations, may elect that payments coming due at or after his death shall
be either in one sum or in installments. Any payment coming due during the
Employee's lifetime shall be payable to the Employee. Any payment coming due
at or after the Employee's death shall be paid when due to the beneficiary
designated by the Employee. The beneficiary designated by the Employee must
be his spouse, child or children, grandchild or grandchildren, sibling or
siblings, the Employee's executors or administrators, or a trust established
by the instrument probated as the Employee's Will. If no such designation is
in effect at the time any payment becomes due, it shall be paid to the
Employee's executors or administrators. Beneficiary designations and changes
thereof may be made during the Employee's lifetime by the Employee by written
notice filed with the Company. Such designation and any subsequent change
shall take effect as of the date the notice was signed, upon recording and
acceptance by the Company, subject to any payment made by the Company or
action taken by it before receipt of the notice.
(c) In the event of Employee's termination of employment either
by death or without cause, at the election of the Employee or the Employee's
executors or administrators, made on or before the 90th day following the date
of termination, Employee may convert all or a portion of the amounts in the
Account into common stock of the Company at a price per share not greater than
the lowest price per share (adjusted for stock splits, stock dividends, the
issuance of convertible securities, warrants or options, or other dilution),
at which shares of the Company's common stock have been issued (or agreed to
be issued) at any time in the 365 days preceding the date of termination.
Notice of the election must be in writing and must specify the amount of such
Account to be so converted. The common stock shall be issued as of the date
of the notice, upon recording by the Company.
(d) A termination shall be deemed without cause if, without
Employee's written consent, any of the following events occur:
(i) The Employee is assigned any duties inconsistent with his
status in the position held immediately prior to such assignment, or has the
nature or status of his responsibilities altered in a substantially adverse
way;
(ii) The Company reduces the Employee's annual base salary
in effect as of the date of this Agreement, or as the same may be increased
from time to time;
(iii) The Company's offices where the Employee is working
are moved to a location more than 50 miles from the location of such offices;
(iv) The Company fails to pay any portion of current
compensation, or fails to pay any portion of an installment of deferred
compensation under any deferred compensation program of the Company within 30
days of the date such compensation is due;
(v) The Company fails to continue in effect any compensation
plan in which the Employee is participating which is material to such
Employee's total compensation;
(vi) The Company fails to continue to provide the Employee
with benefits substantially similar to those, if any, previously enjoyed under
any of the Company's pension, saving, health, or other welfare or benefit
plans;
(vii) The Company takes any other action which directly or
indirectly materially reduces any of the benefits referred to above, or
reduces any fringe benefits enjoyed by the Employee (including, without
limitation, days of paid vacation); or
(ix) The Company materially breaches any employment agreement
with the Employee.
4. Benefits May Not be Assigned or Attached.
No benefit hereunder may be assigned, anticipated or hypothecated and,
to the extent permitted by law, no sum payable under this Agreement shall be
subject to legal process or attachment for payment of any claim payee
hereunder.
5. No Obligations to Continue Employment.
Subject to the provisions of Section 3(d) above, nothing contained in
this Agreement shall in any way otherwise obligate the Company to retain the
Employee in its employment for any period of time, nor in any way otherwise
affect the Company's right to change at any time the Employee's compensation,
the method or conditions for payment thereof, or any other aspect of the
Employee's employment.
6. Duration of Agreement.
This Agreement shall remain effective and continue in force until such
time as it may be amended or terminated by the parties hereto.
7. Election of Payment .
If the Employee has not elected to convert his Account into common stock
of the Company, such Account shall be paid as follows: [Initial one.]
(a) Single sum.
(b) Monthly Installments over (5 or 10 years)
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
Ixion Biotechnology, Inc. Weaver H. Gaines
By:
Employee
Designation of Benficiary
defcomp.whg
IXION BIOTECHNOLOGY, INC.
DEFERRED COMPENSATION PLAN AGREEMENT
THIS AGREEMENT made this 1st day of June, 1994 by and between Ixion
Biotechnology, Inc. (the "Company") and Ammon B. Peck ("Peck"):
WITNESSETH:
WHEREAS, Peck occupies a position of key significance with the Company
and the Company desires to encourage Peck to remain with the Company, to make
and to continue to make contributions to the Company's growth;
WHEREAS, by consent dated January 3, 1994, the Company's Board of
Directors adopted a Deferred Compensation Plan for officers, key employees,
and key consultants of the Company (the "Plan"), permitting Peck to defer
receipt of all or a portion of his compensation to be paid in the future in
accordance with the terms and conditions herein set forth.
NOW, THEREFORE, the parties agree as follows:
1. Payment of Compensation.
Beginning June 1, 1994, and thereafter for all future calendar years
until Peck provides the Company with written notice to discontinue or reduce
the deferral of future compensation hereunder, 100% of each installment of
Peck's compensation (including annual or long term incentive compensation, if
any) shall be deferred and credited in accordance with Section 2 below. (The
beginning date in the preceding sentence shall be the first business day of a
future calendar year, unless Peck executes this Agreement within thirty days
of becoming eligible for the Plan, in which event the beginning date may be
the first day of any future month.) Any remaining portion of Peck's
compensation shall be paid currently in accordance with the Company's normal
payroll procedures. Peck's regular stipulated rate of pay from the Company,
if any, shall not be affected by the deferral provided for herein and,
therefore, none of the Company's non-qualified welfare plans, if any, the
benefits of which are a function of the regular stipulated rate of pay, shall
be affected by such deferral.
2. Peck's Account: Credits and Interest.
(a) An unfunded deferred compensation account (the "Account") will
be established for Peck. The only obligation of the Company with respect to
the Account is to make the payments provided for under this Agreement when
they become payable, and that any amount credited to such Account will be
solely for record-keeping purposes and shall not be considered to be held in
trust or in escrow or in any way vested in Peck.
(b) The Company will credit to the Account an amount equal to the
percent of compensation specified in Section 1.
(c) (i) Until payments under this Agreement begin, the Company
will also credit additional amounts to the Account. The Board of Directors
will establish an annual interest rate which shall remain in effect until
changed by the Board at the beginning of each year. The initial rate shall be
8%.
(ii) After payments under this Agreement begin, the Company
will also credit additional amounts to the Account. Such additional amounts
shall be equal to the amount of interest set forth in Subsection 2(c)(i)
above, unless greater additional amounts are otherwise ordered by the Board of
Directors.
3. Payments from Deferred Compensation Account.
(a) The amount in Peck's Account will be paid out as indicated
below provided, in all cases, the Company has sufficient cash to be able
prudently to make such payments.
(i) In the event of Peck's termination of employment by death,
payment to the beneficiary will commence on the first day of the calendar
month following the 90th day after Peck's death, provided that the Company has
been provided with the necessary documents.
(ii) In the event of Peck's termination of employment, other than
by death, disability or retirement: [Initial one.]
on the first day of the calendar month following
the 90th day after Peck's termination of employment; or
on the first day of the calendar month following
the month in which Peck attained 65 years of age.
(b) Cash payment shall be in the form of monthly installments, as
nearly equal as may be practicable, but with appropriate adjustment for
changes required under Subsection (c)(ii) of Section 2, over a period of years
to be selected by Consultant or in a single sum. A change in either the
elected form of payment or the number of years for installment payments may be
made at any time prior to the calendar year during which the initial benefit
becomes payable. Peck, in the same manner as his may make beneficiary
designations, may elect that payments coming due at or after his death shall
be either in one sum or in installments. Any payment coming due during Peck's
lifetime shall be payable to Peck. Any payment coming due at or after Peck's
death shall be paid when due to the beneficiary designated by Peck. The
beneficiary designated by Peck must be his spouse, child or children,
grandchild or grandchildren, sibling or siblings, Peck's executors or
administrators, or a trust established by the instrument probated as Peck's
Will. If no such designation is in effect at the time any payment becomes
due, it shall be paid to Peck's executors or administrators. Beneficiary
designations and changes thereof may be made during Peck's lifetime by Peck by
written notice filed with the Company. Such designation and any subsequent
change shall take effect as of the date the notice was signed, upon recording
and acceptance by the Company, subject to any payment made by the Company or
action taken by it before receipt of the notice.
(c) In the event of Consultant's termination of employment either
by death or without cause, at the election of Peck or Peck's executors or
administrators, made on or before the 90th day following the date of
termination, Consultant may convert all or a portion of the amounts in the
Account into common stock of the Company at a price per share not greater than
the lowest price per share (adjusted for stock splits, stock dividends, the
issuance of convertible securities, warrants or options, or other dilution),
at which shares of the Company's common stock have been issued (or agreed to
be issued) at any time in the 365 days preceding the date of termination.
Notice of the election must be in writing and must specify the amount of such
Account to be so converted. The common stock shall be issued as of the date
of the notice, upon recording by the Company.
(d) A termination shall be deemed without cause if, without
Consultant's written consent, any of the following events occur:
(i) Peck is assigned any duties inconsistent with his status in
the position held immediately prior to such assignment, or has the nature or
status of his responsibilities altered in a substantially adverse way;
(ii) The Company reduces Peck's annual base salary in effect
as of the date of this Agreement, or as the same may be increased from time to
time;
(iii) The Company's offices where Peck is working are moved
to a location more than 50 miles from the location of such offices;
(iv) The Company fails to pay any portion of current
compensation, or fails to pay any portion of an installment of deferred
compensation under any deferred compensation program of the Company within 30
days of the date such compensation is due;
(v) The Company fails to continue in effect any compensation
plan in which Peck is participating which is material to such Consultant's
total compensation;
(vi) The Company fails to continue to provide Peck with
benefits substantially similar to those, if any, previously enjoyed under any
of the Company's pension, saving, health, or other welfare or benefit plans;
(vii) The Company takes any other action which directly or
indirectly materially reduces any of the benefits referred to above, or
reduces any fringe benefits enjoyed by Peck (including, without limitation,
days of paid vacation); or
(ix) The Company materially breaches any employment agreement
with Peck.
4. Benefits May Not be Assigned or Attached.
No benefit hereunder may be assigned, anticipated or hypothecated and, to
the extent permitted by law, no sum payable under this Agreement shall be
subject to legal process or attachment for payment of any claim payee
hereunder.
5. No Obligations to Continue Employment.
Subject to the provisions of Section 3(d) above, nothing contained in
this Agreement shall in any way otherwise obligate the Company to retain Peck
in its employment for any period of time, nor in any way otherwise affect the
Company's right to change at any time Peck's compensation, the method or
conditions for payment thereof, or any other aspect of Peck's employment.
6. Duration of Agreement.
This Agreement shall remain effective and continue in force until such
time as it may be amended or terminated by the parties hereto.
7. Election of Payment .
If Peck has not elected to convert his Account into common stock of the
Company, such Account shall be paid as follows: [Initial one.]
(a) Single sum.
(b) Monthly Installments over (5 or 10 years)
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
Ixion Biotechnology, Inc. Ammon B. Peck, Ph.D.
By:
Designation of Benficiary
IXION BIOTECHNOLOGY, INC.
DEFERRED COMPENSATION PLAN AGREEMENT
THIS AGREEMENT made this 1st day of April, 1994 by and between Ixion
Biotechnology, Inc. (the "Company") and David C. Peck (the "Employee"):
WITNESSETH:
WHEREAS, the Employee occupies a position of key significance with the
Company and the Company desires to encourage the Employee to remain with the
Company, to make and to continue to make contributions to the Company's
growth;
WHEREAS, by consent dated January 3, 1994, the Company's Board of
Directors adopted a Deferred Compensation Plan for officers, key employees,
and key consultants of the Company (the "Plan"), permitting the Employee to
defer receipt of all or a portion of his compensation to be paid in the future
in accordance with the terms and conditions herein set forth.
NOW, THEREFORE, the parties agree as follows:
1. Payment of Compensation.
Beginning April 1, 1994, and thereafter for all future calendar years
until the Employee provides the Company with written notice to discontinue or
reduce the deferral of future compensation hereunder, 100% of each installment
of Employee's annual compensation (including annual or long term incentive
compensation, if any) shall be deferred and credited in accordance with
Section 2 below. (The beginning date in the preceding sentence shall be the
first business day of a future calendar year, unless the Employee executes
this Agreement within thirty days of becoming eligible for the Plan, in which
event the beginning date may be the first day of any future month.) Any
remaining portion of the Employee's compensation shall be paid currently in
accordance with the Company's normal payroll procedures. The Employee's
regular stipulated rate of pay from the Company for full-time service shall
not be affected by the deferral provided for herein and, therefore, none of
the Company's non-qualified welfare plans, if any, the benefits of which are a
function of the regular stipulated rate of pay, shall be affected by such
deferral.
2. Employee's Account: Credits and Interest.
(a) An unfunded deferred compensation account (the "Account")
will be established for the Employee. The only obligation of the Company with
respect to the Account is to make the payments provided for under this
Agreement when they become payable, and that any amount credited to such
Account will be solely for record-keeping purposes and shall not be considered
to be held in trust or in escrow or in any way vested in the Employee.
(b) The Company will credit to the Account an amount equal to the
percent of compensation specified in Section 1.
(c) (i) Until payments under this Agreement begin, the
Company will also credit additional amounts to the Account. The Board of
Directors will establish an annual interest rate which shall remain in effect
until changed by the Board at the beginning of each year. The initial rate
shall be 8%.
(ii) After payments under this Agreement begin, the
Company will also credit additional amounts to the Account. Such additional
amounts shall be equal to the amount of interest set forth in Subsection
2(c)(i) above, unless greater additional amounts are otherwise ordered by the
Board of Directors.
3. Payments from Deferred Compensation Account.
(a) The amount in the Employee's Account will be paid out as
indicated below provided, in all cases, the Company has sufficient cash to be
able prudently to make such payments.
(i) In the event of the Employee's termination of employment by
death, payment to the beneficiary will commence on the first day of the
calendar month following the 90th day after the Employee's death, provided
that the Company has been provided with the necessary documents.
(ii) In the event of the Employee's termination of employment,
other than by death, disability or retirement: [Initial one.]
on the first day of the calendar month following
the 90th day after the Employee's termination of employment; or
on the first day of the calendar month following
the month in which the Employee attained 65 years of age.
(b) Cash payment shall be in the form of monthly installments, as
nearly equal as may be practicable, but with appropriate adjustment for
changes required under Subsection (c)(ii) of Section 2, over a period of years
to be selected by Employee or in a single sum. A change in either the elected
form of payment or the number of years for installment payments may be made at
any time prior to the calendar year during which the initial benefit becomes
payable. The Employee, in the same manner as his may make beneficiary
designations, may elect that payments coming due at or after his death shall
be either in one sum or in installments. Any payment coming due during the
Employee's lifetime shall be payable to the Employee. Any payment coming due
at or after the Employee's death shall be paid when due to the beneficiary
designated by the Employee. The beneficiary designated by the Employee must
be his spouse, child or children, grandchild or grandchildren, sibling or
siblings, the Employee's executors or administrators, or a trust established
by the instrument probated as the Employee's Will. If no such designation is
in effect at the time any payment becomes due, it shall be paid to the
Employee's executors or administrators. Beneficiary designations and changes
thereof may be made during the Employee's lifetime by the Employee by written
notice filed with the Company. Such designation and any subsequent change
shall take effect as of the date the notice was signed, upon recording and
acceptance by the Company, subject to any payment made by the Company or
action taken by it before receipt of the notice.
(c) In the event of Employee's termination of employment either
by death or without cause, at the election of the Employee or the Employee's
executors or administrators, made on or before the 90th day following the date
of termination, Employee may convert all or a portion of the amounts in the
Account into common stock of the Company at a price per share not greater than
the lowest price per share (adjusted for stock splits, stock dividends, the
issuance of convertible securities, warrants or options, or other dilution),
at which shares of the Company's common stock have been issued (or agreed to
be issued) at any time in the 365 days preceding the date of termination.
Notice of the election must be in writing and must specify the amount of such
Account to be so converted. The common stock shall be issued as of the date
of the notice, upon recording by the Company.
(d) A termination shall be deemed without cause if, without
Employee's written consent, any of the following events occur:
(i) The Employee is assigned any duties inconsistent with his
status in the position held immediately prior to such assignment, or has the
nature or status of his responsibilities altered in a substantially adverse
way;
(ii) The Company reduces the Employee's annual base salary
in effect as of the date of this Agreement, or as the same may be increased
from time to time;
(iii) The Company's offices where the Employee is working
are moved to a location more than 50 miles from the location of such offices;
(iv) The Company fails to pay any portion of current
compensation, or fails to pay any portion of an installment of deferred
compensation under any deferred compensation program of the Company within 30
days of the date such compensation is due;
(v) The Company fails to continue in effect any compensation
plan in which the Employee is participating which is material to such
Employee's total compensation;
(vi) The Company fails to continue to provide the Employee
with benefits substantially similar to those, if any, previously enjoyed under
any of the Company's pension, saving, health, or other welfare or benefit
plans;
(vii) The Company takes any other action which directly or
indirectly materially reduces any of the benefits referred to above, or
reduces any fringe benefits enjoyed by the Employee (including, without
limitation, days of paid vacation); or
(ix) The Company materially breaches any employment agreement
with the Employee.
4. Benefits May Not be Assigned or Attached.
No benefit hereunder may be assigned, anticipated or hypothecated and,
to the extent permitted by law, no sum payable under this Agreement shall be
subject to legal process or attachment for payment of any claim payee
hereunder.
5. No Obligations to Continue Employment.
Subject to the provisions of Section 3(d) above, nothing contained in
this Agreement shall in any way otherwise obligate the Company to retain the
Employee in its employment for any period of time, nor in any way otherwise
affect the Company's right to change at any time the Employee's compensation,
the method or conditions for payment thereof, or any other aspect of the
Employee's employment.
6. Duration of Agreement.
This Agreement shall remain effective and continue in force until such
time as it may be amended or terminated by the parties hereto.
7. Election of Payment .
If the Employee has not elected to convert his Account into common stock
of the Company, such Account shall be paid as follows: [Initial one.]
(a) Single sum.
(b) Monthly Installments over (5 or 10 years)
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement
as of the day and year first above written.
Ixion Biotechnology, Inc. David C. Peck
By:
Employee
Designation of Benficiary
AGREEMENT TO PURCHASE SHARES, dated as of October 10,
1994, among IXION BIOTECHNOLOGY, INC., a Delaware
corporation ("Seller") and the persons listed in Attachment
A hereto ("Purchasers").
Purchasers desire to acquire from the Seller, and Seller desires to sell
to Purchasers, the number of shares of common stock, $0.10 par value set forth
opposite their names on Attachment A, or a total of 130,000 shares (the
"Shares"), for the purchase price and on the terms and conditions set forth
below.
1. Purchase and Sale of Shares. Seller agrees to issue and deliver to
Purchasers fully-paid and nonassessable Shares, free and clear of all liens,
claims, options, charges, and encumbrances whatsoever, and each Purchaser
agrees to purchase the Shares set forth opposite his, her, or their names as
set forth on Attachment A, and to pay Seller the purchase price, such payment
to be not later than November 4, 1994. The purchase price to be paid by the
Purchasers shall be $0.10 per share or, in the aggregate, the amount set
forth opposite his, her, or their name on Attachment A. Payment shall be made
by delivery to Seller of a check payable to Seller.
2. Closing. The closing of each purchase hereunder shall take place in
the offices of the Seller at One Progress Blvd., Alachua, FL 32615. At the
Closing, each Purchaser will deliver to Seller:
(i) A check in the amount set forth opposite his, her, or their
names on Attachment A; and
(ii) An executed copy of the investment and representation letter
in the form attached as Attachment B hereto;
and the Seller will execute and deliver a fully paid and nonassessable
certificate for the number of Shares set forth opposite his, her, or their
name on Attachment A hereto.
3. Access to Books, Records, and Information of Seller.
3.1 Purchasers acknowledge that they have received the following
information and documents from Seller:
a) Unaudited balance sheet and income statement and
accompanying notes for the period commencing with the founding of
the Company and ending December 31, 1993;
b) Unaudited balance sheet, income statement, and statement
of cash flow for the nine months ended September 30, 1994;
c) A copy of the Company's Certificate of Incorporation and
Bylaws;
d) A copy of the Company profile dated October, 1994; and
e) Information to the effect of the following:
the Company is a start-up company which has had
substantial operating losses since its founding;
such losses are continuing and are expected to continue
for the foreseeable future;
there is no assurance that the Company will be able to
obtain financing sufficient to fund its objectives, and
therefore this investment is speculative and may fail;
the Company has no material tangible assets and owns no
intellectual property rights, or other intangible property
and that there is no assurance that it will ever have any;
the Company has negotiated with the University of Florida
for an exclusive license to certain technology covered by a
pending U.S. patent application, but that there is no
assurance that the University will execute a license on
reasonable (or any) terms with the Company, and, that if
such license is executed, there is no assurance that the
patent application is valid or that a patent will issue, and
there is no assurance that, assuming the license is executed
and the patent issued, that a commercially saleable product
can be developed therefrom; and
the Company has no intellectual property rights regarding
certain discoveries of Dr. Peck in the field of Islets of
Langerhan and that, while it expects to negotiate with the
University of Florida to obtain such rights, there is no
assurance that it will be able to obtain any, and that if it
is successful in obtaining such rights, it is likely that
the Company will have to dilute its interest in such rights
in order to finance further research and development in the
field.
3.2 Purchasers acknowledge that prior to the signing hereof,
Seller has afforded the Purchasers (or any authorized representatives of such
Purchasers) free and full access to all books, tax returns, records, founders,
or officials of the Company.
4. Representations of the Seller.
4.1 The Company is a corporation duly organized, existing, and in
good standing under the laws of the State of Delaware and is duly qualified in
the State of Florida. The Company has the corporate power to own, operate, or
lease its properties, and to carry on its business.
4.2 The Shares to be issued have been validly authorized and,
upon payment by the Purchaser of the purchase price, will be fully paid and
nonassessable.
4.3 Attached hereto as Attachment C are
(i) the unaudited balance sheet and income statement of the
Company as at December 31, 1993, and for the period commencing
with the founding of the Company and ending on December 31, 1993,
with accompanying notes, and
(ii) the unaudited balance sheet, income statement, and statement
of cash flow as at September 30, 1994, and for the nine months
then ended.
There are no audited financial statements.
4.4 Attached hereto as Attachment D are true and correct copies
of the Company's Certificate of Incorporation and Bylaws, as amended.
4.5 Attached hereto as Attachment E is a copy of the October 1994
Company profile.
4.6 There are no actions, suits, proceedings, or investigations
pending or threatened against or affecting the Company.
4.7 Seller has made no representations, warranties or
projections, orally, or in writing, except those expressly set forth in this
Agreement.
5. Representations and Warranties of the Purchasers.
5.1 The Shares which are to be issued and delivered to Purchasers
pursuant to the terms of this Agreement are being acquired by them for their
own accounts for investment and not with a view of the resale or distribution
there of, and they have no present intention of making any distribution or
disposition of any of such Shares. Purchaser understands that the Shares are
being sold to them in a transaction which is exempt from the registration
requirements of the Securities Act of 1933 (the "Act"), and that such Shares
must be held by them and not resold unless they are subsequently registered
under the Act or an exemption from such registration is available and the
certificates issued to evidence such Shares shall contain a legend to the
foregoing effect.
5.2 The offer by the Purchasers to purchase the Shares was
unsolicited.
5.3 Notwithstanding the forgoing, or the provisions of Section 6
below, the Purchasers agree that they will not dispose, by sale, gift, or
otherwise, any of the Shares before November 4, 1999 without the express
written consent of the Company. Such consent may be given only by the
President, the Chairman of the Board, or by vote of the Directors.
5.4 Purchasers have received and carefully read the Company's
unaudited financial statements, its corporate documents, the Company profile
dated October, 1994, and this Agreement and have not been furnished with any
offering materials or literature relating to the Company other than as stated
herein.
5.5 Purchasers have had a reasonable opportunity to ask questions
of and receive answers from the Company concerning the Company and the Shares,
and any such questions have been answered to their full satisfaction.
5.6 Purchasers have such knowledge and expertise in financial and
business matters that they are capable of evaluating the merits and risks
involved in an investment in the Shares; they are financially able to bear the
economic risk of the investment in the Shares, including a total loss of such
investment.
5.7 Purchasers have adequate means of providing for their current
needs and have no need for liquidity in this investment. Purchasers have no
reason to anticipate any material change in their financial condition for the
foreseeable future.
5.8 Purchasers are aware that the purchase of the Shares is a
speculative investment involving a high degree of risk and that there is no
guarantee that the Purchasers will realize any gain from this investment, and
that the Purchasers could lose the total amount of their investment.
5.9 Purchasers understand that no federal or state agency has
made any finding or determination regarding the fairness of this offering, nor
any recommendation or endorsement of the offering.
5.10 Except as set forth in this Agreement, no representations or
warranties have been made to the Purchasers by the Company, and in entering
into this transaction, the Purchasers are not relying upon any information
other than that referred to herein. No person has made any representation or
warranties as to the accuracy or completeness of the information contained in
the Company profile or the unaudited financial statements.
5.11 Purchasers understand that the Shares are being offered and
sold to them in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgements, and understandings of the Purchasers set forth
herein in order to determine the applicability of such exemptions and the
suitability of Purchasers to acquire the Shares.
6. Inclusion in Registrations Statements
6.1 If, at any time during the period commencing on October 10,
1994 and ending on October 9, 2004, Ixion shall determine or be required to
register any shares of Ixion common stock (whether on behalf of itself or any
other person) under the Act on Forms S-1, S-2, S-3, SB-1, or SB-2 (or if such
forms are rescinded by the Securities and Exchange Commission, the forms which
supplant such forms), excluding any registration for the offering and sale of
securities of Ixion to its employees, it will notify the Purchasers in order
that they may request that all or a part of the Shares be included in the
registration statement. If requested by any Purchaser in writing within 20
days after Ixion's notice, Ixion will include the requested number of shares
in such registration statement. Any such request shall include the agreement
of the Purchaser requesting the registration to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with such registration. The Company may, however, decline to include all or a
part of the requested number of shares in a registration statement pursuant to
this section if it is advised by the investment banking firm managing the
underwriting that such inclusion would adversely affect the offering of the
shares to be covered by the proposed registration statement.
6.2 Ixion shall use its best efforts to file such post-effective
amendments to any registration statement described in this Section 6 as shall
be necessary to keep it effective until six months after the effective date of
the registration statement or the date on which all of the shares of the
Purchasers covered thereunder shall have been sold, whichever is earlier.
6.3 As a condition to Ixion's obligation under this Section 6 to
cause a registration statement or amendment to be filed or shares to be
included in a registration statement, the Purchasers shall provide such
information and execute such documents as may reasonably be required in
connection with such registration. In addition, Ixion shall not be required
to include such shares in a registration statement if it shall have received
opinions of its and the Purchaser's counsel to the effect that the proposed
disposition of such shares may be effected without registration under the Act.
6.4 The expenses of the registration of Purchasers' shares shall
be paid by Ixion.
7. Miscellaneous
7.1 This Agreement shall be construed in accordance with the laws
of the State of Florida.
7.2 This Agreement constitutes the entire agreement among the
parties hereto and supersedes all prior written or oral communications or
understandings among the parties and cannot be changed except by an instrument
in writing signed by all the parties.
7.3 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 and the same instrument.
7.4 Where notices are called for in this Agreement, such notices
shall be deemed given when deposited in the U.S. mail, postage prepaid, and
sent to the following addresses (or such other addresses notice of which shall
have been given to the other party in writing):
To Ixion: Ixion Biotechnology
One Progress Blvd., Box 26
Alachua, FL 32615
Attn: President
To Purchaser: At the address set forth below:
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
IXION BIOTECHNOLOGY, INC. PURCHASERS
By
Address:
$504,000 Aggregate Principal Amount
10% Convertible Unsecured Notes Due 2001
and
Variable Conversion Rate Convertible Unsecured Notes Due 2001
NOTE PURCHASE AGREEMENT
Between
IXION BIOTECHNOLOGY, INC.
And
THE NOTE PURCHASERS
NAMED IN SCHEDULE I HERETO
Dated as of September 13, 1996
TABLE OF CONTENTS
RECITALS 1
ARTICLE I. SALE AND PURCHASE OF NOTES 1
Section 1.1 Sale and Purchase of Notes. 1
Section 1.2 Initial Closing. 2
Section 1.3 Additional Closings. 2
Section 1.4 Location of Closing. 2
Section 1.5 Payment for and Delivery of Notes. 2
Section 1.6 Security for and Ranking of the Notes. 2
ARTICLE II. CONDITIONS TO CLOSING 2
Section 2.1 Aggregate Principal Amount of Notes Sold. 3
Section 2.2 Representations and Warranties Correct. 3
ARTICLE III. THE NOTES 3
Section 3.1 Principal and Interest. 3
Section 3.2 Method and Place of Payment of Principal and Interest.
3
Section 3.3 Note Register; Exchange of Notes. 4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES 4
Section 4.1 Unregistered Offering. 4
Section 4.2 Corporate Organization and Authority. 4
Section 4.3 Transactions Authorized. 5
Section 4.4 Securities Authorized. 5
Section 4.5 Financial Statements. 5
Section 4.6 Security for and Ranking of the Notes 5
ARTICLE V. AFFIRMATIVE COVENANTS 6
Section 5.1 Payment of Notes. 6
Section 5.2 Company Reporting. 6
ARTICLE VI. FINANCIAL COVENANTS 6
Section 6.1 Cash Flow Limitation. 6
Section 6.2 Liens, Encumbrances, and Senior Debt. 6
ARTICLE VII. REDEMPTION OF NOTES 7
Section 7.1 Optional Redemption; Liquidity. 7
Section 7.2 Selection by Company of Notes to be Redeemed. 7
Section 7.3 Notice of Offer for Redemption; Notice of Acceptance. 8
Section 7.4 Notes Payable on Redemption Date. 9
Section 7.5 Notes Redeemed in Part. 9
ARTICLE VIII. CONVERSION OF NOTES 9
Section 8.1 Conversion at Option of Holder. 9
Section 8.2 Surrender of Note. 10
Section 8.3 No Fractional Shares. 10
Section 8.4 Adjustment of Conversion Price. 10
Section 8.5 Adjustment for Mergers. 10
ARTICLE IX. REGISTRATION OF CONVERSION SHARES 11
Section 9.1 Incidental Registration. 11
Section 9.2 Registration Procedures. 11
Section 9.3 Expenses. 11
Section 9.4 Conditions to Company's Obligation. 12
Section 9.5 Special Definition. 12
Section 9.6 Availability of Registration Rights. 12
ARTICLE X. EVENTS OF DEFAULT 12
Section 10.1 Events of Default. 12
Section 10.2 Acceleration; Waiver of Default. 13
ARTICLE XI. AMENDMENT AND WAIVER 13
ARTICLE XII. MISCELLANEOUS 14
Section 12.1 Representations and Warranties of Note Purchasers.
14
Section 12.2 Assignment and Transfer. 15
Section 12.3 Survival of Agreements. 16
Section 12.4 Notices. 16
Section 12.5 Binding Effect. 16
Section 12.6 Entire Agreement. 17
Section 12.7 Modification and Waiver. 17
Section 12.8 Severability. 17
Section 12.9 Governing Law; Venue. 17
Section 12.10 Section Headings. 17
Section 12.11 Counterparts. 17
SIGNATURE OF THE COMPANY 18
SIGNATURE OF NOTE PURCHASERS 19
SCHEDULE I - LIST OF NOTE PURCHASERS 20
EXHIBIT A FORM OF 10% CONVERTIBLE UNSECURED NOTE A-1
EXHIBIT B FORM OF VARIABLE CONVERSION RATE CONVERTIBLE UNSECURED NOTE B-1
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT, is made and entered into as of the 13th
day of September, 1996, by and between Ixion Biotechnology, Inc., a Delaware
corporation (the "Company"). and the purchasers named in Schedule I hereto
(each a "Note Purchaser" and collectively the "Note Purchasers").
RECITALS
A. The Company has authorized the issue and sale of its 10% Unsecured
Convertible Notes Due 2001 (the "10% Notes") and its Variable Conversion Rate
Unsecured Convertible Notes Due 2001 (the "Variable Notes") (the 10% Notes and
the Variable Notes, together with any notes issued in exchange therefor or
replacement thereof, called the "Notes") in the aggregate principal amount of
$504,000, which amount may be increased by the Company to up to $1,000,000.
The 10% Notes are to be substantially in the form of Exhibit A, and the
Variable Notes are to be substantially in the form of Exhibit B, attached
hereto. Interest on the 10% Notes accrues from September 1, 1996 and is
payable quarterly, in arrears, on November 30, February 28, May 31, and August
31 of each year, commencing November 30, 1996. The Notes are unsecured
general obligations of the Company and rank pari passu with all other
unsecured and unsubordinated obligations of the Company. The Notes are
subordinated to any senior indebtedness or secured indebtedness of the
Company.
B. The 10% Notes are convertible into shares of the common stock of
the Company, $.01 par value (the "Common Stock"), at a conversion price of
$4.20 per share, and the Variable Notes are convertible into shares at
conversion prices ranging from $4.20 per share to $2.10 per share, as provided
in Article VIII herein. The shares of Common Stock issuable upon conversion
of the Notes are the "Conversion Shares."
C. The Notes and the Conversion Shares are herein sometimes referred
to collectively as the "Securities." The Note Purchasers and their permitted
assignees are herein sometimes referred to as the "Holders" of the Securities.
D. The Company has prepared and each of the Note Purchasers has
received a Confidential Private Placement Memorandum dated September 13, 1996,
relating to the Company and the offer and sale of the Notes (the
"Memorandum").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained in this Agreement, the
parties hereto agree as follows:
ARTICLE I. SALE AND PURCHASE OF NOTES
Section 1.1 Sale and Purchase of Notes. The Company will issue and
sell
to each Note
Purchaser and, subject to the terms and conditions hereof and in reliance upon
the representations and warranties contained herein, each Note Purchaser will
purchase from the Company, at the Closing specified in Section 1.5 herein, the
Notes to be purchased by such Note Purchaser at such Closing as indicated on
the Signature of Note Purchasers attached hereto. The obligations of the Note
Purchasers to purchase the Notes hereunder are several, and not joint.
Section 1.2 Initial Closing. The date for the initial closing shall
be
set by the Company upon the receipt of subscriptions for Securities in the
aggregate principal amount of at least $504,000 (or such lesser principal
amount of Securities as may be sold). The time of such initial sale of
Securities shall be referred to herein as the "Initial Closing," and the date
of such initial sale of Securities shall be referred to herein as the "Initial
Closing Date."
Section 1.3 Additional Closings. After the Initial Closing, subject
to
the terms and conditions of the Memorandum, the Company may agree to
acknowledge the sale of and accept payment for additional Securities up to a
maximum of $1,000,000 aggregate principal amount of Securities. Upon the sale
of such additional Securities, the Company shall set dates and times to
acknowledge the sale of and accept payment for such additional Securities. The
time of any such additional sale of Securities shall be referred to herein as
an "Additional Closing," and the date of any such additional sale of
Securities shall be referred to herein as an "Additional Closing Date." The
Initial Closing and any Additional Closing shall sometimes be referred to
herein as a "Closing,"' and the Initial Closing Date and any Additional
Closing Date shall sometimes be referred to herein as a "Closing Date."
Section 1.4 Location of Closing. Each Closing of the sale and
purchase
of the Notes
hereunder shall take place at the offices of the Company in Alachua, Florida.
Section 1.5 Payment for and Delivery of Notes. At the Closing, the
Company will deliver the Securities to be purchased by each Note Purchaser at
such Closing against payment of the purchase price therefor to the Company.
The purchase price for the Securities shall be paid to the Company by check
or wire transfer. If paid by wire transfer, such payment shall be made to an
account designated by the Company, and in accordance with instructions
provided by the Company. At the Closing, the Company will deliver to the Note
Purchasers Notes of the type elected by the Note Purchasers pursuant to
Section 3.1(b) hereof, registered in the name of each Note Purchaser and in
such denominations authorized under Article III hereof as such Note Purchaser
may reasonably request.
Section 1.6 Security for and Ranking of the Notes. The Notes will be
unsecured general
obligations of the Company and will rank pari passu with all other unsecured
general obligations of the Company .
ARTICLE II. CONDITIONS TO CLOSING
The obligation of each Note Purchaser to purchase and pay for the Notes
to be purchased by such Note Purchaser at the Closing shall be subject to the
fulfillment, prior to or at the Closing, of the following conditions:
Section 2.1 Aggregate Principal Amount of Notes Sold. On or prior to
the Initial Closing Date, the Company shall have received subscriptions for
Securities in the aggregate principal amount of at least $252,000. If
subscriptions in the aggregate principal amount of at least $504,000 have not
been received by (or on behalf of) the Company by the Time of Termination, the
Company may modify the terms of the Offering and acknowledge the sale of and
accept payment for those Securities for which subscriptions have been
received.
Section 2.2 Representations and Warranties Correct. The
representations
and warranties of the Company contained in Article IV hereof shall have been
true correct when made and shall be correct at and as of the time of the
Closing.
ARTICLE III. THE NOTES
Section 3.1 Principal and Interest.
(a) Maturity Date. The entire principal balance of the Notes (less
any redemptions made under Article VII hereof) shall be due and payable on
August 31, 2001.
(b) Election of Form of Notes. At the time of execution of this Note
Purchase Agreement, a Note Purchaser must elect either 10% Notes or Variable
Notes. The election is final once the Notes are issued by the Company.
(c) Interest. No interest shall accrue on Variable Notes. Interest
shall accrue on the unpaid principal balance of the 10% Notes commencing
September 1, 1996, at the rate of 10% per annum and shall be payable quarterly
in arrears on November 30, February 28, May 31, and August 31 in each year,
commencing November 30, 1996. Interest shall be computed on the basis of a
360 day year. Interest shall be payable to the persons in whose names the
Notes are registered at the close of business on the fifteenth day of the
month of the respective interest payment date.
Section 3.2 Method and Place of Payment of Principal and Interest.
Despite any provisions to the contrary contained herein or in the Notes, the
Company will pay to the Holder of a Note in immediately available funds to an
account designated by such Holder, all amounts payable to such Holder in
respect of the principal of, or interest on, any of the Notes then registered
to such Holder, without any presentation of such Notes. Payment of the
principal of and interest on the Notes will be made at the office or agency of
the Company maintained for that purpose in Alachua, Florida, or in such other
office or agency as may be established by the Company pursuant to this
Agreement (initially the principal executive office of the Company in Alachua,
Florida), in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts;
provided, however, that at the option of the Company payment of interest may
be made (subject to collection) by check mailed to the address of the Holder
entitled thereto as such address shall appear on the Note Register.
Section 3.3 Note Register; Exchange of Notes. The Company will keep,
at
its office maintained pursuant to Section 12.4, a register in which the
Company will provide for the registration and transfer of the Notes. The
Holder of any Notes may, at its option, in person or by duly authorized
attorney, surrender the same for exchange at such principal office of the
Company and, within a reasonable time thereafter and without expense for the
issuance of the replacement Notes, receive in exchange therefor one or more
duly executed Notes, each in the principal amount of any multiple of $100, as
a Holder may reasonably request, dated as of the date to which interest has
been paid on the Note or Notes so surrendered, or if no interest has yet been
so paid, then dated the date hereof, and registered in such name or names, all
as may be designated by such Holder. for the same aggregate principal amount
as the then unpaid principal amount of the Note or Notes so surrendered. The
Company covenants and agrees to take and cause to be taken all action
necessary to effect such registrations, transfers and exchanges. Each such
new Note shall be payable to such person as such registered owner may request.
The Company and any agent of the Company may treat the person in whose name
any Note is registered as the owner of such Note for the purpose of receiving
payment of the principal of, and interest on, such Note and for all other
purposes, whether or not such Note be overdue, and neither the Company nor any
such agent shall be affected by notice to the contrary.
Section 3.4 Replacement of Notes. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of a Note and (i) in the case of loss, theft
or destruction, of indemnity reasonably satisfactory to the Company, or (ii)
in the case of mutilation, upon surrender and cancellation thereof, then the
Company at its expense will execute and deliver in lieu thereof a new Note of
like tenor, dated and bearing interest from the date to which interest has
been paid on such lost, stolen, destroyed or mutilated Note or dated the date
of such lost, stolen, destroyed or mutilated Note if no interest has been paid
thereon.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
The Company hereby represents and warrants to each of the Note
Purchasers as follows:
Section 4.1 Unregistered Offering. The offer, offer for sale, and
sale
of the Securities (the "Offering") have not been and will not be registered
with the Securities and Exchange Commission (the "Commission") in reliance
upon the exemptions from the registration requirements of Section 5 of the
Securities Act of 1933, as amended (the "Securities Act").
Section 4.2 Corporate Organization and Authority. The Company has
been
duty organized, is validly existing as a corporation in good standing under
the laws of the State of Delaware, has the corporate power and authority to
own or lease its properties and conduct its business as described in the
Memorandum, and is duly qualified to transact business in all jurisdictions in
which the conduct of its business or its ownership or leasing of property
requires such qualification and the failure so to qualify would have a
material adverse effect on the Company's business or condition, financial or
otherwise. The Company does not own or control, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any equity interest in any firm, association, partnership,
joint venture or other entity.
Section 4.3 Transactions Authorized. This Agreement and the
performance
by the Company of its obligations hereunder have been duly and validly
authorized by the Company. This Agreement has been executed and delivered by
the Company and constitutes the valid and binding agreement of the Company,
enforceable in accordance with its terms, except to the extent limited by
bankruptcy, insolvency, moratorium and other laws of general application
relating to or affecting the enforcement of creditors' rights and by general
equitable principles and except as rights to indemnity and contribution
hereunder may be limited by applicable securities laws. The Company has full
power and authority to enter into this Agreement and to issue and sell the
Securities to be sold hereby on the terms and conditions set forth herein, all
necessary corporate proceedings therefor have been duly and validly taken, and
no consent, approval, authorization or order of, or any filing or declaration
with, any court or governmental authority is required in connection with such
authorization, execution and delivery or with the authorization, issue and
sale of the Securities, except such as may be required under the Securities
Act and any applicable state securities laws.
Section 4.4 Securities Authorized. The Notes to be sold in the
Offering
have been duly authorized and, when issued, delivered, and paid for in
accordance with this Agreement, will be valid and binding obligations of the
Company enforceable in accordance with their terms and the terms of this
Agreement, except as enforceability may be limited by the application of
bankruptcy, insolvency, moratorium, and other laws of general application
relating to or affecting the enforcement of creditors' rights and by general
equitable principles. The Conversion Shares are duly authorized and, when and
if issued and delivered in accordance with this Agreement, will be validly
issued, fully paid, and nonassessable. A sufficient amount of Common Stock of
the Company has been reserved for the issuance of the Conversion Shares.
Neither the Offering nor the sale of the Securities as contemplated by this
Agreement will give rise to any preemptive rights.
Section 4.5 Financial Statements. The Company's financial
statements,
together with related notes, included in the Memorandum, present fairly the
financial position and results of operations of the Company on the basis
stated in the Memorandum at the indicated dates and for the indicated periods.
Such financial statements and related notes have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved, and all adjustments necessary for a fair presentation of
results for such periods have been made, except as otherwise stated therein.
The as adjusted financial information included in the Memorandum has been
prepared in accordance with generally accepted accounting principles to give
effect to certain assumptions and transactions made on reasonable bases that
are fully and accurately described in the Memorandum, and such adjustments
have been properly applied on the bases described therein. The summary and
selected financial data included in the Memorandum present fairly the
information set forth therein on the basis stated in the Memorandum and have
been compiled on a basis consistent with the financial statements to which
they relate.
Section 4.6 Security for and Ranking of the Notes. The Notes will be
unsecured general obligations of the Company and will rank pari passu with all
other unsecured general obligations of the Company.
ARTICLE V. AFFIRMATIVE COVENANTS
Section 5.1 Payment of Notes. The Company will punctually pay or
cause
to be paid the principal of and interest on the Notes at the times and places
and in the manner specified in the Notes.
Section 5.2 Company Reporting. If and when the Company becomes
subject
to the periodic reporting and informational requirements of the Commission, it
will furnish to each Note Holder copies of the Company's reports on Forms
10-K, 10-Q, and 8-K and of proxy materials for all annual and special meetings
of shareholders of the Company, that the Company is required to file with the
Commission.
ARTICLE VI. FINANCIAL COVENANTS
The Company covenants, warrants, and agrees with the Notes Purchasers,
for their benefit, as follows:
Section 6.1 Cash Flow Limitation. The Company shall not permit net
negative cash flow to exceed $60,000 per month for any successive three month
period commencing with the Closing Date, unless and until not less than $1.5
million of additional funds have been obtained by the Company, whether by,
without limitation, equity investment, senior indebtedness, unsecured
indebtedness, subordinated indebtedness, sale of warrants, preferred stock, or
other securities, payments by corporate partners or collaborators, grants, or
revenue.
Section 6.2 Liens, Encumbrances, and Senior Debt. The Company may,
directly or indirectly, create, incur, assume, or permit to exist any
indebtedness senior to the Notes, or any lien (other than Permitted Liens)
upon any of its properties securing any indebtedness of the Company, only
with the prior approval of the unanimous vote of its Board of Directors
finding that the incurring of such indebtedness is in the best interests of
the Company. "Permitted Liens" means:
(i) liens for taxes, assessments and governmental charges not yet
delinquent or being contested in good faith and for which adequate
reserves have been established to the extent required by generally
accepted accounting principles,
(ii) landlord's, carrier's, warehousemen's, storage, mechanics',
workmen's, materialmen's, operator's or similar liens arising in the
ordinary course of business,
(iii) easements, rights-of-way, restrictions and other similar
easements, licenses, restrictions on the use of properties or minor
imperfections of title that, in the aggregate, are not material in
amount, and that do not in any case materially detract from the
properties subject thereto or interfere with the ordinary conduct of the
business of the Company,
(iv) judgment and attachment liens not giving rise to an Event of
Default created by or existing from any litigation or legal proceeding
that are currently being contested in good faith by appropriate
proceedings and for which adequate reserves have been made to the extent
required by generally accepted accounting principles,
(v) liens on deposits made in the ordinary course of business,
(vi) liens (including extensions and renewals thereof) upon real or
tangible personal property acquired after the date of this Agreement,
provided that (A) any such lien is created primarily for the purpose of
securing purchase money indebtedness, (B) the principal amount of the
purchase money indebtedness secured by such lien does not exceed 100% of
such cost, (C) such lien does not extend to or cover any other property
other than such item of property and any improvements on such item, and
(D) the incurring of such purchase money indebtedness is permitted by
this Agreement, and
(vii) liens (including extensions and renewals thereof) upon receivables
and inventory, provided that any such lien is created primarily for the
purpose of securing indebtedness outstanding under revolving credit
facilities, now or hereafter existing, of the Company.
ARTICLE VII. REDEMPTION OF NOTES
Section 7.1 Optional Redemption; Liquidity. A holder may offer his
or
her Notes for redemption, in whole at any time or in part from time to time,
on or after December 31, 1996, at the redemption price of 90% of the principal
amount ("Redemption Price"), plus accrued and unpaid interest, if any, thereon
to the date fixed for redemption ("Redemption Date"). The Company may, but
shall not be required to, redeem such offered Notes (or a portion thereof),
if, in the absolute discretion of the Board of Directors, it has sufficient
resources in hand to prudently do so. The Company, if it elects not to redeem
such offered Notes shall use its best efforts to inform the offering holder of
other investors who may agree to acquire such offered Notes known to the
Company.
Section 7.2 Selection by Company of Notes to be Redeemed. If some,
but
less than all, of a Note or Notes offered by a holder or holders from time to
time are to be redeemed, the particular Notes to be redeemed shall be selected
by the Company from the outstanding Notes using such method as the Company
shall deem fair and appropriate and which may provide for the selection for
redemption of portions of the principal of Notes of a denomination not less
than $100.
For all purposes of this Agreement, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion
of the principal of such Note which has been or is to be redeemed.
On and after the Redemption Date, interest will cease to accrue on the
Notes or portions thereof accepted for redemption. If the Notes are accepted
for redemption, the Note Purchasers may exercise the conversion rights set
forth in Article VIII until the Redemption Date.
Section 7.3 Notice of Offer for Redemption; Notice of Acceptance.
(a) Notice of Offer for Redemption. Notice by a Holder of his or her
offer for redemption shall be given by first-class mail, postage prepaid,
mailed not less than 60 days prior to the proposed Redemption Date, to the
Company at its address for notices provided pursuant to Section 12.4 hereof.
Each notice of offer for redemption shall state:
(1) the name of the registered Holder,
(2) the proposed Redemption Date,
(3) if less than all of a Holder's outstanding Notes are to be
offered
for redemption, the principal amount of the Note offered to be redeemed,
(4) acknowledgment that on the proposed Redemption Date, if the offer
is accepted by the Company, the Redemption Price will become due and payable,
and that interest thereon shall cease to accrue from and after said date, and
(b) Notice of Acceptance of Offer for Redemption. Notice of
acceptance of a Holder's offer of redemption shall be given by first-class
mail, postage prepaid, mailed not less than 10 days prior to the Redemption
Date accepted by the Company, to each Holder of Notes whose offer of
redemption has been accepted, at such Holder's address appearing in the Note
Register.
Each notice of acceptance of an offer for redemption shall state:
(1) the Redemption Date agreed to by the Company,
(2) the Redemption Price,
(3) if less than all Notes offered for redemption (or less than all
the outstanding principal amount of a Note offered for redemption) is to be
redeemed, the identification (and in the case of partial redemption, the
respective principal amounts) of the Notes to be redeemed,
(4) that on the Redemption Date, the Redemption Price will become due
and payable upon each such Note, and that interest thereon shall cease to
accrue from and after said date; and
(5) the place where such Notes are to be surrendered for payment of
the Redemption Price, which shall be the office of the Company unless
otherwise indicated.
Section 7.4 Notes Payable on Redemption Date. Notice of acceptance
of
offer for redemption having been given as aforesaid, the Notes so to be
redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price herein specified and from and after such date, unless the
Company shall default in the payment of the Redemption Price, such Notes shall
cease to bear interest. Upon surrender of such Notes for redemption in
accordance with said notice, such Notes shall be paid by the Company at the
Redemption Price. Installments of interest whose stated maturity is on the
Redemption Date shall be payable to the Holders of such Notes registered as of
the record date for such interest installment as provided in Section 3.1
hereof.
If any Note accepted for redemption shall not be so paid upon surrender
thereof for redemption, the principal shall, until paid, bear interest from
the Redemption Date at the rate borne by the Note.
Section 7.5 Notes Redeemed in Part. Any Note which is to be redeemed
only in part shall be surrendered to the Company with, if the Company so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company and duly executed by, the Holder thereof or such
Holder's attorney duly authorized in writing, and the Company shall execute
and deliver to the Holder of such Note without service charge, a new Note or
Notes of any authorized denominations as requested by such Holder in aggregate
principal amount equal to and in exchange for the unredeemed portion of the
principal of the Note so surrendered.
ARTICLE VIII. CONVERSION OF NOTES
Section 8.1 Conversion at Option of Holder.
(a) Conversion Option. At the election of the Holder of a Note, the
principal amount of the Note may be converted, in whole or in part, into
shares of the Company's Common Stock at any time at the conversion Price set
per share set forth below (the "Conversion Price"). If the Notes are accepted
for redemption by the Company, Holders will be permitted to exercise the
conversion rights until the Redemption Date. The Notes may be converted at
any time, or from time to time, prior to repayment of the Notes. The Notes
may be converted only upon presentation and surrender of the Notes and
following written notice to the Company of the Holder's election to convert
the principal amount hereof, in` the manner provided in this Article VIII (the
actual date of conversion is hereinafter referred to as the "Conversion
Date").
(b) Conversion Price. The Conversion Price shall be as follows:
(i) The Conversion Price for 10% Notes shall be $4.20 per share.
(ii) The Conversion Price for Variable Notes shall be:
End of Year 1 Year 2 Year 3 Year 4 Year 5
Nov $4.10 $3.70 $3.30 $2.90 2.50
Feb $4.00 $3.60 $3.20 $2.80 2.40
May $3.90 $3.50 $3.10 $2.70 2.30
Aug $3.80 $3.40 $3.00 $2.60 2.10
Section 8.2 Surrender of Note. In order to exercise the conversion
privilege, the Holder shall give written notice to the Company at the
Company's principal office at least three (3) days prior to such conversion
that the Holder elects to convert the Note, specifying the principal amount of
the Note to be converted, and shall surrender the Note to the Company on or
before the Conversion Date at such office. Such notice shall also state-the
name or names, together with address or addresses, in which the certificate or
certificates for Conversion Shares shall be issued. The Notes surrendered for
conversion shall, unless the Conversion Shares are to be issued in the same
name as the name of the original Holder, be accompanied by instruments of
transfer, in form satisfactory to the Company, duly executed by the Holder or
its duly authorized attorney. As promptly as practicable after the Conversion
Date, the Company shall issue and shall deliver at such office or agency to
the Holder, a certificate or certificates for the number of full shares of
Common Stock issuable upon the conversion of the Notes in accordance with the
provisions of this Article VIII, and a new Note representing the principal
balance if any, with respect to which the surrendered Note shall not then have
been converted shall also be delivered to the Holder.
Section 8.3 No Fractional Shares. No fractional shares of Common
Stock
shall be issued upon conversion of the Notes. In the event that any portion
of principal amount of the Notes would be converted into only a fractional
interest in a share of Common Stock in connection with such conversion, then
the Company shall, in lieu thereof, pay to the Holder the principal amount
representing such fractional interest.
Section 8.4 Adjustment of Conversion Price. The Conversion Price
shall be adjusted from time to time such that, in case the Company shall
hereafter: (i) pay a dividend or make a distribution on its Common Stock in
shares of Common Stock, (ii) subdivide its outstanding shares of Common Stock
into a greater number of shares, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by
reclassification of its Common Stock any shares of capital stock of the
Company, the Conversion Price in effect immediately prior to such action shall
be adjusted so that the Holder shall be entitled to receive the number of
shares of Common Stock or other capital stock of the Company which such Holder
would have owned immediately following such action had such Note been
converted immediately prior thereto. An adjustment made pursuant to this
Subsection shall become effective immediately after the record date in the
case of a dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
reclassification.
Section 8.5 Adjustment for Mergers. In case of any consolidation
or merger to which the Company is a party other than a merger or consolidation
in which the Company is the continuing corporation, or in case of any sale or
conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, or in the case of any statutory
exchange of securities with another corporation (including any exchange
effected in connection with a merger of a third corporation into the Company),
there shall be no adjustment under Section 8.4 but the Holder shall have the
right thereafter to convert such Note into the kind and amount of shares of
stock and other securities and property which such Holder would have owned or
have been entitled to receive immediately after such consolidation, merger,
statutory exchange, sale or conveyance had such Note been converted
immediately prior to the effective date of such consolidation, merger,
statutory exchange, sale or conveyance and in any such case, if necessary,
appropriate adjustment shall be made in the application of the provisions set
forth in this Article with respect to the rights and interest thereafter of
the Holder. The provisions of this Subsection shall similarly apply to
successive consolidations, mergers, statutory exchanges, sales or conveyances.
ARTICLE IX. REGISTRATION OF CONVERSION SHARES
Section 9.1 Incidental Registration. If, the Company shall determine
or
be required to register any shares of the Company's Common Stock (whether on
behalf of itself or any other person) under the Securities Act of 1933 on
Forms S-1, S-2, S-3, SB-1, or SB-2 (or if such forms are rescinded by the
Securities and Exchange Commission (the "Commission") such forms as replace
those forms), excluding any registration for the offering and sale of
securities of the Company to its employees, it will notify all record Holders
of Conversion Shares in order that they may request that all or a part of
their Conversion Shares of Common Stock be included in the registration
statement. If requested by any Holder of Conversion Shares in writing within
20 days after the Company's notice, the Company will, except as herein
provided, include the requested number of Conversion Shares in such
registration statement. Any such request shall include the agreement of the
Holder requesting the registration to execute and deliver the underwriting
agreement, if any, to be executed and delivered in connection with such
registration. The Company may, however, decline to include all or a part of
the requested number of shares in a registration statement pursuant to this
section if it is advised by the investment banking firm, if any, managing the
underwriting (or, in the case of a registration undertaken by the Company
without underwriters, if it is determined by the Board of Directors of the
Company) that such inclusion would adversely affect the offering of the shares
to be covered by the proposed registration statement.
Section 9.2 Registration Procedures. The Company shall use its best
efforts to file such post-effective amendments to any registration statement
described herein as shall be necessary to keep it effective until six months
after the effective date of the registration statement or the date on which
all of the Conversion Shares of Holders covered thereunder shall have been
sold, whichever is earlier.
Section 9.3 Expenses. The expenses of the registration of Holders'
Conversion Shares (other than transfer taxes, underwriting commissions, and
fees of Holders' counsel) shall be paid by the Company.
Section 9.4 Conditions to Company's Obligation. As a condition to
the
Company's obligation under this Article IX to cause a registration statement
or amendment to be filed or shares to be included in a registration statement,
each Holder shall provide such information and execute such documents as may
reasonably be required in connection with such registration. In addition, the
Company shall not be required to include such shares in a registration
statement if it shall have received opinions of its and the Holder's counsel
to the effect that the proposed disposition of such shares may be effected
without registration under the Act.
Section 9.5 Special Definition. For purposes of this Article IX.
"Conversion Shares" shall mean the shares of Common Stock of the Company
issuable upon conversion of the Notes and all shares of such Common Stock
issued in exchange or substitution therefor, whether or not such securities
(other than the Notes) have in fact been issued, and the stock or other
securities of the Company issued in a stock split or reclassification of, or a
stock dividend or other distribution on or in substitution or exchange for, or
otherwise in connection with, any of the foregoing securities, or in a merger
or consolidation involving the Company or a sale of all or substantially all
of the Company's assets. For purposes hereof, the record Holder of the Notes
shall be treated as the record Holder of the related Common Stock then
issuable upon the exercise thereof. Nothing in this Section 9.5 shall,
however, be deemed to require the Company to register the Notes, it being
understood that the registration rights granted hereby relate only to shares
of Common Stock of the Company and securities issued in substitution or
exchange therefor.
Section 9.6 Availability of Registration Rights. The right to a
registration pursuant hereto shall commence on the first date at which the
Notes may be converted, and shall terminate at midnight on August 31, 2006.
ARTICLE X. EVENTS OF DEFAULT
Section 10.1 Events of Default. An "Event of Default" shall exist
if any of the following occurs and is continuing:
(a) Default shall be made by the Company in a payment of principal on
any Note, when and as the same shall become due and payable, at maturity
(including upon acceleration), upon redemption, or otherwise; or
(b) Default shall be made by the Company in a payment of interest on
any Note, when and as the same shall become due and payable, and such default
shall continue for fifteen (15) calendar days after there has been given
written notice of such default to the Company by the Holders of at least 25%
in aggregate principal amount of the outstanding Notes; or
(c) Default shall be made in the performance or observance of any
covenant, condition, undertaking or agreement contained in this Agreement or
the Notes, and such default shall continue for thirty (30) calendar days after
there has been given written notice of such default to the Company by the
Holders of at least 25% in aggregate principal amount of the outstanding
Notes.
Section 10.2 Acceleration; Waiver of Default.
(a) In case any one or more of the Events of Default specified in
Section 10.1 shall have happened and be continuing, the Holder or Holders of
at least 25% in aggregate principal amount of the outstanding Notes shall have
the right to accelerate payment of the entire principal of, and all interest
accrued on, all such outstanding Notes, and, upon such acceleration, the Notes
shall thereupon become forthwith due and payable, without any presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Company shall forthwith pay to the Holder of the Note the
entire outstanding principal of, and interest accrued on, such Note.
(b) If an Event of Default shall occur and be continuing, the Holder
or Holders of a majority in aggregate principal amount of the outstanding
Notes may proceed to protect and enforce the rights of the Holders either by
suit, in equity and/or by action at law, or by other appropriate proceedings,
whether for specific performance (to the extent permitted by applicable law or
equitable principles) of any covenant or agreement contained in this Agreement
or the Notes, or in aid of the exercise of any power granted in this Agreement
or the Notes, or may proceed to enforce the payment of the Notes or to enforce
any other legal or equitable right of the Holders of the Notes.
(c) The Holders of a majority in aggregate principal amount of
outstanding Notes may waive an Event of Default resulting in acceleration of
such Notes but only if all Events of Default have been remedied and all
payments due, other than those due as a result of acceleration, have been
made.
(d) No course of dealing on the part of the Holder of any Note or any
delay or failure on the part of such Holder to exercise any right shall
operate as a waiver of such right or otherwise prejudice such Holder's rights,
powers and remedies.
ARTICLE XI. AMENDMENT AND WAIVER
Any term, covenant, agreement or condition of this Agreement may be
amended, or compliance therewith may be waived, if the Company shall have
obtained the agreement or consent in writing of the Holders of at least a
majority in aggregate principal amount of all outstanding Notes; provided,
however, that no such amendment or waiver shall, without the consent of the
Holder of each Note affected thereby, (i) change the stated maturity of the
principal of, or the due date of any installment of interest on, any Note,
(ii) reduce the principal of, or rate of interest on, any Note, (iii) change
the place of payment where, or coin or currency in which any portion of the
principal of, or interest on, any Note is payable, (iv) impair the right to
institute suit for the enforcement of any such payment, (v) reduce the
above-stated percentage of Holders of the outstanding Notes necessary to
modify this Agreement, or (vi) modify the foregoing requirements or reduce the
percentage of outstanding Notes necessary to effect such amendments or
waivers.
ARTICLE XII. MISCELLANEOUS
Section 12.1 Representations and Warranties of Note Purchasers.
Each Note Purchaser hereby represents and warrants:
(a) The Securities being acquired by such Purchaser are for his or
her
own account for investment and not with a view of the resale or distribution
there of, and he or she has no present intention of making any distribution or
disposition of any of such Securities. Purchaser understands that the
Securities are being sold to him or her in a transaction which is exempt from
the registration requirements of the Securities Act of 1933 (the "Act"), and
that such Securities must be held and not resold unless they are subsequently
registered under the Act or an exemption from such registration is available
and the Securities shall contain a legend to the foregoing effect.
(b) He or she has received and carefully read the Memorandum and this
Note Purchase Agreement and has not been furnished with any other offering
materials or literature relating to the Company other than as stated herein.
(c) He or she has had a reasonable opportunity to ask questions of
and
receive answers from the Company concerning the Company and the Securities,
and any such questions have been answered to his or her full satisfaction. In
addition, such Note Purchaser has had the opportunity to request additional
information from the Company as described in the Memorandum under "Additional
Information." Any such requested additional information has been provided.
(d) He or she either (i) along with his or her representative, has
such knowledge and expertise in financial and business matters that he or she
is capable of evaluating the merits and risks involved in an investment in the
Securities (Note Purchaser's representative must be specifically acknowledged
as such for the purpose of a potential investment in the Securities), or (ii)
qualifies as an "accredited investor" (as that term may be further defined
under Regulation D promulgated under the Act) at the time of his or her
purchase of the Notes.
(e) He or she has adequate means of providing for his or her current
needs and has no need for liquidity in this investment. The Note Purchaser
has no reason to anticipate any material change in his or her financial
condition for the foreseeable future. The Note Purchaser understands that he
or she may be required to bear the economic risk of an investment in the
Securities for an indefinite period because the Securities have not been
registered under the Act, and, therefore, cannot be sold unless they are
subsequently registered under the Act or an exemption from such registration
is available. Purchaser has been advised that Rule 144 under the Act permits
the resale, subject to strict conditions, of limited amounts of "restricted
securities" (as the Conversion Shares will be classified under Rule 144) after
they have been held for two years. Rule 144, among other things, requires
that adequate current public information be available with respect to the
Company. Purchaser acknowledges that the Company is under no obligation to
register the Securities under the Act, to become a reporting company under the
Securities Exchange Act of 1934, or otherwise make public the financial and
other information required to comply with the requirements of any exemptions
from registration under the Act, except as otherwise set forth herein.
(f) He or she is aware that the purchase of the Notes is a
speculative
investment involving a high degree of risk and that there is no guarantee that
the Note Purchaser will realize any gain from this investment, and that the
Note Purchaser could lose the total amount of his or her investment. He or
she is financially able to bear the economic risk of the investment in the
Securities, including a total loss of such investment. The Note Purchaser has
carefully considered the risk factors set forth in the Memorandum.
(g) Each Note Purchaser understands that no federal or state agency
has made any finding or determination regarding the fairness of the Offering,
nor any recommendation or endorsement of the Offering.
(h) Except as set forth in this Note Purchase Agreement, no
representations or warranties have been made to the Note Purchaser by the
Company, and in entering into this transaction, the Note Purchaser is not
relying upon any information other than that referred to herein. No person
has made any representation or warranties as to the accuracy or completeness
of the information contained in the Memorandum. Neither the Company, nor any
other person acting on its behalf has offered or sold the Notes to him or her
by any form of general solicitation or general advertising.
(i) Purchaser understands that the Securities are being offered and
sold to him or her in reliance on specific exemptions from the registration
requirements of federal and state securities laws and that the Company is
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments, and understandings of the Note Purchaser set
forth herein in order to determine the applicability of such exemptions and
the suitability of the Note Purchaser to acquire the Securities.
(j) The address set forth below is the Note Purchaser's residence,
and
he or she has no present intention of becoming a resident of any other state
or jurisdiction.
(k) The Note Purchaser acknowledges that the Notes and the
certificate
for Conversion Shares issued to him or her will bear the legend set forth on
page A-4 hereof, and appropriate stop transfer instructions will be noted in
the Company's stock records.
(l) The foregoing representations and warranties are true and
accurate
as of the date hereof and shall be true and accurate as of the date of
delivery of the Note Purchase Price to the Company, and shall survive such
delivery.
(m) The Note Purchaser acknowledges that he or she understands the
meaning and legal consequences of the representations and warranties contained
in this Note Purchase Agreement, and he or she hereby agrees to indemnify and
hold harmless the Company and each officer and director thereof from and
against any and all loss, damage, or liability due to or arising out of a
breach of any representation or warranty of the Note Purchaser contained in
this Note Purchase Agreement.
Section 12.2 Assignment and Transfer. The Note Purchaser and any
Holder of a Note may transfer Notes, in whole or in part. to another person
and may, in connection with such transfer, assign its rights in whole or in
part under this Agreement, provided that such transfer complies with
applicable federal and state securities laws. The Company agrees to execute
and deliver such instruments, documents, and certificates as the Note
Purchaser, a Holder or any such transferee may reasonably request in order to
document the transfer in whole or in part of rights hereunder, which
instruments, documents and certificates shall be in form and substance
reasonably satisfactory to counsel for the Note Purchaser or Holder or such
transferee. Other than as provided in Section 6.3 hereof, the Company map not
assign its rights, or effect an assumption of its obligations hereunder, in
whole or in part, without the prior written consent of all of the Holders of
the Notes.
Section 12.3 Survival of Agreements. All covenants,
representations and warranties contained herein or in the Notes, or made in
any document given or supplied in connection herewith, shall survive the
execution and delivery of this Agreement, the issuance, sale and delivery of
the Notes and payment therefor, any disposition thereof by the Holders
thereof, and any investigation at any time made by such Holder on its behalf.
All statements contained in any report, memorandum, certificate or other
instrument delivered in connection with the transactions contemplated hereby
or pursuant hereto shall constitute representations and warranties as of the
date of delivery of such report, memorandum, certificate, or other instrument.
Section 12.4 Notices. Unless otherwise specifically provided
herein, all communications under this Agreement or the Notes shall be in
writing and shall be deemed to have been duly given (i) on the date of service
if served personally on the party to whom notice is to be given, (ii) on the
day of transmission if sent by facsimile transmission to the telecopy number
given below, and telephonic confirmation of receipt is obtained promptly after
completion of transmission, (iii) on the day after delivery to Federal Express
or similar overnight courier, or (iv) on the fifth day after mailing, if
mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed, return
receipt requested, to the party as follows:
If to the Note Purchasers: To the address of each Note
Purchaser then reflected on the Note
Register maintained by the Company.
If to the Company: Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Any party hereto, or Holder of a Note, may change its address for purposes of
this Section 12.4 by giving the other party written notice of the new address
in the manner set forth above.
Section 12.5 Binding Effect. All the terms of this Agreement shall
be binding upon, and inure to the benefit of and be enforceable by the
respective successors and assigns of the parties hereto.
Section 12.6 Entire Agreement. This Agreement (including the
Exhibits and Schedules which form a part hereof) constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, oral and written, between the parties with respect to the
subject matter hereof.
Section 12.7 Modification and Waiver. Neither any failure nor any
delay on the part of the Company, any Note Purchaser or the Holder of any Note
in exercising any right, power or privilege hereunder or under the Notes shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or future exercise, or the exercise of any other right,
power or privilege.
Section 12.8 Severability. Every provision in this Agreement is
intended to be severable. If any term or provision hereof is illegal or
invalid for any reason whatsoever, such illegality or invalidity shall not
affect the validity of the remainder hereof.
Section 12.9 Governing Law; Venue. This Agreement and the Notes
shall be governed by and construed under Florida law, without reference to
principles of choice of law thereunder. The Company and each Note Purchaser
hereby submits to the jurisdiction and venue of the United States District
Court for the Northern District of Florida or the Circuit Court, Alachua
County, State of Florida, for the purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated hereby.
Section 12.10 Section Headings. The captions or headings in this
Agreement are inserted for convenience and identification only and are in no
way intended to describe, interpret, define, or limit the scope, extent, or
intent of this Agreement or any provisions hereof.
Section 12.11 Counterparts. This Agreement may be executed in two
or more counterparts, which when so executed shall constitute one and the same
agreement.
SIGNATURE OF THE COMPANY
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer as of the date first above written.
IXION BIOTECHNOLOGY, INC.
By:
(Signature)
Weaver H. Gaines
Chairman and Chief Executive Officer
SIGNATURE OF NOTE PURCHASERS
Election: Note Purchaser elects (check one only)
10% Unsecured Convertible Note Due 2001
Variable Conversion Rate Unsecured Convertible Note Due 2001
Principal Amount Subscribed For $
IN WITNESS WHEREOF, the undersigned Note Purchaser has caused this
Agreement to be executed as of the date first above written.
NOTE PURCHASER:
(Signature of Note
Purchaser(s))
Name(s):
(Print Name(s))
Address:
SCHEDULE I - LIST OF NOTE PURCHASERS
Name and Address of Note Purchaser Principal Amount Purchased
10% Unsecured Convertible Notes Due 2001
Subtotal:
Variable Conversion Rate Convertible Notes Due 2001
Subtotal:
Total :
EXHIBIT A
FORM OF 10% CONVERTIBLE UNSECURED NOTE
IXION BIOTECHNOLOGY, INC.
10% Convertible Unsecured Note
$ , 1996
(Principal Amount)
(Date of Issue)
FOR VALUE RECEIVED, Ixion Biotechnology, Inc., a Delaware corporation,
(herein called the "Company"), hereby promises to pay to
(the "Holder") or registered assigns, the principal sum of
Dollars on August 31, 2001, and to pay interest thereon at the rate of 10% per
annum from September 1, 1996 or from the most recent Interest Payment Date on
which interest has been paid or duly provided, with the first interest payment
on November 30, 1996, until the principal hereof is paid or made available for
payment. Interest shall be computed on the basis of a 360 day year.
The interest so payable, and punctually paid or duly provided for, on
any Interest Payment Date will, as provided in the Note Purchase Agreement
hereinafter referred to, be paid to the person in whose name this Note (or one
or more Predecessor Notes) is registered at the close of business on the
regular Record Date for such interest, which shall be the fifteenth day,
whether or not a Business Day, of the month of the respective Interest Payment
Date. Any such interest not so punctually paid or duly provided for shall
forthwith cease to be payable to the Registered Holder on such Regular Record
Date. Payment of the principal of and interest on this Note will be made at
the office or agency of the Company maintained for that purpose in Alachua,
Florida, or in such other office or agency as may be established by the
Company pursuant to said Note Purchase Agreement (initially the principal
executive office of the Company in Alachua, Florida), in such coin or currency
of the United States of America as at the time of payment is legal tender for
payment of public and private debts; provided, however, that at the option of
the Company payment of interest may be made (subject to collection) by check
mailed to the address of the person entitled thereto as such address shall
appear on this Note Register.
This Note is one of a duly authorized issue of Notes of the Company
designated as its 10% Convertible Unsecured Notes due 2001 (herein called the
"Notes"), issued and to be issued under a Note Purchase Agreement dated as of
September 13, 1996 (herein called the "Note Purchase Agreement"), between the
Company and initial Note Purchasers, to which Note Purchase Agreement
reference is hereby made for a statement of the respective rights thereunder
of the Company and the Holders of the Notes, and the terms upon which the
Notes are, and are to be, delivered.
The indebtedness of the Company evidenced by the Notes, including the
principal thereof and interest thereon, is an unsecured general obligation of
the Company and will rank pari passu with all other unsecured general
obligations of the Company. Each Holder of a Note, by acceptance hereof,
agrees to and shall be bound by the provisions of the Note Purchase Agreement.
From and after December 31, 1996, the Holder shall be permitted to offer
to redeem the Notes, in whole at any time or in part from time to time, upon
written notice to the Note Purchasers given not less than 60 days prior to the
date proposed for redemption, at the redemption price of 90% of the principal
amount, plus accrued and unpaid interest, if any, thereon to the date fixed
for redemption ("Redemption Date").
Notice of acceptance of an offer for redemption shall be given to the
Holders of Notes to be redeemed by mailing a notice of such redemption not
less than 10 days prior to the accepted Redemption Date at their addresses as
they shall appear on the Note Register, all as provided in the Note Purchase
Agreement.
If this Note (or a portion thereof) is accepted for redemption and funds
for payment duly provided, this Note (or such portion thereof) shall cease to
bear interest from and after such Redemption Date.
Interest installments whose stated maturity is on the Redemption Date
will be payable to the Holders of such Notes, or one or more Predecessor
Notes, of record at the close of business on the relevant record date for such
interest installment, all as provided in the Note Purchase Agreement. In the
event of redemption of this Note in part only, a new Note or Notes for the
unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof.
This Note is convertible into shares of Common Stock, $.01 par value, of
the Company, at a conversion price of $4.20 per share, in the manner set forth
in the Note Purchase Agreement.
If an Event of Default as defined in the Note Purchase Agreement shall
occur and be continuing, the principal of all the Notes may be declared due
and payable in the manner and with the effect provided in the Note Purchase
Agreement. The Note Purchase Agreement provides that such declaration and its
consequences may, in certain events, be annulled by the Holders of a majority
in principal amount of the Notes outstanding.
The Note Purchase Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes under
the Note Purchase Agreement at any time by the Company with the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding. The Note Purchase Agreement also contains provisions permitting
the Holders of a majority in aggregate principal amount of the Notes at the
time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Note Purchase
Agreement and certain past defaults under the Note Purchase Agreement and
their consequences. Any such consent or waiver by the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof
or in exchange therefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Note Purchase Agreement and no provisions of
this Note or of the Note Purchase Agreement shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
As provided in the Note Purchase Agreement and subject to certain
limitations therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for registration of transfer at
the office or agency of the Company to be maintained for that purpose in
Alachua, Florida, or at such other office or agency as may be established by
the Company for such purpose pursuant to the Note Purchase Agreement
(initially the principal executive office of the Company in Alachua, Florida),
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form, without coupons, in
denominations of $100, or greater multiples of $100. Notes are exchangeable
for a like aggregate principal amount of Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Each Holder of a Note covenants and agrees by such Holder's acceptance
thereof to comply with and be bound by the foregoing provisions.
Certain terms used in this Note which are defined in the Note Purchase
Agreement have the meanings set forth therein.
The Company and any agent of the Company may treat the person in whose
name this Note is registered as the owner hereof for all purposes, and neither
the Company nor any such agent shall be affected by notice to the contrary.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name by the signature of its Chairman, President, or one of its Vice
Presidents and its corporate seal to be impressed or imprinted hereon,
attested by the signature of its Secretary or one of its Assistant
Secretaries.
Date: IXION BIOTECHNOLOGY, INC.
By
ATTEST:
Secretary
THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE UPON CONVERSION OF
THIS NOTE (THE "CONVERSION SHARES ") HAVE NOT BEEN REGISTERED UNDER EITHER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS,
AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THIS NOTE AND THE
CONVERSION SHARES MAY NOT BE SOLD. OFFERED FOR SALE OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT, AND APPLICABLE BLUE SKY
LAWS, OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO COUNSEL
FOR THE COMPANY THAT SUCH TRANSACTION WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER THE ACT OR APPLICABLE BLUE SKY LAWS.
EXHIBIT B
FORM OF VARIABLE CONVERSION RATE CONVERTIBLE UNSECURED NOTE
IXION BIOTECHNOLOGY, INC.
Variable Conversion Rate Convertible Unsecured Note
$ , 1996
(Principal Amount) (Date
of Issue)
FOR VALUE RECEIVED, Ixion Biotechnology, Inc., a Delaware corporation,
(herein called the "Company"), hereby promises to pay to
(the "Holder") or registered assigns, the principal sum of
Dollars on August 31, 2001.
This Note is one of a duly authorized issue of Notes of the Company
designated as its Variable Conversion Rate Convertible Unsecured Notes due
2001 (herein called the "Notes"), issued and to be issued under a Note
Purchase Agreement dated as of September 13, 1996 (herein called the "Note
Purchase Agreement"), between the Company and initial Note Purchasers, to
which Note Purchase Agreement reference is hereby made for a statement of the
respective rights thereunder of the Company and the Holders of the Notes, and
the terms upon which the Notes are, and are to be, delivered.
The indebtedness of the Company evidenced by the Notes is an unsecured
general obligation of the Company and will rank pari passu with all other
unsecured general obligations of the Company. Each Holder of a Note, by
acceptance hereof, agrees to and shall be bound by the provisions of the Note
Purchase Agreement.
From and after December 31, 1996, the Holder shall be permitted to offer
to redeem the Notes, in whole at any time or in part from time to time, upon
written notice to the Note Purchasers given not less than 60 days prior to the
date proposed for redemption, at the redemption price of 90% of the principal
amount, plus accrued and unpaid interest, if any, thereon to the date fixed
for redemption ("Redemption Date").
Notice of acceptance of an offer for redemption shall be given to the
Holders of Notes to be redeemed by mailing a notice of such redemption not
less than 10 days prior to the accepted Redemption Date at their addresses as
they shall appear on the Note Register, all as provided in the Note Purchase
Agreement.
In the event of redemption of this Note in part only, a new Note or
Notes for the unredeemed portion hereof shall be issued in the name of the
Holder hereof upon the cancellation hereof.
This Note is convertible into shares of Common Stock, $.01 par value, of
the Company, at a conversion price per share as set forth below, in the manner
set forth in the Note Purchase Agreement.
End of Year 1 Year 2 Year 3 Year 4 Year 5
Nov $4.10 $3.70 $3.30 $2.90 2.50
Feb $4.00 $3.60 $3.20 $2.80 2.40
May $3.90 $3.50 $3.10 $2.70 2.30
Aug $3.80 $3.40 $3.00 $2.60 2.10
If an Event of Default as defined in the Note Purchase Agreement shall
occur and be continuing, the principal of all the Notes may be declared due
and payable in the manner and with the effect provided in the Note Purchase
Agreement. The Note Purchase Agreement provides that such declaration and its
consequences may, in certain events, be annulled by the Holders of a majority
in principal amount of the Notes outstanding.
The Note Purchase Agreement permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Notes under
the Note Purchase Agreement at any time by the Company with the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding. The Note Purchase Agreement also contains provisions permitting
the Holders of a majority in aggregate principal amount of the Notes at the
time outstanding, on behalf of the Holders of all the Notes, to waive
compliance by the Company with certain provisions of the Note Purchase
Agreement and certain past defaults under the Note Purchase Agreement and
their consequences. Any such consent or waiver by the Holder of this Note
shall be conclusive and binding upon such Holder and upon all future Holders
of this Note and of any Note issued upon the registration of transfer hereof
or in exchange therefor or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Note Purchase Agreement and no provisions of
this Note or of the Note Purchase Agreement shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this Note at the times, places and rate, and in
the coin or currency, herein prescribed.
As provided in the Note Purchase Agreement and subject to certain
limitations therein set forth, this Note is transferable on the Note Register
of the Company, upon surrender of this Note for registration of transfer at
the office or agency of the Company to be maintained for that purpose in
Alachua, Florida, or at such other office or agency as may be established by
the Company for such purpose pursuant to the Note Purchase Agreement
(initially the principal executive office of the Company in Alachua, Florida),
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form, without coupons, in
denominations of $100, or greater multiples of $100. Notes are exchangeable
for a like aggregate principal amount of Notes of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such transfer or exchange, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
Each Holder of a Note covenants and agrees by such Holder's acceptance
thereof to comply with and be bound by the foregoing provisions.
Certain terms used in this Note which are defined in the Note Purchase
Agreement have the meanings set forth therein.
The Company and any agent of the Company may treat the person in whose
name this Note is registered as the owner hereof for all purposes, and neither
the Company nor any such agent shall be affected by notice to the contrary.
IN WITNESS WHEREOF, the Company has caused this Note to be signed in its
name by the signature of its Chairman, President, or one of its Vice
Presidents and its corporate seal to be impressed or imprinted hereon,
attested by the signature of its Secretary or one of its Assistant
Secretaries.
Date: IXION BIOTECHNOLOGY, INC.
By
ATTEST:
Secretary
THIS NOTE AND THE COMMON STOCK OF THE COMPANY ISSUABLE UPON CONVERSION OF
THIS NOTE (THE "CONVERSION SHARES ") HAVE NOT BEEN REGISTERED UNDER EITHER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR APPLICABLE BLUE SKY LAWS,
AND ARE SUBJECT TO CERTAIN INVESTMENT REPRESENTATIONS. THIS NOTE AND THE
CONVERSION SHARES MAY NOT BE SOLD. OFFERED FOR SALE OR TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE ACT, AND APPLICABLE BLUE SKY
LAWS, OR AN OPINION OF COUNSEL SATISFACTORY IN FORM AND SUBSTANCE TO COUNSEL
FOR THE COMPANY THAT SUCH TRANSACTION WILL NOT RESULT IN A PROHIBITED
TRANSACTION UNDER THE ACT OR APPLICABLE BLUE SKY LAWS.
Sid Martin
Biotechnology Development Institute
INCUBATOR LICENSE AGREEMENT
THIS AGREEMENT, made this 26th day of June 1995, between Ixion
Biotechnology, Inc. ("Licensee") and the University of Florida Research
Foundation, Inc., a Florida not for profit corporation ("UFRFI") in
Gainesville, Florida.
WHEREAS, the University of Florida ("University") has established the
Biotechnology Development Institute ("BDI") which seeks to encourage the
development of early-stage companies whose technology relates to the molecular
life sciences by providing incubator resources which will foster that
development (the "Incubator Program"); and
WHEREAS, the BDI Building has been constructed at the Progress Park
in Alachua, Florida, to provide facilities for the Incubator Program; and
WHEREAS, UFRFI has agreed to manage certain activities of the Incubator
Program, including licensing and managing space in the BDI building, and other
services as more particularly described herein; and
WHEREAS, Licensee has submitted an application for admission to the BDI
Incubator Program and has submitted or is developing a business plan in
support of that application; and
WHEREAS, UFRFI, upon review of Licensee's application and supporting
documentation, has accepted Licensee's application for participation in the
BDI Incubator Program; and
WHEREAS, Licensee is desirous of being the recipient of resources to be
made available to the participants in the BDI Incubator Program;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
in this Agreement, the parties agree as follows:
1. License Grant. UFRFI grants to Licensee and Licensee hereby
accepts a license to use the space or spaces located within the BDI
Building, the exact location and area allowances of which are as indicated in
Attachment A (the "Licensed Space"). UFRFI shall also make available the
following resources and facilities:
(a) Shared Facilities. UFRFI will provide a centralized
reception and administrative support suite and limited secretarial services.
Other services and facilities will include access to centralized mail
handling, certain library and reference materials, a copying machine, a fax
machine, and limited transportation between the BDI Building and the
University campus. In addition, the BDI Building will contain a central
instrumentation lab for common equipment usage, common use cold rooms,
autoclaves, and dark room, a 600 sq. ft. greenhouse, support facilities for
media preparation, small-scale fermentation experiments, and glassware
washing. Such services and facilities will be made available to Licensee on a
shared basis with other occupants of the BDI Building and others, and, as
such, Licensee understands that UFRFI will make such services available on a
reasonable, best efforts basis, as determined at the sole discretion of the
BDI's Incubator Manager. The "Incubator Manager" is defined as the Assistant
Director for R&D of the University's Biotechnology Program, or his or her
designee.
(b) "If Available" Shared Facilities. UFRFI will provide
Licensee on an "if available" basis the use of a conference room within the
BDI Building, together with certain audio visual equipment. On-campus meeting
and conference rooms may be requested through the Incubator Manager.
(c) Communications Connections. UFRFI shall provide wiring and
jacks for two (2) telephones and two (2) computer and network hook-ups within
each office or lab in the Licensed Space. Licensee shall pay any additional
costs associated with telephone, computer, or network services, including, but
not limited to, monthly service charges, service initiation charges, voice
mail charges, long distance charges, and e-mail or connect time charges. Any
replacement or upgrading of equipment or service shall be at the expense of
Licensee and only with the prior written approval of the Incubator Manager.
(d) Utilities. UFRFI shall provide Licensee with electric, gas,
water, analytical grade deionized water, and sewer service for seven days per
week of normal office or laboratory use. BDI shall also supply normal waste
disposal during business days. Normal and reasonable janitorial service shall
be provided by UFRFI. If Licensee makes excessive use of the facilities as
determined by the Incubator Manager in his or her sole discretion, the costs
of such excessive use shall be borne by Licensee as additional cash license
fees as described below.
(e) Lab and Office Equipment. Upon request of Licensee, UFRFI
shall use its best efforts to provide for use within Licensed Space the lab
and office equipment set forth on Attachment A. Any changes in carpet,
installed equipment, or furnishings, or any structural changes in the Licensed
Space shall be implemented only with the prior written approval of the
Incubator Manager, and at the exclusive expense of Licensee.
(f) Core Laboratories and other Resources. UFRFI will use its
best efforts, but does not guarantee, to provide Licensee with access to
certain Biotechnology Program resources upon request by Licensee, including
access to the Biotechnology Program Core Laboratory Services, and
transportation for samples and reagents between campus-based laboratories and
facilities and the BDI Building. Licensee may, at UFRFI's discretion, have
access to disclosure, patent, or technology transfer training. Payment of
service fees relating to such resources, if any, shall be the sole
responsibility of Licensee.
(g) Damage to Facilities. In the event that any licensed
facilities, equipment, or any other UFRFI or University property is damaged or
destroyed through use, misuse, or negligence by Licensee, UFRFI may make the
required repairs or replacement of damaged property and shall provide Licensee
with an invoice representing the loss to UFRFI or the University (whether
replaced or repaired or otherwise), said invoice to be due and payable by
Licensee in accordance with its terms. In the event that normal maintenance
is required for said facilities, equipment, or UFRFI or University property,
Licensee shall notify the Incubator Manager, who is the sole person authorized
to arrange for such service. The cost for any unauthorized repairs ordered by
Licensee shall be borne exclusively by Licensee.
2. Scheduling of Use of University Campus Facilities. Licensee shall
schedule the use of any University campus facilities only through the
Incubator Manager.
3. License Fees; Term. The term of this Agreement and Licensee's
obligation to pay a license fee (consisting of both a monthly cash payment and
warrants to purchase Licensee's common stock shares) are as provided below.
Additional warrants may be required if this Agreement is renewed as provided
in this Section 3.
(a) License Fees. Cash payments shall commence on the first day
of August, 1995 , (the "Effective Date"), and thereafter the license fee
shall be paid in equal monthly installments on the first day of each month
during the term, in advance, to the UFRFI at its offices at 109 Grinter Hall,
Gainesville, Florida 32611-2037, unless UFRFI designates another place. The
license fee shall be paid without abatement, deduction, or set off for any
reason. In the event that UFRFI has not completed renovations to the Licensed
Space, if any, as agreed upon for Licensee's research activities, the
Effective Date shall be that date on which UFRFI and Licensee agree that UFRFI
has completed the renovations agreed upon. Any portion of the Licensed
Space or other space in the BDI Building that is occupied by Licensee prior to
the Effective Date shall be subject to a monthly fee equivalent to an annual
rate of $10.00 per square foot, payable monthly and commencing on the date of
such occupancy.
The cash license fee during the term of this license shall be
payable by Licensee in equal monthly installments, on or before the first day
of each month and shall be as follows:
Initial Term:
From August 1, 1995, to July 31, 1996, $1,065.00 per month (of which
$792.50 shall be paid in cash and $272.50 shall be deemed paid pursuant to
Attachment F).
Renewal Terms:
From August 1, 1996, to July 31, 1997, $1,171.50 per month (of which
$871.75 shall be paid in cash and $299.75 shall be deemed paid pursuant to
Attachment F).
From August 1, 1997, to July 31, 1998, $1,278.00 per month (of which
$951.00 shall be paid in cash and $327.00 shall be deemed paid pursuant to
Attachment F).
(b) Term. The initial term of the license shall be for 12 months
following the commencement of the term as noted below and shall terminate on
July 31, 1996, or on the last day of the month which is 12 months after the
Effective Date, whichever is later. Licensee shall have the option of two
additional one-year renewal terms, provided written notice of the exercise of
said option is furnished to UFRFI at least 60 days prior to the expiration of
the current term. Licensee's right to exercise such options is subject to
satisfactory progress on meeting its R&D milestones and business plan
objectives, such progress to be determined in the sole discretion of BDI after
reasonable consultation with Licensee. In the event this Agreement is
extended, all of the terms and conditions contained herein shall apply to the
renewal terms.
(c) Additional License Fees. Unless otherwise agreed to, the cost
of any services or resources provided by BDI or the University not indicated
in Section 1 above shall be borne by Licensee. Licensee shall be billed
separately for said additional services or resources as additional cash
license fees, payment for which shall be due and payable in accordance with
the terms of the invoice therefor.
4. Warrants. Licensee intends to issue a Warrant to UFRFI to purchase
shares of Licensee's common stock in further consideration for UFRFI's
entering into this Agreement, and, except as provided in Section 5 herein,
such Warrant shall remain in full force and effect without regard to whether
this Agreement is terminated by either party for any reason.
(a) Warrant for Initial Term. As set forth in Section 3 above,
and upon the terms and conditions set forth herein, as a part of the license
fee, Licensee shall grant to UFRFI a Warrant to purchase shares of Licensee's
common stock, in accordance with the provisions of Attachment B.
(b) Additional Warrants. As a condition of renewal of this
license for additional terms of one year beyond the initial term of 12 months,
Licensee shall grant to UFRFI additional warrants to purchase shares of
Licensee's common stock for each renewal term. The number of shares, term,
and warrant exercise price of such Warrants will be determined by good faith
negotiation prior to the commencement of renewal terms.
(c) Anti-dilution, Term, and Other Provisions. Other terms of
the Warrant shall be as set forth in the Warrant Agreement in Attachment B.
5. Termination. The facilities, equipment, and Licensed Space licensed
hereunder are licensed for the purpose of furthering Licensee's business
objectives as approved by UFRFI. Pertinent portions of Licensee's business
plan, including its business objectives and financial progress reports are
attached as Attachment C.
(a) Not a Lease. The parties understand that this Agreement
constitutes a license, not a lease, and that the relationship of the parties
hereunder is that of licensor and licensee, and not that of landlord and
tenant. As such, UFRFI reserves the right to change space assignments or to
terminate this Agreement by written notice if the assigned space does not
function as a place of business for more than one week, or if Licensee in
UFRFI's sole discretion no longer meets the criteria for participation in the
Incubator Program. Notwithstanding Section 15 below, if UFRFI has reason to
believe at any time that Licensee is no longer following its business plan as
approved by UFRFI, UFRFI, in its sole discretion, may review Licensee's
status. If, in UFRFI's sole discretion, Licensee's current status is not in
material accord with its business plan, UFRFI may terminate this Agreement.
(b) Default; Notice of Termination. Should either party be in
default in connection with any material terms or conditions stated within this
Agreement, then the other party shall have the right to terminate this
Agreement upon ten business days' written notice, if the other party does not
correct such situation within the said ten day period. Further, either party
may terminate this Agreement, with or without cause, upon 60 days' written
notice. This Section 5 does not relieve either party of any outstanding
obligations incurred pursuant to this Agreement.
(c) Consequences of Certain Terminations. If this Agreement is
terminated by BDI, through no fault of Licensee, within one year of its
Effective Date, the number of Licensee's shares of stock which UFRFI is
entitled to purchase per paragraph 4 during the initial term shall be reduced
on a pro rata basis.
6. Indemnification. Licensee shall at all times during the term of
this Agreement and thereafter, indemnify, defend, and hold UFRFI and the
University, their trustees, officers, employees, and affiliates (the
"Indemnities"), harmless against all claims and expenses, including legal
expenses and reasonable attorneys' fees, whether arising from a third party
claim or resulting from UFRFI's enforcing this indemnification clause against
Licensee, or arising out of the death of or injury to any person or persons or
out of any damage to property and against any other claim, proceeding, demand,
expense, or liability of any kind whatsoever resulting from the Licensee's
occupancy of the Licensed Space, the use of any University services or
resources, arising from any right or obligation of Licensee hereunder, or
arising out of Licensee's business plan, or research involving, without
limitation, the use of animals, human subjects, or biohazardous materials.
This indemnification shall not apply to any liability, damage, loss, or
expense to the extent that it is attributable to the negligence or intentional
wrongdoing of the Indemnities.
Licensee shall, at its own expense, provide attorneys reasonably acceptable to
UFRFI to defend against any actions brought or filed against any party
indemnified hereunder with respect to the subject of indemnity contained
herein, whether such actions are rightfully brought.
7. Insurance. During the term of this Agreement, Licensee shall, at
its sole cost and expense, procure and maintain policies of comprehensive
general liability insurance naming the Indemnities as additional insureds.
(a) Comprehensive General Liability. The comprehensive general
liability insurance shall provide broad form contractual liability coverage
for Licensee's indemnification under this Section 6 in the following minimum
amounts:
(i) comprehensive liability (personal injury, including death):
$1,000,000, per claim and $5,000,000 per occurrence; and
(ii) property damage: $1,000,000 per claim and $5,000,000 per
occurrence.
(b) Self-Insurance. If Licensee elects to self-insure, such self-
insurance program must be acceptable to UFRFI.
(c) Other Insurance. Licensee shall obtain and keep in force all
worker's compensation insurance required under the laws of the State of
Florida, and such other insurance as may be necessary to protect Indemnities
against any other liability of person or property arising hereunder by
operations of law, whether such law is now in force or is adopted subsequent
to the Effective Date.
(d) Cancellation; Replacement Insurance. Licensee shall provide
UFRFI with written evidence of such insurance upon request, and shall provide
UFRFI with written notice at least 45 days prior to the cancellation, non-
renewal, or material change in such comprehensive general liability insurance;
if Licensee does not obtain replacement insurance providing comparable
coverage within such 45 day period or provide self-insurance satisfactory to
UFRFI, UFRFI shall have the right to terminate this Agreement.
(e) Assumption of Risk. Each party assumes any and all risks of
personal injury and property damage attributable to the negligent acts or
omissions of that party and the officers, employees and agents thereof.
(f) Non-exclusive Remedies. Nothing contained herein shall be
construed or interpreted as denying to either party any remedy or defense
available to such party under the laws of the State of Florida; the consent of
the State of Florida.
8. Destruction of Space. If the Licensed Space is totally destroyed
(or so substantially damaged as to be unhabitable) by storm, fire, earthquake,
or other casualty, this Agreement shall terminate as of the date of such
destruction or damage, and license fees shall be accounted for as between
UFRFI and Licensee as of that date. If the Licensed Space is damaged but not
rendered wholly unhabitable by any such casualty or casualties, license fees
shall abate in such proportion as the use of the Licensed Space has been
destroyed until UFRFI has restored the Licensed Space to substantially the
same condition as before damage, whereupon full license fees shall commence.
Nothing contained herein shall require UFRFI to make such restoration,
however, if not deemed advisable in its judgment. UFRFI shall make its
intentions to restore or not to restore said Licensed Space to original
condition known to Licensee in writing, within ninety (90) days of such
occurrence. If UFRFI decides against such reconstruction or fails to provide
such notice, Licensee may, at its option, cancel this Agreement.
9. Maintenance; Survey. The Licensed Space shall be maintained in its
original condition to the satisfaction of UFRFI, normal wear and tear
excepted. Prior to the Effective Date, a joint survey of the Licensed Space
and equipment, indicating its exact condition, shall be made by
representatives of both Licensee and UFRFI. A written report of said survey
shall be attached hereto and be made also upon termination of this Agreement.
In the event that the facilities incur any loss or damage, Licensee shall
return the Licensed Space to its original condition to the satisfaction of
UFRFI. Otherwise, UFRFI shall make the required repairs or replacement of
damaged property, and shall provide Licensee with an invoice due and payable
in accordance with its terms. Licensee, under this Section, is deemed to have
accepted the Licensed Space in the condition existing on the Effective Date.
Licensee is not liable for losses or damage to the License Space, furnishings,
or equipment due to the sole negligence of UFRFI or the University.
10. Security Deposit. Licensee shall pay to UFRFI a sum equal to one
month's cash license fee (as provided in Section 3 hereof) as further
consideration for this Agreement. The aforesaid sum is held by UFRFI as a
non-interest bearing security for the full, faithful, and punctual performance
by Licensee of the terms, covenants, and conditions of this Agreement.
(a) Application of Security. If, at any time, Licensee fails to
fully, faithfully, and punctually perform any of the terms, covenants, and
conditions contained herein, then UFRFI may apply any part or the whole of
said security to indemnify UFRFI for any damage it may have suffered or will
suffer because of such failure to perform by the Licensee; and UFRFI shall in
no way be precluded from recovering in addition to the said security, any
other damages or expenses that UFRFI may suffer by reason of any violation by
Licensee of Licensee's terms, covenants, and conditions contained herein.
(b) Return of Security. If this Agreement is terminated prior to
the expiration of the term hereof by agreement of the parties, or in
accordance with the terms of this license, and the Licensee has fully,
faithfully, and punctually performed all of the Licensee's obligations
hereunder up to the date of the termination, then the security deposit
described herein shall be returned by UFRFI to Licensee.
11. Interruption of Business. Except as specified in Section 8,
neither the University nor UFRFI shall be responsible to Licensee for any
damages or inconvenience caused by interruption of business or inability to
occupy the Licensed Space for any reason whatsoever, providing that, Licensee
shall be credited with the cash license fee on a pro rata basis for any
working day period, if the business interruption is due to circumstances
caused by UFRFI that are not in the normal course of business or that are not
a part of normal operating procedures at the BDI Building.
12. No Assignment. This Agreement is not assignable without the prior
written consent of UFRFI, and any attempt to do so shall be void.
13. Qualification for Incubator; Non-Interference; Animal or Human
Research; Toxic Materials. Licensee's admittance to the Incubator Program is
based, in part, on UFRFI's review of Licensee's business concept, objectives,
and plans. Use of the Licensed Space and other facilities, furnishings,
equipment, and services made available to Licensee by UFRFI or the University
shall be in furtherance of Licensee's business concept, objectives, and plans,
and shall not be in furtherance of any illicit or illegal purposes, or
purposes not consistent with Licensee's business concept, objectives, and
plans. Licensee's use of the Licensed Space and the equipment, furnishings,
and services available under this Agreement shall not interfere, in any
manner, with use by other licensees or occupants of nearby facilities and
equipment. Research involving the use of animals, human subjects, or the use
of hazardous or toxic materials by Licensee is not permitted unless consented
to in writing by BDI, and then only in the manner prescribed by UFRFI. UFRFI
reserves the right to approve in its sole discretion Licensee's use of the
Licensed Space and available equipment and services. Approval of the effort
outlined in this Agreement is acknowledged by the signing of this Agreement by
UFRFI.
14. Compliance with University and UFRFI Policies; Requirements.
Licensee shall comply with all applicable UFRFI or University rules or
policies, including policies relating to human and animal subjects,
recombinant DNA/RNA practices, biohazards, and radiation safety, as well as
federal, state, or local laws, ordinances, codes, rules, permits, licensing
conditions, and regulations, including any amendments thereto (collectively,
the "Requirements"), in its use of the Licensed Space, and shall procure, at
its expense, any licenses, permits, insurance, and government approvals
necessary to the operation of its business.
(a) Certain Federal Statutes. "Hazardous substance" as used
herein includes any "hazardous substance" as defined by the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. s 9601, et
seq., including any amendments thereto ("CERCLA"), any substance, waste, or
other material considered hazardous, dangerous, or toxic under any of the
Requirements, petroleum and petroleum products, and natural gas. "Release" as
used herein means any intentional or unintentional spilling, pumping,
emitting, emptying, discharging, escaping, leading, dumping, disposing, or
abandonment of any hazardous substance. Licensee shall comply with all
Requirements governing the discharge, release, emission, or disposal of any
hazardous substance and prescribing methods for or other limitations on
storing, handling, or otherwise managing hazardous substances including, but
not limited to, the then-current versions of the following federal statutes,
any Florida analogs, and the regulations implementing them: the Resource
Conservation and Recovery Act (42 U.S.C. s 6901, et seq.); CERCLA; the Clean
Water Act (33 U.S.C. s 1251, et seq.); the Clean Air Act (42 U.S.C. S 7401, et
seq.); and the Toxic Substances Control Act (15 U.S.C. S 2601, et seq.).
Licensee shall comply with all requirements of the Animal Welfare Act (7
U.S.C. S 2131, et seq.) as the same may be amended, and all similar federal,
state, and local laws, codes, ordinances, and regulations.
(b) Hazardous Substances; Disposal. Licensee covenants and agrees
that it will not use or allow the Licensed Space to be used for the storage,
use, treatment, disposal, or other handling of any hazardous substance without
the prior written consent of UFRFI. Attached to the License as Attachment C
is a list prepared by Licensee identifying the hazardous substances which
Licensee intends to use and store in the premises, and setting forth the
quantity, use, and location thereof. BDI hereby permits Licensee to use and
store the hazardous substances set forth on Attachment D within the Licensed
Space, provided that Licensee complies in all respects with the Requirements
and this Section and that such hazardous substances are not disposed of in the
sanitary sewer system of the BDI Building unless the Requirements permit and
the BDI has consented to such method of disposal in writing, having determined
in UFRFI's sole and absolute discretion that such disposal will not harm the
sanitary sewer piping. Licensee shall request in writing UFRFI's written
approval before any additional hazardous substance use, handling, treatment,
storage, or disposal in the Licensed Space is undertaken. Such request shall
set forth a description of the hazardous substance involved, the maximum
quantity to be present in the Licensed Space at any time, its location within
the Licensed Space, and its use in Licensee's business.
(c) Violations. Licensee shall take all steps necessary to remedy
any violation of any Requirements by the Licensee whether or not a citation or
other notice of violation has been issued by a governmental authority.
Licensee shall at its own expense, promptly contain and remediate any release
of hazardous substances arising from or related to Licensee's hazardous
substance activity to the Licensed Space, the BDI Building, or the environment
and remediate any resultant damage to the property, persons, or the
environment.
(d) Environmental Inspections. UFRFI reserves the right to
periodically conduct an environmental and safety inspection of the Licensed
Space and areas beyond such space, where necessary, such as the HVAC system
and the laboratory exhaust venting system. The scope of such inspection may
include, but not be limited to, having the fume hoods tested and inspected.
Licensee shall give prompt written notice to UFRFI of any release of any
hazardous substance in the Licensed Space, the BDI Building or the environment
not made in conformance with the Requirements, including a description of
remediation measures and any resulting damage to persons, property, or the
environment. Licensee shall upon expiration or termination of this License,
surrender the Licensed Space to UFRFI free from the presence and contamination
of any hazardous substance. Following any breach by Licensee of the
Requirements of this Section, or any reasonable safety or environmental
concern by UFRFI, UFRFI may withdraw its consent to Licensee's hazardous
substance activity (or any portion thereof) by written notice to Licensee.
Licensee shall terminate its hazardous substance activity immediately upon
notice and remove all hazardous substances from the Licensed Space within 15
days from the date of such notice unless such breach or concern is promptly
addressed and corrected by Licensee to UFRFI's sole satisfaction. Licensee
shall indemnify, hold harmless and (at UFRFI's option) defend the University
or UFRFI, their agents and employees, from and against all claims, actions,
losses, costs and expenses (including attorneys' and other professional fees),
judgments, settlement payments, and, whether or not reduced to final judgment,
all liabilities, damages, or fines paid, incurred, or suffered by such parties
in connection with loss of life, personal injury, or damage to property of the
environment arising, directly or indirectly, wholly or in part from any
conduct, activity, act, omission, or operation involving the use, handling,
generation, treatment, storage, disposal, other management or release of any
hazardous substance at, from, or to the Licensed Space, whether or not
Licensee has acted negligently with respect to such hazardous substance.
Licensee's obligations and liabilities hereunder shall survive the expiration
or other termination of this License
15. UFRFI's Control of Facilities. Notwithstanding anything to the
contrary herein, UFRFI reserves the right at all times to control all
facilities licensed hereunder, and to enforce all applicable necessary laws,
rules, and regulations.
16. Business Plan and R&D Review. At the request of UFRFI, but not
more frequently than at six month intervals, Licensee agrees to review its
current and prospective business plan and R&D program status with UFRFI.
Progress may be monitored in relation to the previous most recent plans which
have been reviewed and approved by both Licensee and UFRFI. If, in UFRFI's
sole discretion, the Licensee's current status is not sufficiently in accord
with the most recent previously reviewed plans, UFRFI may give written notice
of default in accordance with Section 5 above.
17. Locks. UFRFI will install all locks attached to the Licensed Space
and provide two keys for each lock to Licensee. UFRFI, through its agent ,
BDI, will have keys to all locks, and may enter the Licensed Space at
reasonable times, for inspection, maintenance or repair, or for any other
necessary reason. Entry for other than normal maintenance and inspection
activities shall be preceded by appropriate notice to Licensee. In the event
of an emergency, notice will be given at the first reasonable opportunity,
even after the fact.
18. Right to Remove Property. Unless in default of contract, Licensee
shall have the right to remove any equipment, goods, fixtures, and other
property which it has placed or affixed within or to the Licensed Space,
provided Licensee repairs damage caused by such removal. Licensee shall not
remove improvements made to the facilities or Licensed Space by UFRFI or on
behalf of UFRFI during this Agreement.
19. Use of Names. Licensee shall not use the names of BDI, the
University, or UFRFI nor of any of such institution's employees, nor any
adaptation thereof, in any advertising, promotional, or sales literature
without prior written consent obtained from UFRFI in each case, except that
Licensee may state that it is a licensee of UFRFI pursuant to this Agreement,
that it is a participant in the Incubator Program, and, where relevant, that
UFRFI is the owner of warrants for, or shares of, its common stock.
Licensee will cooperate fully with UFRFI to publicize the Incubator Program
and Licensee's participation in such program.
(a) Request for Consent to Use of Names. Requests for consent
from UFRFI shall be sent to the Incubator Manager. Notwithstanding the
foregoing, the University and UFRFI consent to references to them pursuant to
any requirements of applicable law or governmental regulations, provided that,
in the event of any such disclosure, Licensee shall afford UFRFI the prior
opportunity to review the text of such disclosure. Licensee shall use its
best efforts to comply with any reasonable requests by UFRFI regarding
changes.
(b) Consent Deemed Granted. Where consent of a party is required
under this Section, such consent shall be deemed granted if no written
objection (or oral objection, confirmed immediately in writing) is received by
the requesting party on or before the twentieth calendar day following the
date a written request for consent was received by the requested party. For
the purposes of this Section only, a item shall be deemed received as follows:
(i) if hand delivered, upon delivery; (ii) if sent by electronic mail, upon
confirmation by the sending carrier that the message was deposited to the
addressee's mailbox; (iii) if sent by registered mail, return receipt
requested, upon signing by the receiving party; or (iv) if sent by ordinary
mail in the United States, postage prepaid, and addressed as set forth below,
on the fifth calendar day after deposit in the mail.
20. No Partnership. Nothing contained in this Agreement shall create
any partnership or joint venture between the parties. Neither party may
pledge the credit of the other or make any binding commitment on the part of
the other.
21. Miscellaneous. The parties hereto acknowledge that this Agreement
sets forth the entire agreement and understanding of the parties hereto as to
the subject matter hereof, and shall not be subject to any change or
modification except by the execution of a written instrument subscribed to by
the parties hereto. The provisions of this Agreement are severable, and in
the event that any provisions of this Agreement shall be determined to be
invalid or unenforceable under any controlling body of the law, such
invalidity or unenforceability shall not in any way affect the validity or
enforceability of the remaining provisions hereof. The titles herein are for
convenience only. This Agreement shall be construed, governed, interpreted,
and applied in accordance with the laws of the State of Florida.
22. Notices. Any payment, notice or other communication pursuant to
this Agreement shall be sufficiently made or given on the date of mailing if
sent to such party by certified first class mail, postage prepaid, addressed
to it at its address below or as it shall designate by written notice given to
the other party:
In the case of UFRFI:
President, University of Florida Research Foundation, Inc.
109 Grinter Hall
Gainesville, Florida 32611
PLEASE MAKE ALL CHECKS PAYABLE TO:
University of Florida Research Foundation, Inc.
109 Grinter Hall
Gainesville, Florida 32611
In the case of Licensee:
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
Attn: Chairman or President
23. Inventions, Improvements, and Discoveries. Any inventions,
improvements, or discoveries patentable or unpatentable, which are conceived
or made solely by one or more employees of Licensee, whether developed in the
BDI Building or through the use of other facilities, equipment, or services,
access to which is provided under this Agreement, shall be the sole property
of Licensee. All rights and title to all inventions, improvements, or
discoveries, which are generated jointly by one or more employees of the
University and one or more employees of Licensee shall belong to the
University unless subject to the terms and conditions of a superseding
agreement.
24. Confidentiality. UFRFI will use its best efforts to prevent the
dissemination of any proprietary information related to work of the Licensee
unless authorized to do so in writing by Licensee. UFRFI shall have, however,
the right to disclose Licensee's activities in a general, descriptive manner.
IN WITNESS WHEREOF, the parties have executed this License Agreement as
of the date first above written.
University of Florida Research Foundation, Inc.
By:__________________________________________
Karen A. Holbrook, Ph.D.
Vice President for Research
Licensee: Ixion Biotechnology, Inc.
By__________________________________________
Weaver H. Gaines
Chairman and Chief Executive Officer
ATTACHMENT A
LICENSED SPACE
1) See attached highlighted floor plan for office and laboratory location
2) Address: 12085 Research Drive
Alachua, Fl 32615
3) Lab Space: Room 168: 951 square feet
Office Space: Entrepreneurial office #1: Room 126: 188 square feet
Entrepreneurial office #2: Room 125: 139 square
feet
Total square feet: 1278 square feet
4) Office and Laboratory equipment: Upon request of Licensee, UFRFI shall use
its best efforts to provide for use within the Licensed Space furniture and
equipment as follows:
(I) in the laboratory: 2 small desks with carrels, 2 four-drawer
letter-sized file cabinets, 3 lab stools; 2 desk chairs; 2 waste baskets; 1
book case; a chemical fume hood; and a biological fume hood
(II) in the entrepreneurial offices: 1 credenza (keyhole type with 2
sets of file drawers on either side); 1 six- shelf, 6-foot bookcase; 1 chair
pad, 1 wastebasket; 1 five-foot bookcase with six shelves; 2 desks with
carrels; 2 desk chairs; 3 four-drawer letter-sized file cabinets (one must be
locking); 2 wastebaskets.
Such furnishings and equipment shall be selected by UFRFI.
ATTACHMENT B
WARRANT AGREEMENT
ATTACHMENT C
EXTRACTS FROM BUSINESS PLAN
Reference is made to the Private Placement Memorandum of Ixion
Biotechnology Inc., dated January 30, 1995, as stickered, dated February 17,
1995, which is incorporated herein by reference.
ATTACHMENT D
LIST OF HAZARDOUS SUBSTANCES
ATTACHMENT E
ANIMAL SAFETY AND COMPLIANCE
ATTACHMENT F
SUPPLEMENTAL NOTES
To the degree that Weaver H. Gaines supplies consulting services at reasonable
times upon request, to the satisfaction of the Biotechnology Program, the rent
for both entrepreneurial offices will be deemed paid.
AMENDMENT NO.1
SECURITY DEPOSIT RETURN
This Amendment No. 1 dated July 31, 1996 is between the University of Florida
Research Foundation, Inc., a not-for-profit corporation duly organized and
existing under the laws of the State of Florida and having its office in 223
Grinter Hall, Gainesville, FL 32611-2037 ("UFRFI"), and Ixion Biotechnology,
Inc., a company duly organized under the laws of Delaware, and having its
principle office at 12085 Research Drive, Alachua, Florida 32615 ("Ixion")
WITNESSETH
WHEREAS, UFRFI and Ixion entered into an Incubator License Agreement
relating to licensed space at the Sid Martin Biotechnology Development
Institute in Alachua, Florida, dated June 26, 1995 (the "ILA"), and
WHEREAS, UFRFI and Ixion desire to amend the ILA in connection with the
exercise by Ixion of the option for the first renewal term ending July 31,
1997;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties agree as follows:
1. UFRFI shall reimburse Ixion $1,065, the full amount of the security
deposit previously deposited pursuant to Section 10 of the ILA;
2. Ixion, having accepted the return of the one month license fee,
agrees to pay a $200.00 non-refundable occupancy fee upon invoice; and
3. Section 10 of the ILA shall be deleted and replaced in its entirety
with the following:
10. Occupancy Fee. Licensee shall pay to UFRFI a non-
refundable sum of $200.00 to cover key lock changes, minor adaptations and
other incidental expenses related to the occupancy of the Licensee. The
Occupancy Fee shall be paid at the beginning of the initial term as an
addition to the first month's payment of license fees pursuant to Section 3
(a).
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this agreement as of the day and the year first set forth
above.
University of Florida Research Foundation, Inc. Ixion
Biotechnology, Inc.
Arnold A. Heggestad, Ph.D.
Weaver H. Gaines
Executive Director
Chairman and Chief Executive Officer
AMENDMENT NO.2
ADDITIONAL LICENSED SPACE
This Amendment No. 2, dated October 1, 1996 is between University of Florida
Research Foundation, Inc., a not-for-profit corporation duly organized and
existing under the laws of the State of Florida and having its office in 223
Grinter Hall, Gainesville, FL 32611-2037 ("UFRFI"), and Ixion Biotechnology,
Inc., a company duly organized under the laws of Delaware, and having its
principle office at 12085 Research Drive, Alachua, Florida 32615 ("Ixion")
WITNESSETH
WHEREAS, UFRFI and Ixion entered into an Incubator License Agreement
relating to licensed space at the Sid Martin Biotechnology Development
Institute in Alachua, Florida, dated June 26, 1995
(the "ILA"), and
WHEREAS, UFRFI and Ixion amended the ILA in connection with the exercise
by Ixion of the option for the first renewal term ending July 31, 1997;
WHEREAS, Ixion desires an increase in licensed space;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties agree as follows:
1. Ixion shall license an additional lab office, Room 170 A for the
remainder of the first renewal term of Ixion's Incubator License Agreement.
2. Cash payments shall commence on the first day of October, 1996. The
cash license fee for lab office 170 A during this term shall be payable by
Licensees in equal monthly installments, on or before the first day of each
month in addition to the fee paid under the terms of the first renewal term
and shall be as follows:
Lab Space and office, Rooms 168 & 168 A:
951 square feet
Lab office space 170 A:
94 square feet
Entrepreneurial office 126:
188 square feet
Entrepreneurial office 125:
139 square feet
Total square feet:
1,372 square feet at the rate of
$11.00/square foot
From October 1, 1996 to July 31, 1997, Ixion will pay a license fee of
$1,257.66 monthly (of which $957.92 shall be paid in cash and $299.75 shall
be deemed paid pursuant to Attachment F).
3. Attachment A, "Licensed Space," to the Incubator License Agreement is
amended in its entirety as attached hereto.
4. Pursuant to Section 4(b) of the ILA, Ixion will issue additional
warrants for 548 warrants to UFRFI in accordance with Attachment B
representing the supplementary license fee for the additional licensed space.
Ixion will use the form of warrant, with the same exercise price and
expiration date as previously issued in connection with Ixion's initial term.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this agreement as of the day and the year first set forth
above.
University of Florida Research Foundation Ixion
Biotechnology, Inc.
Arnold A. Heggestad, Ph.D.
Weaver H. Gaines
Executive Director
Chairman and Chief Executive Officer
ATTACHMENT A
LICENSED SPACE
1) See attached highlighted floor plan for office and laboratory location
2) Address: 12085 Research Drive
Alachua, Fl 32615
3) Lab Space and office: Room 168 and 168 A: 951 square feet
Lab Office 170 A: 94 square feet
Office Space: Entrepreneurial office #1: Room 126: 188 square feet
Entrepreneurial office #2: Room 125: 139 square feet
Total square feet: 1372 square feet
4) Office and Laboratory equipment: Upon request of Licensee, UFRFI shall use
its best efforts to provide for use within the Licensed Space furniture and
equipment as follows:
(I) in the laboratory 168: a chemical fume hood; and a biological fume
hood
(II) in the laboratory office 168 A : 2 small desks with carrels; 2
four-drawer letter-sized file cabinets; 3 lab stools; 2 desk chairs; 2 waste
baskets; 1 book case;
(III) in the entrepreneurial offices: 1 credenza (keyhole type with 2
sets of file drawers on either side); 1 six- shelf, 6-foot bookcase; 1 chair
pad, 1 wastebasket; 1 five-foot bookcase with six shelves; 2 desks with
carrels; 2 desk chairs; 3 four-drawer letter-sized file cabinets (one must be
locking); 2 wastebaskets.
(IV) in the laboratory office 170 A: 1(one) desk and return; 1(one) four
drawer filing cabinet; 1(one) bookcase; 1(one) lab chair.
Such furnishings and equipment shall be selected by UFRFI.
AMENDMENT NO.3
ADDITIONAL LICENSED SPACE
This Amendment No. 3, dated November 6, 1996 is between University of Florida
Research Foundation, Inc., a not-for-profit corporation duly organized and
existing under the laws of the State of Florida and having its office in 223
Grinter Hall, Gainesville, FL 32611-2037 ("UFRFI"), and Ixion Biotechnology,
Inc., a company duly organized under the laws of Delaware, and having its
principle office at 12085 Research Drive, Alachua, Florida 32615 ("Ixion")
WITNESSETH
WHEREAS, UFRFI and Ixion entered into an Incubator License Agreement
relating to licensed space at the Sid Martin Biotechnology Development
Institute in Alachua, Florida, dated June 26, 1995
(the "ILA"), and
WHEREAS, UFRFI and Ixion amended the ILA in connection with the exercise
by Ixion of the option for the first renewal term ending July 31, 1997;
WHEREAS, Ixion desires an increase in licensed space;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties agree as follows:
1. Ixion shall license an additional entrepreneurial office, Room 122
for the remainder of the first renewal term of Ixion's Incubator License
Agreement.
2. Cash payments shall commence on the seventh day of November, 1996.
The cash license fee for lab office 122 during this term shall be payable by
Licensees in equal monthly installments, on or before the first day of each
month in addition to the fee paid under the terms of the first renewal term
and shall be as follows:
Lab Space and office, Rooms 168 & 168 A:
951 square feet
Lab office space 170 A:
94 square feet
Entrepreneurial office 122:
160 square feet
Entrepreneurial office 126:
188 square feet
Entrepreneurial office 125:
139 square feet
Total square feet:
1,532 square feet at the rate of
$11.00/square foot
From November 7, 1996 to July 31, 1997, Ixion will pay a license fee of
$1,404.33 monthly (of which $ 1,104.59 shall be paid in cash and $299.75
shall be deemed paid pursuant to Attachment F).
3. Attachment A, "Licensed Space," to the Incubator License Agreement is
amended in its entirety as attached hereto.
4. Pursuant to Section 4(b) of the ILA, Ixion will issue additional
warrants for 817 warrants to UFRFI in accordance with Attachment B
representing the supplementary license fee for the additional licensed space.
Ixion will use the form of warrant, with the same exercise price and
expiration date as previously issued in connection with Ixion's initial term.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this agreement as of the day and the year first set forth
above.
University of Florida Research Foundation Ixion
Biotechnology, Inc.
Arnold A. Heggestad, Ph.D.
Weaver H. Gaines
Executive Director
Chairman and Chief Executive Officer
ATTACHMENT A
LICENSED SPACE
1) See attached highlighted floor plan for office and laboratory location
2) Address: 12085 Research Drive
Alachua, Fl 32615
3) Lab Space and office: Room 168 and 168 A: 951 square feet
Lab Office 170 A: 94 square feet
Office Space: Entrepreneurial office #1: Room 126: 188 square feet
Entrepreneurial office #2: Room 125: 139 square feet
Entrepreneurial office #3: Room 122: 160 square feet
Total square feet: 1532 square feet
4) Office and Laboratory equipment: Upon request of Licensee, UFRFI shall use
its best efforts to provide for use within the Licensed Space furniture and
equipment as follows:
(I) in the laboratory 168: a chemical fume hood; and a biological fume
hood
(II) in the laboratory office 168 A : 2 small desks with carrels; 2
four-drawer letter-sized file cabinets; 3 lab stools; 2 desk chairs; 2 waste
baskets; 1 book case;
(III) in the entrepreneurial offices 126 and 125: 1 credenza (keyhole
type with 2 sets of file drawers on either side); 1 six-shelf, 6-foot
bookcase; 1 chair pad, 1 wastebasket; 1 five-foot bookcase with six shelves; 2
desks with carrels; 2 desk chairs; 3 four-drawer letter-sized file cabinets
(one must be locking); 2 wastebaskets.
(IV) in the laboratory office 170 A: 1(one) desk and return; 1(one) four
drawer filing cabinet; 1(one) bookcase; 1(one) lab chair.
(V) in the entrepreneurial office 122: 1 desk set w/return; 1 chair; 1
bookcase; 1 file cabinet.
Such furnishings and equipment shall be selected by UFRFI.
AMENDMENT NO.4
ADDITIONAL LICENSED SPACE
This Amendment No. 4, dated January 21, 1997 is between University of Florida
Research Foundation, Inc., a not-for-profit corporation duly organized and
existing under the laws of the State of Florida and having its office in 223
Grinter Hall, Gainesville, FL 32611-2037 ("UFRFI"), and Ixion Biotechnology,
Inc., a company duly organized under the laws of Delaware, and having its
principle office at 12085 Research Drive, Alachua, Florida 32615 ("Ixion")
WITNESSETH
WHEREAS, UFRFI and Ixion entered into an Incubator License Agreement
relating to licensed space at the Sid Martin Biotechnology Development
Institute in Alachua, Florida, dated June 26, 1995
(the "ILA"), and
WHEREAS, UFRFI and Ixion amended the ILA in connection with the exercise
by Ixion of the option for the first renewal term ending July 31, 1997;
WHEREAS, Ixion desires an increase in licensed space;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties agree as follows:
1. Ixion shall license an additional laboratory space, laboratory 170
for the remainder of the first renewal term of Ixion's Incubator License
Agreement.
2. Cash payments shall commence on the first day of February, 1997. The
cash license fee for laboratory 170 during this term shall be payable by
Licensees in equal monthly installments, on or before the first day of each
month in addition to the fee paid under the terms of the first renewal term
and shall be as follows:
Lab Space and office, Rooms 168 & 168 A:
951 square feet
Lab Space and office, Rooms 170 & 170 A:
963 square feet
Entrepreneurial office 122:
160 square feet
Entrepreneurial office 126:
188 square feet
Entrepreneurial office 125:
139 square feet
Total square feet:
2,401 square feet at the rate of
$11.00/square foot
From February 1, 1997 to July 31, 1997, Ixion will pay a license fee of
$2,200.92 monthly (of which
$1,901.17 shall be paid in cash and $299.75 shall be deemed paid pursuant to
Attachment F).
3. Attachment A, "Licensed Space," to the Incubator License Agreement is
amended in its entirety as attached hereto.
4. Pursuant to Section 4(b) of the ILA, Ixion will issue additional
warrants for 3042 warrants to UFRFI in accordance with Attachment B
representing the supplementary license fee for the additional licensed space.
Ixion will use the form of warrant, with the same exercise price and
expiration date as previously issued in connection with Ixion's initial term.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this agreement as of the day and the year first set forth
above.
University of Florida Research Foundation Ixion
Biotechnology, Inc.
Arnold A. Heggestad, Ph.D.
Weaver H. Gaines
Executive Director
Chairman and Chief Executive Officer
ATTACHMENT A
LICENSED SPACE
1) See attached highlighted floor plan for office and laboratory location
2) Address: 12085 Research Drive
Alachua, Fl 32615
3) Lab Space and office: Room 168 and 168 A: 951 square feet
Lab Space and office: Room 170 and 170 A: 963 square feet
Office Space: Entrepreneurial office #1: Room 126: 188 square feet
Entrepreneurial office #2: Room 125: 139 square feet
Entrepreneurial office #3: Room 122: 160 square feet
Total square feet: 2,401 square feet
4) Office and Laboratory equipment: Upon request of Licensee, UFRFI shall use
its best efforts to provide for use within the Licensed Space furniture and
equipment as follows:
(I) in the laboratory 168: a chemical fume hood; and a biological safety
cabinet
(II) in the laboratory office 168 A : 2 small desks with carrels; 2
four-drawer letter-sized file cabinets; 3 lab stools; 2 desk chairs; 2 waste
baskets; 1 book case;
(III) in the entrepreneurial offices 126 and 125: 1 credenza (keyhole
type with 2 sets of file drawers on either side); 1 six-shelf, 6-foot
bookcase; 1 chair pad, 1 wastebasket; 1 five-foot bookcase with six shelves; 2
desks with carrels; 2 desk chairs; 3 four-drawer letter-sized file cabinets
(one must be locking); 2 wastebaskets.
(IV) in the laboratory 170: a chemical fume hood, and a biological safety
cabinet
(V) in the laboratory office 170 A: 1(one) desk and return; 1(one) four
drawer filing cabinet; 1(one) bookcase; 1(one) lab chair.
(VI) in the entrepreneurial office 122: 1 desk set w/return; 1 chair; 1
bookcase; 1 file cabinet.
Such furnishings and equipment shall be selected by UFRFI.
PREAMBLE
This Agreement is made this th day of February 1997, (the
"Effective Date") between Randy S. Fischer, 1014 21st Avenue South, Fargo, ND
58103 and Roy A. Jensen, PO Box 1460, Melrose, FL 32666 (jointly referred to
hereafter as "Licensors"), and Ixion Biotechnology, Inc., a corporation duly
organized under the laws of Delaware, and having its principal office at
12085 Research Drive, Alachua, Florida 32615 ("Ixion").
WITNESSETH
WHEREAS, Licensors are the owners of Patent Rights under U.S. Patent
Number 5,187,071 dated February 16, 1993, entitled "Method for the Selective
Control of Weeds, Pests, and Microbes," and has the right to grant licenses
under said Patent Rights, subject only to a nonexclusive, nontransferable,
irrevocable, paid-up license to practice the invention or have the invention
practiced throughout the world by or on behalf of the United States
Government; and
WHEREAS, Licensors desire to have the Patent Rights utilized and are
willing to grant a license thereunder; and
WHEREAS, Ixion desires to obtain a license under the Patent Rights upon
the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties agree as follows:
ARTICLE I - DEFINITIONS
The following words and phrases have the following meanings:
1.1 "Inventors" mean Randy S. Fischer, Ph.D., and Roy A. Jensen,
Ph.D.
1.2 "Ixion" means any of the following:
(a) Ixion or a related company of Ixion, the voting
stock of which is directly or indirectly at least 50% owned
or controlled by Ixion;
(b) an organization which directly or indirectly
controls more than 50% of the voting stock of Ixion; and
(c) an organization, the majority ownership of which
is directly or indirectly common to the ownership of Ixion.
1.3 "Licensed Know-How" means any technical data, information, or
knowledge within the knowledge and possession of the Inventors at any time
which is incorporated in or becomes part of the Patent Rights.
1.4 "Licensed Product" means any product or part thereof which:
(a) is covered in whole or in part by an issued,
unexpired claim or a pending claim contained in the Patent
Rights in the country in which any Licensed Product is made,
used, or sold;
(b) is manufactured by using a process which is
covered in whole or in part by an issued, unexpired claim or
a pending claim contained in the Patent Rights in the
country in which any Licensed Process is used or in which
such product or part thereof is used or sold.
1.5 "Licensed Process" means any process which is covered in whole or
in part by an issued, unexpired claim or a pending claim contained in the
Patent Rights.
1.6 "Net Sales" means Ixion's, and its sublicensees' gross sales from
the sale or lease of Licensed Products and Licensed Processes produced
hereunder less the sum of the following:
(a) discounts allowed and brokers' or agents'
commissions, if any, allowed and paid;
(b) excise, value-added, or sales taxes, tariff
duties or use taxes directly imposed and with reference to
particular sales;
(c) outbound transportation prepaid or allowed;
(d) amounts allowed or credited on returns; and
(e) packing costs and insurance costs if itemized
separately.
Licensed Products shall be considered "sold" when payment is received.
1.7 "Patent Rights" means all of the following Licensors intellectual
property:
(a) the United States and foreign patents or patent
applications listed in Appendices A and B;
(b) United States and foreign patents issued from
the applications listed in Appendices A and B and from
divisionals, continuations, and continuations-in-part of
these applications;
(c) claims of all foreign patent applications, and
of the resulting patents, which are directed to subject
matter specifically described in the United States patents
and/or patent applications described in (a) or (b) above;
and
(d) any reissues of United States patents described
in (a) or (b) above.
1.8 "Territory" means all the countries of the world.
ARTICLE II - GRANT
2.1 Licensors grant to Ixion the exclusive right and license to make,
have made, use, lease, and sell the Licensed Products, and to practice the
Licensed Processes and the Licensed Know-How, in the Territory to the end of
the term for which the Patent Rights are granted or the expiration date of the
last to expire patent hereunder, whichever is later, unless sooner terminated
according to the terms hereof.
2.2 Licensors shall not grant any other license to make, have made,
use, lease, or sell Licensed Products or to utilize Licensed Processes during
the period of time commencing with the Effective Date of this Agreement and
terminating with the expiration or termination of this Agreement.
2.3 Licensors reserve the right to practice under the Patent Rights
for their own noncommercial research purposes.
2.4 Ixion may sublicense others under this Agreement. Each
sublicense
shall be consistent with the terms of this Agreement.
2.5 Any sublicenses granted by Ixion shall provide that the
obligations to Licensors of this Agreement shall be binding upon the
sublicensee as if it were a party to this Agreement. Ixion shall attach
copies of this Agreement to sublicense agreements.
2.6 Ixion shall forward to Licensors a copy of any sublicense
agreement within 30 days of its execution and further shall forward to
Licensors annually a copy of such reports received by Ixion from its
sublicensees during the preceding twelve-month period under the sublicenses as
shall be pertinent to a royalty accounting under said sublicenses.
2.7 The license granted hereunder shall not be construed to confer
any
rights upon Ixion by implication, estoppel, or otherwise as to any technology
not specifically set forth herein.
ARTICLE III - COMMERCIAL DUE DILIGENCE
3.1 Ixion shall use commercially reasonable efforts to bring one or
more Licensed Products or Licensed Processes to market through a program
intended to attain commercialization of Licensed Products and Licensed
Processes.
ARTICLE IV - ROYALTIES
4.1 For the rights, privileges and, license granted hereunder, Ixion
shall pay royalties to Licensors to the end of the term of the Patent Rights
or the expiration date of the last to expire patent hereunder, whichever is
later, unless sooner terminated according to the terms hereof, as follows:
(a) A License Issue Fee of 1,000 shares of Common
Stock of Ixion;
(b) A Running Royalty in an amount equal to 2.0% of
the Net Sales of the Licensed Products or Licensed Processes
used, leased, or sold by or for Ixion or its sublicensees.
4.2 No multiple royalties shall be payable because any Licensed
Product, its manufacture, use, lease, or sale are or shall be covered by more
than one Patent Rights patent application or Patent Rights patent licensed
under this Agreement.
4.3 Royalty payments shall be paid in United States dollars in
Gainesville, Florida or at such other place as Licensors may reasonably
designate in writing consistent with the laws and regulations controlling in
any foreign country. If any currency conversion shall be required in
connection with the payment of royalties hereunder, such conversion shall be
made by using the exchange rate prevailing at the Chase Manhattan Bank (N.A.)
on the last business day of the calendar quarterly reporting period to which
such royalty payments relate.
4.4 In the event the royalties set forth herein are higher than the
maximum royalties permitted by the law or regulations of a particular country,
the royalty payable for sales in such country shall be equal to the maximum
permitted royalty under such law or regulations. Notice of said event shall
be provided to Licensors. Ixion shall notify Licensors, in writing, within 90
days of discovering that such royalties are approaching or have reached the
maximum amount, and shall provide Licensors with written documentation
regarding the laws or regulations establishing such maximum.
4.5 In the event that any taxes, withholding or otherwise, are levied
by any taxing authority in connection with accrual or payment of any royalties
payable by Ixion under this Agreement, and Ixion determines in good faith that
it must pay such taxes, Ixion shall have the right to pay such taxes to the
local tax authorities on behalf of Licensors and payment of the net amount due
after reduction by the amount of such taxes, shall fully satisfy Ixion's
royalty obligations under this Agreement. Ixion shall provide Licensors with
appropriate receipts or other documentation supporting such payment. Ixion
shall inform Licensors in writing, within 90 days of notification that taxes
will or have been levied by a taxing authority.
4.6 In the event that a Licensed Product is sold in a combination
package or kit containing other active products, then Net Sales for purposes
of determining royalty payments on the combination package, shall be
calculated using one of the following methods, but in no event shall the
royalties payable to Licensors be reduced to less than 25% of that provided
for in Section 4.1 above:
(a) by multiplying the net selling price of that combination
package by the fraction A/A+B, where A is the gross selling price,
during the royalty-paying period in question, of the Licensed
Product sold separately, and B is the gross selling price during
the royalty period in question, of the other active products sold
separately; or
(b) in the event that no such separate sales are made of the
Licensed Product or any of the active products in such combination
package during the royalty-paying period in question, Net Sales
for the purposes of determining royalty payments, shall be
calculated by dividing the net selling price of the combination
package by the number of functions performed by the combination
package sold where such package contains active agents other than
those licensed under this Agreement. The parties recognize that
this provision will require consultation and that in the event a
combination package or kit circumstance arises, the parties will
negotiate in good faith to determine the calculation of Net Sales
pursuant to this section.
4.7 If it is necessary for Ixion to take any license(s) in any given
country, under third-party patents in order to practice the Licensed Processes
or produce the Licensed Products in that country, then Ixion can deduct up to
50% of the royalties otherwise due under this Agreement for Net Sales in that
country, until such time as Ixion has recovered an amount equal to the
royalties payable to such third parties.
ARTICLE V - REPORTS AND RECORDS
5.1 Ixion shall keep accurate books of account for the purpose of
showing the amounts payable to Licensors hereunder. Said books of account
shall be kept at Ixion's principal place of business or the principal place of
business of the appropriate division of Ixion to which this Agreement relates.
Said books and the supporting data shall be open at all reasonable times for
one year following the end of the calendar year to which they pertain, to the
inspection of Licensors or its agents at Licensor's expense for the purpose of
verifying Ixion's royalty statements.
5.2 Ixion, within 45 days after December 31 of each year, shall
deliver to Licensors accurate reports, giving such particulars of the business
conducted by Ixion and its sublicensees during the preceding twelve-month
period under this Agreement as shall be pertinent to a royalty accounting
hereunder. These shall include at least the following:
(a) number of Licensed Products manufactured and
sold;
(b) total billings for Licensed Products sold;
(c) an accounting for all Licensed Processes used or
sold;
(d) deductions applicable to a determination of Net
Sales;
(e) total royalties due; and
(f) names and addresses of all sublicensees of
Ixion.
5.3 With each such report submitted, Ixion shall pay to Licensors the
royalties due and payable under this Agreement. If no royalties shall be due,
Ixion shall so report.
5.4 On or before the 90th day following the close of Ixion's fiscal
year, Ixion shall provide Licensors with Ixion's year-end balance sheet and an
operating statement for the preceding fiscal year then ended.
5.5 The royalty payments, license fees, and reimbursement for patent-
related expenses set forth in this Agreement shall, if overdue, bear interest
until payment at the monthly rate of 1.0%. The payment of such interest shall
not foreclose Licensors from exercising any other rights it may have as a
consequence of the lateness of any payment.
ARTICLE VI - PATENT PROSECUTION
6.1 Ixion shall apply for, seek issuance of, and maintain during the
term of this Agreement the Patent Rights in the United States and in the
foreign countries listed in Appendix B hereto to the extent, in its sole
discretion, it deems such actions commercially reasonable. Licensors shall
have reasonable opportunities to advise Ixion and shall cooperate with Ixion
in such prosecution, filing, and maintenance.
6.2 Payment of all fees and costs relating to the filing,
prosecution,
and maintenance of the Patent Rights shall be the responsibility of Ixion
after the Effective Date.
ARTICLE VII - INFRINGEMENT
7.1 Licensors shall inform Ixion promptly in writing of any alleged
infringement of the Patent Rights by a third party and of any available
evidence thereof.
7.2 During the term of this Agreement, Ixion shall have the right,
but
shall not be obligated, to prosecute at its own expense any such infringements
of the Patent Rights. If Ixion prosecutes any such infringement, Licensors
agrees that Ixion may include Licensors as a co-plaintiff in any such suit,
without expense to Licensors. The total cost of any such infringement action
commenced or defended solely by Ixion shall be borne by Ixion and Ixion shall
keep any recovery or damages for past infringement derived therefrom.
7.3 If within six months after having been notified of any alleged
infringement or such shorter time proscribed by law, Ixion shall have been
unsuccessful in persuading the alleged infringer to desist or shall not have
brought and shall not be diligently prosecuting an infringement action, or if
Ixion shall notify Licensors at any time prior thereto of its intention not to
bring suit against any alleged infringer, then, and in those events only,
(a) Licensors shall have the right, but shall not be obligated,
to prosecute at its own expense any infringement of the Patent
Rights (keeping any recovery or damages for past infringements
derived therefrom), and Licensors may, for such purposes, use the
name of Ixion as co-plaintiff. No settlement, consent judgment,
or other voluntary final disposition of the suit may be entered
into without the consent of Ixion, which consent shall not
unreasonably be withheld. Licensors shall indemnify Ixion against
any order for costs that may be made against Ixion in such
proceedings.
(b) Payments which are earned under Article IV hereof shall be
waived so long as any such infringement which the parties agree in
good faith is material continues, such waiver not to exceed 75% of
the royalties payable hereunder.
7.4 If Licensors has brought a suit pursuant to section 7.3 above, it
shall have the right for such purpose to join Ixion as a co-plaintiff at
Ixion's expense. Ixion independently shall have the right to join any such
suit or action brought by Licensors, and, in such event, shall pay one-half of
the cost of such suit or action from the date of joining. Any damages
recovered by a suit or action in which Ixion has paid its share of costs shall
be first used to reimburse each party hereto for the cost of such suit or
action (including attorney's fees) actually paid by each party hereto as the
case may be, then to reimburse Licensors for any payments waived under this
Section 7.4, and the residue, if any, shall be divided equally between the
parties hereto.
7.5 In the event that a declaratory judgment action alleging
invalidity or noninfringement of any of the Patent Rights shall be brought
against Ixion, Licensors, at its option, shall have the right, within 30 days
after commencement of such action, to intervene and take over the sole defense
of the action at its own expense.
7.6 In any infringement suit as either party may institute to enforce
the Patent Rights pursuant to this Agreement, the other party hereto shall, at
the request and expense of the party initiating such suit, cooperate in all
respects and, to the extent possible, have its employees testify when
requested and make available relevant records, papers, information, samples,
specimens, and the like.
ARTICLE VIII - PRODUCT LIABILITY
8.1 Ixion shall at all times during the term of this Agreement and
thereafter, indemnify, defend, and hold Licensors harmless against all claims
and expenses, including legal expenses and reasonable attorneys' fees, whether
arising from a third party claim or resulting from Licensor's enforcing this
indemnification clause against Ixion, or arising out of the death of or injury
to any person or persons or out of any damage to property and against any
other claim, proceeding, demand, expense, or liability of any kind whatsoever
resulting from the production, manufacture, sale, use, lease, consumption, or
advertisement of the Licensed Products and/or Licensed Processes or arising
from any right or obligation of Ixion hereunder. This indemnification shall
not apply to any liability, damage, loss, or expense to the extent that it is
attributable to the negligence or intentional wrongdoing of the Licensors.
8.2 At such time as any product, process, or service relating to, or
developed pursuant to, this Agreement is being commercially distributed or
sold (other than for the purpose of obtaining regulatory approvals) by Ixion
or by a licensee, affiliate, or agent of Ixion, Ixion shall, at its sole cost
and expense, procure and maintain policies of comprehensive general liability
insurance naming Licensors as additional insureds. Such comprehensive general
liability insurance shall provide (a) product liability coverage, and (b)
broad form contractual liability coverage for Ixion's indemnification under
sections 8.1 and 8.2 above. Ixion may elect to self-insure.
8.3 Ixion shall provide Licensors with written evidence of such
insurance upon request, and shall provide Licensors with written notice at
least 45 days prior to the cancellation, non-renewal, or material change in
such comprehensive general liability insurance; if Ixion does not obtain
replacement insurance providing comparable coverage within such 45 day period,
Licensors shall have the right to terminate this Agreement.
8.4 Ixion shall maintain such comprehensive general liability
insurance beyond the expiration or termination of this Agreement during (a)
the period that any product, process, or service, relating to, or developed
pursuant to, this Agreement is being commercially distributed or sold (other
than for the purpose of obtaining regulatory approvals) by Ixion or by a
licensee, affiliate, or agent of Ixion, and (b) a reasonable period after the
period referred to in section 8.5 (a) above, which in no event shall be less
than 15 years.
8.5 In the event any such action is commenced or claim made or
threatened against Licensors or other Indemnitees as to which Ixion is
obligated to indemnify it or them or hold it or them harmless, Licensors or
the other Indemnitees shall promptly notify Ixion of such event. Ixion shall
assume the defense of, and may settle, that part of any such claim or action
or made against Licensors (or other Indemnitee) which relates to Ixion's
indemnification and Ixion may take such other steps as may be necessary to
protect itself. Ixion shall not be liable to Licensors or other Indemnitees
on account of any settlement of any such claim or litigation affected without
Ixion's consent. The right of Ixion to assume the defense of any action shall
be limited to that part of the action commenced against Licensors or other
Indemnitees which relates to Ixion's obligation of indemnification.
ARTICLE IX - DISCLAIMER OF WARRANTIES
9.1 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, Licensors
MAKES NO REPRESENTATIONS AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS
OR IMPLIED, INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, AND VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED
OR PENDING.
9.2 Licensors DOES NOT WARRANT THE VALIDITY OF THE PATENT RIGHTS LICENSED
HEREUNDER AND MAKES NO REPRESENTATION WHATSOEVER WITH REGARD TO THE SCOPE OF
THE LICENSED PATENT RIGHTS OR THAT SUCH PATENT RIGHTS MAY BE EXPLOITED BY
IXION OR ANY AFFILIATE OR SUBLICENSEE WITHOUT INFRINGING OTHER PATENTS.
ARTICLE X - ASSIGNMENT
10.1 This Agreement is not assignable.
ARTICLE XI - TERMINATION
11.1 If Ixion shall cease to carry on its business, this Agreement
shall terminate upon notice by Licensors.
11.2 Should Ixion fail to pay Licensors royalties due and payable
hereunder, Licensors shall have the right to terminate this Agreement on 90
days' notice, unless Ixion shall pay Licensors within the 90-day period, all
such royalties and interest due and payable. Upon the expiration of the 90-
day period, if Ixion shall not have paid all such royalties and interest due
and payable, the rights, privileges, and license granted hereunder shall
terminate.
11.3 Upon any material breach or default of this Agreement by Ixion,
other than those occurrences set out in sections 11.1 and 11.2 above, which
shall always take precedence in that order over any material breach or default
referred to in this section 11.3, Licensors shall have the right to terminate
this Agreement and the rights, privileges, and license granted hereunder by 90
days' notice to Ixion. Such termination shall become effective unless Ixion
shall have cured any such breach or default prior to the expiration of the 90-
day period.
11.4 Ixion shall have the right to terminate this Agreement at any
time
on 90 days' written notice to Licensors, and upon payment of all amounts due
Licensors through the effective date of the termination.
11.5 Upon termination of this Agreement for any reason, nothing
herein
shall be construed to release either party from any obligation that matured
prior to the effective date of such termination. Ixion and any sublicensee
thereof may, however, after the effective date of such termination, sell all
Licensed Products, and complete Licensed Products in the process of
manufacture at the time of such termination and sell the same, provided that
Ixion shall pay to Licensors the royalties thereon as required by Article IV
of this Agreement and shall submit the reports required by Article V hereof on
the sales of Licensed Products.
11.6 Upon termination of this Agreement for any reason, any
sublicense
not then in default shall continue in full force and effect except that
Licensors shall be substituted in place of the sublicensor; provided, however,
that the extent of Licensor's obligations under such sublicense shall be
consistent with (and not exceeding) its obligations under this Agreement.
11.7 Bankruptcy.
(a) Notice of Assumption or Rejection.
(i) In the event that either party files
or has filed against it a petition under the Federal
Bankruptcy Code (11 U.S.C. SS 1, et seq.) (the
"Bankruptcy Code"), is adjudged bankrupt, or files or
has filed against it a petition for reorganization or
arrangement under any law relating to bankruptcy or
similar laws for the protection of debtors, whether
under the laws of the United States and its political
subdivisions or otherwise, such party shall (1) notify
the other party thereof within ten days after the
filing of such petition or such adjudication, and (2),
within 30 days after the filing of such petition,
shall notify the other party of the party's assumption
or rejection of this Agreement, and shall file a
petition with the appropriate court for approval of
all other action as may be necessary to obtain the
approval of such petition and of such assumption or
rejection.
(ii) If such party does not: (1) within
thirty (30) days after the occurrence of any of the
foregoing events, notify the other party of its
assumption or rejection of this Agreement or file the
petition, or (2) thereafter diligently take all other
action necessary for the approval of the foregoing
petition or of such assumption or rejection, such
party shall be deemed to have rejected this Agreement.
Each party acknowledges that, for purposes of Section
365 of the Bankruptcy Code and similar provisions of
any other or future similar laws relating to any
party's assumption or rejection of any executory
contract, a period of 30 days after the date of any
filing or adjudication described above shall
constitute a reasonable time in which such party shall
assume or reject this Agreement and a party shall be
deemed to have not diligently taken all action
necessary for the approval of the foregoing petition
or of such assumption or rejection if such petition,
assumption or rejection is not approved by the
appropriate court within 60 days after the filing of
the petition for such assumption or rejection.
(b) Conditions to Assumption.
No election by any party, or any successor-in-
interest to such party, to assume this Agreement as
contemplated by Section (a) above shall be effective unless
each of the following conditions, each of which each party
acknowledges is commercially reasonable in the context of a
bankruptcy or similar proceeding, has been satisfied by such
party and each of the other parties has acknowledged such
satisfaction in writing:
(1) Cure. Such party has cured, or has
provided the other party adequate assurances that:
(A) Monetary Defaults.
Within ten days from the date of such assumption
such party will cure all monetary defaults under
this Agreement; and
(B) Non-Monetary Defaults.
Within 30 days from the date of such assumption
such party will cure all non-monetary defaults
under this Agreement.
(2) Pecuniary Loss. Such party has
compensated or has provided to the other party
adequate assurances that within ten days from the date
of assumption the other party will be compensated for
any pecuniary loss incurred by the party arising from
any default of such party under this Agreement prior
to the assumption.
(3) Future Performance. Such party has
provided the other party with adequate assurances of
the future performance of such party's obligations
under this Agreement.
(c) Termination. This Agreement shall terminate
upon the rejection of this Agreement as contemplated by this
Section by any party or successor-in-interest thereto.
(d) No Transfer. Neither any party's interest in
this Agreement nor any portion thereof shall pass to any
trustee, receiver, or assignee for the benefit of creditors,
or any other person or entity or otherwise by operation of
law under the Bankruptcy Code or the insolvency laws of any
state having jurisdiction of the person or property of such
party unless the other party shall consent to such transfer
in writing.
ARTICLE XII - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
12.1 Any payment, notice or other communication pursuant to this
Agreement shall be sufficiently made or given on the date of mailing if sent
to such party by first class mail, postage prepaid, addressed to it at its
address below or as it shall designate by written notice given to the other
party:
In the case of Licensors:
Randy S. Fischer
1014 21st Avenue South
Fargo, ND 58103
Roy A. Jensen
PO box 1460
Melrose, FL 32666
In the case of Ixion:
President
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
ARTICLE XIII - MISCELLANEOUS PROVISIONS
13.1 This Agreement shall be construed, governed, interpreted, and
applied in accordance with the laws of the State of Florida, except that
questions affecting the construction and effect of any patent shall be
determined by the law of the country in which the patent was granted.
13.2 This Agreement sets forth the entire agreement and understanding
of the parties hereto as to the subject matter hereof, and shall not be
subject to any change or modification except by the execution of a written
instrument subscribed to by the parties hereto.
13.3 The provisions of this Agreement are severable, and in the event
that any provisions of this Agreement shall be determined to be invalid or
unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
13.4 Ixion agrees to mark the Licensed Products sold in the United
States with all applicable United States patent numbers. All Licensed
Products shipped to or sold in other countries shall be marked in such a
manner as to conform with the patent laws and practice of the country of
manufacture or sale.
13.5 The failure of either party to assert a right hereunder or to
insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
13.6 (a) Anything in this Agreement to the contrary notwithstanding,
any and all knowledge, know-how, practices, process or other information of
any kind and in any form (hereinafter referred to as "Confidential
Information") disclosed or submitted, either orally, in writing or in other
tangible or intangible form which is designated as Confidential Information,
to either party by the other shall be received and maintained by the receiving
party in strict confidence and shall not be disclosed to any third party,
except that Ixion may disclose Confidential Information (pursuant to written
confidentiality agreements) to its lawyers, accountants, advisors, investors,
and potential investors. Furthermore, neither party shall use the said
Confidential Information for any purpose other than those purposes specified
in this Agreement. The parties may disclose Confidential Information to the
minimum number of its employees reasonably requiring access thereto for the
purposes of this Agreement provided, however, that prior to making any such
disclosures each such employee shall be apprised of the duty and obligation to
maintain Confidential Information in confidence and not to use such
information for any purpose other than in accordance with the terms and
conditions of this Agreement.
(b) Nothing contained herein will in any way restrict or impair
either parties right to use, disclose, or otherwise deal with any Confidential
Information which at the time of its receipt:
(i) Is generally available in the public domain, or thereafter
becomes available to the public through no act of the receiving party; or
(ii) Was independently known prior to receipt thereof, or made
available to such receiving party as a matter of lawful right by a third
party.
13.7 Licensors will use his best efforts to assist Ixion in the
transfer of the technology represented by the Patent Rights through
consultation, making available experimental data, or otherwise.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this Agreement as of the day set forth first above.
Randy S. Fischer, Ph.D. Ixion Biotechnology, Inc
By
Weaver H. Gaines
Chairman and Chief Executive Officer
Roy A. Jensen, Ph.D.
APPENDIX A
U.S.S.N. 5,187,071, issued February 16, 1993, entitled "Method for the
Selective Control of Weeds, Pests, and Microbes."
By Randy S. Fischer, Ph. D. and Roy A. Jensen, Ph.D.
APPENDIX B
Foreign countries in which Patent Rights shall be filed, prosecuted and
maintained in accordance with Article VI:
For
EMPLOYMENT AGREEMENT
AGREEMENT between Ixion Biotechnology, Inc., a Delaware corporation
(the "Company"), and Weaver H. Gaines (the "Executive"), dated as of August
31, 1994 (the "Agreement Date").
The Executive is currently employed as Chairman of the Board of
Directors and Chief Executive Officer of the Company. The Company wishes to
assure itself and the Executive of continuity of management both before or
after the event of a Change in Control of the Company, as hereinafter defined,
and to provide the Executive with the termination and other benefits set forth
in this Agreement in the event the Executive's employment with the Company
terminates under the circumstances described below.
NOW, THEREFORE, the Company and the Executive hereby agree as
follows:
1. OPERATION AND TERM OF AGREEMENT; CHANGE IN CONTROL
(A) Term. This Agreement shall be effective as of the Agreement
Date and shall continue in effect until the Expiration Date. The Expiration
Date shall initially be December 31, 1997, but commencing on January 1, 1997
and each January 1 thereafter, the Expiration Date shall automatically be
extended by one additional year unless, not later than September 30 of the
preceding year, the Company shall have given notice to the Executive that it
does not wish to extend the Expiration Date; provided, however, that if a
Change in Control shall have occurred prior to the original or extended
Expiration Date, the Expiration Date shall automatically be extended to the
third anniversary of the last day of the month in which the Change in Control
occurred.
(B) Change In Control. A change in Control means a change in
control of the Company which shall be deemed to have occurred if and when:
(i) the Company shall merge or consolidate with another
corporation in a transaction in which the Company is not the
surviving corporation, or the Company shall sell
substantially all of its assets to another corporation;
(ii) more than 35% of the Company's securities then entitled to vote
in the election of directors shall be acquired by any "person" (as
such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended); or
(iii) during any period of 24 consecutive months commencing on the
Agreement Date, individuals who at the beginning of such period were
members of the Board of Directors of the Company shall cease for any
reason to constitute a majority of its Board of Directors.
2. CERTAIN DEFINITIONS
(A) Period of Employment. The Period of Employment means the period
of time commencing on the Agreement Date and ending on the Expiration Date or
the Termination Date, whichever is earlier.
(B) Contract Term. The Contract Term means the period of time
commencing on the Agreement Date and ending on the Expiration Date.
(C) Termination Date. The Termination Date means the date as of
which the Executive's employment with the Company shall cease or be deemed to
have ceased in the manner specified in Section 6 or Section 7.
3. EXECUTIVE'S RESPONSIBILITIES; LOCATION
(A) Position, Duties, Responsibilities. The Executive shall serve
in the position and have the duties and responsibilities of Chairman of the
Board and Chief Executive Officer.
(B) Best Efforts. During the Period of Employment, the Executive
shall devote substantially his full time, best efforts, and undivided
attention during normal business hours to the business and affairs of the
Company, except for reasonable vacations, illness, or incapacity. The
Executive is aware that reasonable performance objectives may be established
by the Company's Board of Directors in consultation with the Executive, for
Company-wide performance and for performance by the Executive. The Executive
agrees to work diligently throughout the Period of Employment to achieve any
such performance objectives that shall then exist.
(C) Principal Business Office. During the Period of Employment, the
Executive's principal business office shall be located in or near Gainesville,
Florida.
4. RESTRICTIVE COVENANTS
(A) Noncompetition. The Executive agrees that during the Period of
Employment and for the six-month period immediately following the Period of
Employment, the Executive shall not, directly or indirectly, in any capacity,
engage in any business which is substantially competitive with any business
then actively conducted by the Company or any of its affiliates or
subsidiaries, and the Executive shall not undertake to consult with or advise
any such competitive business or otherwise, directly or indirectly, engage in
any activity which is substantially competitive with or in any way adversely
and substantially affects any activity of the Company or any of its affiliates
or subsidiaries.
(B) Nondisclosure. Except as expressly provided herein, the
Executive agrees that during the Period of Employment and thereafter, the
Executive shall not make use of, disclose, divulge, or make accessible, to any
third party, any information of a secret or confidential nature known to the
Executive in the course of his employment with the Company or any of its
affiliates or subsidiaries until such information has come into the public
domain or has otherwise ceased to be secret or confidential.
(C) Inventions. All patentable and unpatentable inventions,
discoveries, and ideas, which are made or conceived by the Executive during
the term of this Agreement shall be the Company's sole and exclusive property
throughout the world. Promptly upon conception of such invention, discovery,
or idea, the Executive will disclose it to the Company which shall have full
power and authority to file and prosecute patent applications throughout the
world thereon and to procure and maintain patents thereon. The Executive
shall, at the Company's request and expense, execute documents and perform
such acts as counsel may deem advisable, to confirm in the Company all right,
title, and interest throughout the world, in and to, such invention,
discovery, or idea, and all patent applications, patents, and copyrights
thereon, and to enable and assist the Company in procuring, maintaining,
enforcing and defending patents, petty patents, copyrights, and other
applicable statutory protection throughout the world on any such invention,
discovery, or idea which may be patentable or copyrightable.
(D) Specific Performance and Injunctive Relief. The Executive
acknowledges and agrees that the Company or its affiliates and subsidiaries
will suffer irreparable injury if the provisions of this Section 4 are not
honored, that damages resulting from such injury will be incapable of being
precisely measured, and that the Company and its subsidiaries and affiliates
will not have an adequate remedy at law to redress the harm which such
violation shall cause. Accordingly, the Executive agrees that the Company
shall have the rights and remedies of specific performance and injunctive
relief, in addition to any other rights or remedies that may be available at
law or in equity, in respect of any failure, or threatened failure, on the
part of the Executive to comply with the provisions of this Section 4,
including, but not limited to, temporary restraining orders and temporary
injunctions to restrain any violation or threatened violation of this
Agreement by the Executive.
5. COMPENSATION, PERQUISITES, AND EMPLOYEE BENEFITS
(A) Base Compensation. For all substantially full time services
rendered during the Period of Employment, the Executive shall receive annual
base compensation at an initial rate of $75,000, which shall be increased, at
least annually, in accordance with the Company's regular administrative
practices generally applicable to its senior executives. At the Agreement
Date, such rate is acknowledged to be below the median base compensation as
reported by industry surveys relating to private companies of equivalent size.
Upon a determination by the Board of Directors that the Company has obtained
adequate initial financing, the Executive's base compensation shall be
increased to not less than the median base compensation as reported by the
most recent edition of Leadership in Biotechnology or any substantially
equivalent compensation survey chosen by the Board of Directors, and
thereafter, during the Period of Employment, shall not fall below such median
as reported from time to time in such survey. The Executive's cash base
compensation shall never be less than the base compensation paid to any other
senior management executive of the Company.
(B) Incentive Compensation. During the Period of Employment, the
Executive shall be and continue to be a full participant in the Company's
Annual Bonus Plan and Stock Option Plans (the "Incentive Plans"), as the
Incentive Plans are in effect from time to time with such improvements in the
Incentive Plans or other incentive compensation plans as may from time to time
be made in accordance with the practices of the Company. The Executive shall
be entitled to participate in any other incentive compensation plans generally
available to senior executives of the Company. If any of the Incentive Plans
are terminated or discontinued, the Executive shall be entitled to participate
in other incentive compensation plans with terms at least as favorable to the
Executive as the Incentive Plans in effect prior to the termination or
discontinuance of the Incentive Plans.
(C) Perquisites. During the Period of Employment, the Executive
shall be entitled to one club membership to be used for business purposes, and
shall be entitled to such other perquisites and fringe benefits, as shall be
approved by the Board of Directors. Upon a determination by the Board of
Directors that the Company has obtained adequate initial financing, the
Executive's perquisites shall include such perquisites generally available to
officers of his rank at companies of equivalent size and status in the
biotechnology industry, including without limitation a leased automobile,
first class air travel, additional club memberships, supplemental retirement
income, financial and legal counseling, and other perquisites.
(D) Employee Benefits. During the Period of Employment, the
Executive shall be entitled to participate in all employee benefit plans and
programs as in effect for senior executives of the Company ("Plans") under the
terms of the Plans, with such improvements in the Plans as may from time to
time be made in accordance with the practices of the Company. The Executive
shall be entitled to participate in any employee benefit plans and programs
generally available to senior executives of the Company. If any of the Plans
are terminated or discontinued, the Executive shall be entitled to participate
in other employee benefit plans with terms at least as favorable to the
Executive as the Plans as in effect prior to the termination or discontinuance
of the Plans.
(E) Other Obligations of the Company. Any increases in base and
incentive compensation, perquisites or employee benefits under this Agreement
or otherwise shall not diminish any other obligation of the Company hereunder.
6. DEATH OR DISABILITY
(A) Death. If the Executive should die during the Period of
Employment, his employment shall be deemed to have ceased on the last day of
the month in which death shall have occurred.
(B) Disability. "Disability" shall mean an illness or accident
which the Board of Directors determines in its discretion will or has
prevented the Executive from performing his duties under this Agreement for a
period of six consecutive months. In the event that the Executive incurs a
Disability during the Period of Employment, his employment shall be deemed to
have ceased on the last day of such six-month period.
7. TERMINATION
(A) Cause. Upon a determination by the Board of Directors, the
Company shall have the right at any time to terminate the Executive's
employment with the Company. The termination of the Executive's employment by
the Company during the Contract Term shall be deemed to be for "cause" only if
such termination shall be the result of any of the following:
(i) an act or acts of dishonesty by the Executive resulting
in conviction for a felony or conviction of a misdemeanor
involving moral turpitude;
(ii) a deliberate and intentional failure by the Executive
during the Period of Employment (except by reason of
incapacity due to illness or accident) to comply with the
provisions of this Agreement relating to the time and best
efforts to be devoted by the Executive to the affairs of the
Company;
(iii) the Executive's gross misconduct, if such conduct
results in demonstrably material injury to the Company; or
(iv) following a unanimous vote of the Board of Directors (the
Executive abstaining), the Board determines that the Executive
materially failed to meet the reasonable performance objectives
established by the Board for Company-wide performance and for
performance by the Executive;
provided that notice of such termination is given in accordance with Section
7(C) below.
(B) Good Reason. The Executive shall have the right at any time to
terminate his employment with the Company. Termination by the Executive shall
be deemed to be for "Good Reason" only if such termination shall be the result
of the following:
(i) a reduction during the Period of Employment in the
current level of the Executive's aggregate compensation,
including his annual base compensation, Annual Bonus Plan
awards, Stock Option Plan awards, employee benefit plan
coverages, and perquisites (other than a reduction in awards
or benefits that is generally applicable to participants in
a plan in accordance with the terms of the plan);
(ii) a diminishment during the Period of Employment in the
Executive's position, powers, authority, duties, or
responsibilities, or the business to which those powers,
authority, duties, or responsibilities apply; removal during
the Period of Employment of the Executive from the highest
office held on or after the Agreement Date; or change during
the Period of Employment in the Executive's chain of
supervision as it existed as of the Agreement Date (unless
as a result of, and only during, Executive's Disability); or
(iii) a material beach of this Agreement by the Company;
provided that notice of the Executive's election to terminate his employment
under this Agreement is given in accordance with Section 7(C) below. Failure
to elect to terminate with respect to one event giving rise to Good Reason
does not preclude the Executive from making the election with respect to a
subsequent event.
(C) Termination Procedure.
(1) Notice.
(a) Notice of termination of employment under this Agreement
shall be provided in writing by the Company or the Executive, as applicable,
and shall specify the date as of which the Executive's employment shall be
deemed to have ceased, which date shall in no event be earlier than 60 days
from the date of such notice.
(b) In the event that the Company elects to terminate employment,
the Company shall provide to the Executive the notice described in Section
7(C)(1)(a) above. If termination is alleged to be for Cause, such notice
shall also state that the Executive was guilty of conduct set forth in Section
7(A), with the particulars thereof specified in detail.
(c) In the event that the Executive elects to terminate
employment, the Executive shall provide to the Company the notice described in
Section 7(C)(1)(a) above. If termination is alleged to be for Good Reason,
such notice shall also specify the reason for such termination, as set forth
in Section 7(B), with the particulars thereof specified in detail, and shall
be given, except in the case of a continuing breach, within three calendar
months after the most recent event giving rise to Good Reason.
(2) Cure.
(a) In the case of the Executive's alleged breach or gross
misconduct set forth in Sections 7(A)(ii) or (iii), the Executive shall be
given the opportunity to remedy such alleged breach or gross misconduct within
30 days from his receipt of the notice referred to above, or take all
reasonable steps to that end during such 30-day period and thereafter.
(b) In the case of the Executive's allegation of Good Reason, the
Company shall be given the opportunity to remedy the alleged Good Reason
within 30 days from its receipt of the notice referred to above, or take all
reasonable steps to that end during such 30-day period and thereafter.
(3) Arbitration. In the event that the Executive's employment
shall be terminated by the Company and such termination is alleged to be for
Cause, the Executive shall have the right, in addition to all other rights and
remedies provided by law or equity, to seek arbitration as described below.
In the event that the Executive's employment shall be terminated by the
Executive and such termination is alleged to be for Good Reason, the Company
shall have the right, in addition to all other rights and remedies provided by
law or equity, to seek arbitration as described below. Such arbitration shall
be sought in Alachua County, State of Florida, under the rules of the American
Arbitration Association, by serving notice to arbitrate upon the other party
no more than 60 days after such party received the notice of termination
referred to above.
8. CONSEQUENCES OF TERMINATION, DEATH OR DISABILITY
(A) Termination by the Company Other Than for Cause or by the
Executive for Good Reason. In the event of a termination by the Company of
the Executive's employment during the Contract Term other than for Cause or by
the Executive for Good Reason, the Company shall, as liquidated damages, pay
to the Executive and provide him, in lieu of all other rights, remedies,
damages, and relief to which he might otherwise be entitled under this
Agreement, with the benefits described below in this Section 8(A):
(1) Severance. A lump-sum payment in an amount equal to (i) the
aggregate base compensation at the then current rate payable through the
Expiration Date but not less than one times Executive's base compensation in
effect on the Termination Date or, (ii) in event of a Change of Control, the
lesser of such amount and 299% of the "base amount" of the Executive as
determined under section 280G of the Internal Revenue Code of 1986. This
amount shall be reduced by any severance payments made to the Executive under
any other employment contract or severance arrangement with the Company.
(2) Annual Incentive Compensation. A payment in respect of the
annual incentive compensation of the Executive of the following amounts:
(a) any Annual Bonus payments awarded for a year prior to the
year in which the Termination Date occurs but not paid as of the Termination
Date, which amount shall not be less than the Executive's annual base
compensation for such year multiplied by item (ii) of Section 8(A)(2)(b)
below; and
(b) an amount in respect of the annual incentive compensation
that would have been earned in respect of the year in which such Termination
Date occurs, in an amount calculated by multiplying (i) the rate of annual
base compensation in effect for the Executive immediately prior to the
Termination Date by (ii) the average of the annual awards under the Annual
Bonus Plan payable in respect of the two calendar years immediately preceding
the year for which payment is made, with each such award expressed as a
percentage of the annual base compensation paid to the Executive for the
respective calendar years.
(3) Stock Option Plan. With respect to the Company's Stock
Option Plan, the following:
(a) All unvested options shall immediately vest on the
Termination Date;
(b) Any option which is unexerciseable shall be accelerated to
become immediately exercisable on the Termination Date; and
(c) All unexercised options shall remain exercisable for the
maximum period then permitted by the Internal Revenue Code of the United
States.
(4) Restricted Stock; Right to Purchase Stock. All unvested
restricted stock shall immediately vest on the Termination Date. Executive
shall have the right to convert all, or a portion, of any outstanding balances
of any loan to the Company, or any deferred compensation account into voting
common stock of the Company at a price equal to the lowest price (after
adjustment for stock splits or stock dividends) at which common stock has been
sold (other than pursuant to the exercise of outstanding options under the
Stock Option Plan, the Board Retainer Plan, or any similar plan) at any time
during the 24 months immediately preceding the Termination Date. Such right
shall be exercisable not later than 60 days after the Termination Date.
(5) Other Compensation and Benefits. With respect to
compensation and benefits other than those specified in this Section 8, the
Executive shall receive the amounts and arrangements, if any, ordinarily
provided to senior executives of the Company upon termination of employment in
accordance with the plans, programs, and practices of the Company applicable
to senior executives, as in effect on the Termination Date or, at Executive's
election, on the date of a Change in Control. In addition, the Executive
shall receive the amounts and arrangements provided upon termination of
employment in accordance with the Company's Deferred Compensation Plan, the
subordinated note agreement, and any other agreement between the Company and
the Executive executed on or after the Agreement Date.
(B) Disability or Death.
(1) Disability. In the event of the Executive's Disability
during the Period of Employment, the Executive shall be entitled to the
compensation and benefits provided for in Sections 5(A), (C) and (D) of this
Agreement for the Period of Employment. Payment shall be without prejudice to
any other payments due in respect of the Executive's death or Disability.
(2) Death. In the event of the death of the Executive during the
Period of Employment, the Executive's representative shall be entitled to the
compensation provided in Section 5(A) of this Agreement through the Period of
Employment. Payments shall be without prejudice to any other payment due in
respect of the Executive's death or Disability.
(3) Incentive Compensation. In the event of the Executive's
Disability or death during the Period of Employment, the Company shall pay the
Executive or his legal representative, in addition to the payments required by
this Section 8(B): an award under the Annual Bonus Plan, determined in
accordance with Section 8(A)(2) on a pro-rata basis, for the portion of the
calendar year prior to the Termination Date (or, in the case of Disability,
the earlier of the Termination Date and the Expiration Date).
(4) Reduction of Payments. The amount of any payments due under
this Section 8(B) shall be reduced by any payments to which the Executive is
entitled for the same period because of disability under any disability
benefit plan of the Company providing salary continuation.
(C) Termination by the Company for Cause or by the Executive Other
Than for Good Reason. In the event of a termination by the Company of the
Executive's employment during the Contract Term for Cause or by the Executive
other than for Good Reason, the Executive shall be entitled to the
compensation and benefits ordinarily provided to senior executives of the
Company upon termination of employment in accordance with the plans, programs,
and practices of the Company applicable to senior executives as in effect on
the Termination Date of the date of the Change in Control, at Executive's
election.
(D) Time of Payment. All lump-sum payments to be made by the
Company under this Section 8 shall be made within five days after the
Termination Date. Annuity payments shall commence on the last day of the
calendar month in which the Termination Date occurs.
9. INTEREST ASSUMPTIONS
Determination of any present values relating to this Agreement for
purposes of sections 280G and 4999 of the Internal Revenue Code shall be based
upon a discount rate equal to 120 percent of the applicable Federal rate
(determined under section 1274(d) of the Internal Revenue Code of 1986 and the
regulations thereunder), compounded semiannually. The Executive shall be
deemed to have elected the discount rate as in effect on the Agreement Date.
The Company hereby agrees to use the discount rate that is deemed to be
elected by the Executive.
10. WITHHOLDING
All payments required to be made by the Company hereunder to the
Executive shall be subject to the withholding of such amounts, if any,
relating to tax, excise tax, and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law or
regulation.
11. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES
(A) Indemnification and Insurance. The Company will indemnify the
Executive (including payment of expenses in advance of final disposition of
the proceeding) to the fullest extent permitted by the laws of the State of
Florida and the Certificate of Incorporation and By-Laws of the Company, in
each case as in effect on the date of the Change in Control or on the
Termination Date, whichever affords greater protection to the Executive; and
the Executive shall be entitled to the protection of any insurance policies
the Company may elect to maintain generally for the benefit of its directors
and officers, against all costs, charges, and expenses whatsoever incurred or
sustained by him in connection with any action, suit, or proceeding to which
he may be made a party by reason of his being or having been a director,
officer, or employee of the Company or any of its subsidiaries or affiliates
or his serving or having served any other enterprise as a director, officer,
or employee at the request of the Company. The Company shall cause to be
maintained in effect for not less than six years from the Termination Date
policies of directors' and officers' liability insurance of at least the same
coverage as those policies, if any, maintained by the Company on the
Termination Date or the date of the Change in Control and containing terms and
conditions which are no less advantageous than such policies, or if such
coverage is not available, the best available coverage for equal cost to the
Company.
(B) Legal Expenses. In the event of any litigation, arbitration, or
other proceeding between the Company and the Executive with respect to the
subject matter of this Agreement or the enforcement of the Executive's rights
hereunder, the Company shall reimburse the Executive, regardless of the
outcome, for all of his reasonable costs and expenses relating to such
litigation, arbitration, or other proceeding, including, without limitation,
reasonable attorneys' fees and expenses. In no event shall the Executive be
required to reimburse the Company for any of the costs or expenses relating to
such litigation, arbitration, or other proceeding.
12. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be in writing and shall be sufficiently given if and
when mailed in the continental United States by registered or certified mail
or personally delivered to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:
To the Company: Ixion Biotechnology, Inc.
One Progress Blvd., Box 26
Alachua, FL 32615
To the Executive: Weaver H. Gaines
5142 S.W. 92 Court
Gainesville, FL 32615
13. REGISTRATION RIGHTS
(A) Mandatory Registration under the Act. Provided the Company is
then a public company, promptly after the Company's receipt of a request, made
by the Executive at any time during the Contract Term or prior to the third
anniversary of the Termination Date, whichever is later, to register under the
Securities Act of 1933 (the "Act"), at least 100,000 shares of Company common
stock owned by Executive, to enable such Executive to make an underwritten or
other public secondary offering thereof, the Company shall cause a
registration statement to be filed with the Securities and Exchange
Commission (the "Commission") with respect to the number of such shares
specified in the request, and shall use its best efforts to cause the
registration statement to become effective. The Company shall not be required
to cause more than one registration statement to be filed pursuant to this
Section 13(A). The Company shall be entitled to include other securities of
the Company to be offered either by the Company or other stockholders of the
Company in any such registration statement; provided, however, that the
Company or the holder or holders of other securities of the Company to be
registered, as the case may be, shall agree to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with any such registration and the Executive requesting the registration shall
have control of such registration and may require that any such other
securities of the Company not be included in the registration statement if he
is advised by the investment banking firm managing the underwriting that it
reasonably believes that such inclusion would adversely affect the offering of
the shares to be covered by the proposed registration statement. The Company
shall be entitled to postpone the filing of any such registration statement
for a reasonable period of time if the Company is, at the time at which it
receives any such request by Executive, conducting or is about to conduct, an
offering of its securities, and the Company is advised by its investment
banking firm that such offering would be adversely affected by the
registration requested.
(B) Inclusion in Other Registrations. If, at any time during the
period referred to in section 13(A) above, the Company shall determine or be
required to register any shares of its common stock (whether on behalf of
itself or any other person) under the Act on Forms S-1, S-2, S-3, SB-1, or SB-
2 (or if such forms are rescinded by the Commission, the forms which supplant
such forms), excluding any registration for the offering and sale of
securities of the Company to its employees, it will notify Executive in order
that he may request that all or a part of the any shares of common stock owned
by him be included in the registration statement. If requested by the
Executive in writing within 20 days after the Company's notice, the Company
will include the requested number of shares in such registration statement.
Any such request shall include the agreement of the Executive requesting the
registration to execute and deliver the underwriting agreement, if any, to be
executed and delivered in connection with such registration. The Company may,
however, decline to include all or a part of the requested number of shares in
a registration statement pursuant to this section if it is advised by the
investment banking firm managing the underwriting that such inclusion would
adversely affect the offering of the shares to be covered by the proposed
registration statement.
The Company shall use its best efforts to file such post-effective
amendments to any registration statement described in this Section 13(B) as
shall be necessary to keep it effective until six months after the effective
date of the registration statement or the date on which all of the shares of
the Purchasers covered thereunder shall have been sold, whichever is earlier.
As a condition to the Company's obligation under this Section 13(B)
to cause a registration statement or amendment to be filed or shares to be
included in a registration statement, the Executive shall provide such
information and execute such documents as may reasonably be required in
connection with such registration. In addition, the Company shall not be
required to include such shares in a registration statement if it shall have
received opinions of its and the Executive's counsel to the effect that the
proposed disposition of such shares may be effected without registration under
the Act.
14. GENERAL PROVISIONS
(A) Determinations of Value. Whenever, under this Agreement, it is
necessary to determine whether one benefit is less than, equal to, or larger
than another in value (whether or not such benefits are provided under this
Agreement), such determination shall be made using the assumptions described
in Section 9.
(B) Other Existing Agreements. Except as specifically set forth
in this Agreement, this Agreement shall supersede any right under any other
agreement relating to terms of employment between the Company and the
Executive existing as of the Agreement Date.
(C) Limitation. This Agreement shall not confer any right or
impose any obligation on the Executive to continue in the employ of the
Company, or limit the right of the Company or the Executive to terminate his
employment.
(D) Company Set-Off and Counterclaim. The Company shall have no
right of set-off or counterclaim in respect of any claim, debt, or obligation
against any payments provided for in this Agreement.
(E) Assignment of Interest. No right to or interest in any
payments shall be assignable by the Executive; provided, however, that this
provision shall not preclude him from designating one or more beneficiaries to
receive any amount that may be payable after his death and shall not preclude
his executor or administrator from assigning any right hereunder to the person
or persons entitled thereto.
(F) Amendment, Modification and Waiver. No provision of this
Agreement may be amended, modified or waived unless such amendment,
modification or waiver shall be agreed to in writing signed by the Executive
and by a duly authorized Company officer.
(G) Enforceability. If any provision of this Agreement shall be
determined to be invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(H) Entirety of Agreement. This Agreement constitutes the entire
agreement between the Company and the Executive relating to the subject matter
hereof. Any compensation or benefits to which the Executive is entitled under
this Agreement shall be provided based solely upon its terms, without regard
to any materials used in the preparation or consideration of this Agreement,
including any summary of terms or estimate of amounts relating to this
Agreement.
(I) Company and Successors. This Agreement shall be binding upon
and inure to the benefit of the Company and any successor of the Company
including, without limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the assets of the Company,
whether by merger, consolidation, sale, or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company.
(J) Definition of Executive. The word "Executive" shall,
wherever appropriate, include his dependents, beneficiaries, and legal
representatives.
(K) Conflict of Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Florida, without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
IXION BIOTECHNOLOGY
By
David C. Peck
President
[SEAL]
ATTEST:
Secretary
Weaver H. Gaines
Executive
Employwg.Agr
EMPLOYMENT AGREEMENT
AGREEMENT between Ixion Biotechnology, Inc., a Delaware corporation
(the "Company"), and David C. Peck (the "Executive"), dated as of August 31,
1994 (the "Agreement Date").
The Executive is currently employed as President and Chief Financial
Officer of the Company. The Company wishes to assure itself and the Executive
of continuity of management both before or after the event of a Change in
Control of the Company, as hereinafter defined, and to provide the Executive
with the termination and other benefits set forth in this Agreement in the
event the Executive's employment with the Company terminates under the
circumstances described below.
NOW, THEREFORE, the Company and the Executive hereby agree as
follows:
1. OPERATION AND TERM OF AGREEMENT; CHANGE IN CONTROL
(A) Term. This Agreement shall be effective as of the Agreement
Date and shall continue in effect until the Expiration Date. The Expiration
Date shall initially be December 31, 1997, but commencing on January 1, 1997
and each January 1 thereafter, the Expiration Date shall automatically be
extended by one additional year unless, not later than September 30 of the
preceding year, the Company shall have given notice to the Executive that it
does not wish to extend the Expiration Date; provided, however, that if a
Change in Control shall have occurred prior to the original or extended
Expiration Date, the Expiration Date shall automatically be extended to the
third anniversary of the last day of the month in which the Change in Control
occurred.
(B) Change In Control. A change in Control means a change in
control of the Company which shall be deemed to have occurred if and when:
(i) the Company shall merge or consolidate with another
corporation in a transaction in which the Company is not the
surviving corporation, or the Company shall sell
substantially all of its assets to another corporation;
(ii) more than 35% of the Company's securities then entitled to vote
in the election of directors shall be acquired by any "person" (as
such term is used in Section 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended); or
(iii) during any period of 24 consecutive months commencing on the
Agreement Date, individuals who at the beginning of such period were
members of the Board of Directors of the Company shall cease for any
reason to constitute a majority of its Board of Directors.
2. CERTAIN DEFINITIONS
(A) Period of Employment. The Period of Employment means the period
of time commencing on the Agreement Date and ending on the Expiration Date or
the Termination Date, whichever is earlier.
(B) Contract Term. The Contract Term means the period of time
commencing on the Agreement Date and ending on the Expiration Date.
(C) Termination Date. The Termination Date means the date as of
which the Executive's employment with the Company shall cease or be deemed to
have ceased in the manner specified in Section 6 or Section 7.
3. EXECUTIVE'S RESPONSIBILITIES; LOCATION
(A) Position, Duties, Responsibilities. The Executive shall serve
in the position and have the duties and responsibilities of President and
Chief Financial Officer.
(B) Best Efforts. During the Period of Employment, the Executive
shall devote the equivalent of full time, best efforts, and undivided
attention to the business and affairs of the Company, except for reasonable
vacations, illness, or incapacity, as required by the Company's business
activities. The Executive is aware that reasonable performance objectives may
be established by the Company's Board of Directors upon recommendation by the
Chairman after consultation with the Executive, for Company-wide performance
and for performance by the Executive. The Executive agrees to work diligently
throughout the Period of Employment to achieve any such performance objectives
that shall then exist.
(C) Principal Business Office. During the Period of Employment, the
Executive's principal business office shall be located in or near New Hope,
Pennsylvania.
4. RESTRICTIVE COVENANTS
(A) Noncompetition. The Executive agrees that during the Period of
Employment and for the six-month period immediately following the Period of
Employment, the Executive shall not, directly or indirectly, in any capacity,
engage in any business which is substantially competitive with any business
then actively conducted by the Company or any of its affiliates or
subsidiaries, and the Executive shall not undertake to consult with or advise
any such competitive business or otherwise, directly or indirectly, engage in
any activity which is substantially competitive with or in any way adversely
and substantially affects any activity of the Company or any of its affiliates
or subsidiaries.
(B) Nondisclosure. Except as expressly provided herein, the
Executive agrees that during the Period of Employment and thereafter, the
Executive shall not make use of, disclose, divulge, or make accessible, to any
third party, any information of a secret or confidential nature known to the
Executive in the course of his employment with the Company or any of its
affiliates or subsidiaries until such information has come into the public
domain or has otherwise ceased to be secret or confidential.
(C) Inventions. All patentable and unpatentable inventions,
discoveries, and ideas, which are made or conceived by the Executive during
the term of this Agreement shall be the Company's sole and exclusive property
throughout the world. Promptly upon conception of such invention, discovery,
or idea, the Executive will disclose it to the Company which shall have full
power and authority to file and prosecute patent applications throughout the
world thereon and to procure and maintain patents thereon. The Executive
shall, at the Company's request and expense, execute documents and perform
such acts as counsel may deem advisable, to confirm in the Company all right,
title, and interest throughout the world, in and to, such invention,
discovery, or idea, and all patent applications, patents, and copyrights
thereon, and to enable and assist the Company in procuring, maintaining,
enforcing and defending patents, petty patents, copyrights, and other
applicable statutory protection throughout the world on any such invention,
discovery, or idea which may be patentable or copyrightable.
(D) Specific Performance and Injunctive Relief. The Executive
acknowledges and agrees that the Company or its affiliates and subsidiaries
will suffer irreparable injury if the provisions of this Section 4 are not
honored, that damages resulting from such injury will be incapable of being
precisely measured, and that the Company and its subsidiaries and affiliates
will not have an adequate remedy at law to redress the harm which such
violation shall cause. Accordingly, the Executive agrees that the Company
shall have the rights and remedies of specific performance and injunctive
relief, in addition to any other rights or remedies that may be available at
law or in equity, in respect of any failure, or threatened failure, on the
part of the Executive to comply with the provisions of this Section 4,
including, but not limited to, temporary restraining orders and temporary
injunctions to restrain any violation or threatened violation of this
Agreement by the Executive.
5. COMPENSATION, PERQUISITES, AND EMPLOYEE BENEFITS
(A) Base Compensation. For all substantially full time services
rendered during the Period of Employment, the Executive shall receive annual
base compensation at an initial rate of $60,000, which shall be increased, at
least annually, in accordance with the Company's regular administrative
practices generally applicable to its senior executives. At the Agreement
Date, such rate is acknowledged to be below the median base compensation as
reported by industry surveys relating to private companies of equivalent size.
Upon a determination by the Board of Directors that the Company has obtained
adequate initial financing, the Executive's base compensation shall be
increased to not less than the median base compensation as reported by the
most recent edition of Leadership in Biotechnology or any substantially
equivalent compensation survey chosen by the Board of Directors, and
thereafter, during the Period of Employment, shall not fall below such median
as reported from time to time in such survey. The Executive's base
compensation shall never be less than the base compensation paid to any other
senior management executive of the Company other than the Chairman.
(B) Incentive Compensation. During the Period of Employment, the
Executive shall be and continue to be a full participant in the Company's
Annual Bonus Plan and Stock Option Plans (the "Incentive Plans"), as the
Incentive Plans are in effect from time to time with such improvements in the
Incentive Plans or other incentive compensation plans as may from time to time
be made in accordance with the practices of the Company. The Executive shall
be entitled to participate in any other incentive compensation plans generally
available to senior executives of the Company. If any of the Incentive Plans
are terminated or discontinued, the Executive shall be entitled to participate
in other incentive compensation plans with terms at least as favorable to the
Executive as the Incentive Plans in effect prior to the termination or
discontinuance of the Incentive Plans.
(C) Perquisites. During the Period of Employment, the Executive
shall be entitled to one club membership to be used for business purposes, and
shall be entitled to such other perquisites and fringe benefits, as shall be
approved by the Board of Directors. Upon a determination by the Board of
Directors that the Company has obtained adequate initial financing, the
Executive's perquisites shall include such perquisites generally available to
officers of his rank at companies of equivalent size and status in the
biotechnology industry, including without limitation a leased automobile,
first class air travel, additional club memberships, supplemental retirement
income, financial and legal counseling, and other perquisites.
(D) Employee Benefits. During the Period of Employment, the
Executive shall be entitled to participate in all employee benefit plans and
programs as in effect for senior executives of the Company ("Plans") under the
terms of the Plans, with such improvements in the Plans as may from time to
time be made in accordance with the practices of the Company. The Executive
shall be entitled to participate in any employee benefit plans and programs
generally available to senior executives of the Company. If any of the Plans
are terminated or discontinued, the Executive shall be entitled to participate
in other employee benefit plans with terms at least as favorable to the
Executive as the Plans as in effect prior to the termination or discontinuance
of the Plans.
(E) Other Obligations of the Company. Any increases in base and
incentive compensation, perquisites or employee benefits under this Agreement
or otherwise shall not diminish any other obligation of the Company hereunder.
6. DEATH OR DISABILITY
(A) Death. If the Executive should die during the Period of
Employment, his employment shall be deemed to have ceased on the last day of
the month in which death shall have occurred.
(B) Disability. "Disability" shall mean an illness or accident
which the Board of Directors determines in its discretion will or has
prevented the Executive from performing his duties under this Agreement for a
period of six consecutive months. In the event that the Executive incurs a
Disability during the Period of Employment, his employment shall be deemed to
have ceased on the last day of such six-month period.
7. TERMINATION
(A) Cause. Upon a determination by the Board of Directors, the
Company shall have the right at any time to terminate the Executive's
employment with the Company. The termination of the Executive's employment by
the Company during the Contract Term shall be deemed to be for "cause" only if
such termination shall be the result of any of the following:
(i) an act or acts of dishonesty by the Executive resulting
in conviction for a felony or conviction of a misdemeanor
involving moral terpitude;
(ii) a deliberate and intentional failure by the Executive
during the Period of Employment (except by reason of
incapacity due to illness or accident) to comply with the
provisions of this Agreement relating to the time and best
efforts to be devoted by the Executive to the affairs of the
Company;
(iii) the Executive's gross misconduct, if such conduct
results in demonstrably material injury to the Company; or
(iv) following a unanimous vote of the Board of Directors (the
Executive abstaining), the Board determines that the Executive
materially failed to meet the resonable performance objectives
established by the Board for Company-wide performance and for
performance by the Executive;
provided that notice of such termination is given in accordance with Section
7(C) below.
(B) Good Reason. The Executive shall have the right at any time to
terminate his employment with the Company. Termination by the Executive shall
be deemed to be for "Good Reason" only if such termination shall be the result
of the following:
(i) a reduction during the Period of Employment in the
current level of the Executive's aggregate compensation,
including his annual base compensation, Annual Bonus Plan
awards, Stock Option Plan awards, employee benefit plan
coverages, and perquisites (other than a reduction in awards
or benefits that is generally applicable to participants in
a plan in accordance with the terms of the plan);
(ii) a diminishment during the Period of Employment in the
Executive's position, powers, authority, duties, or
responsibilities, or the business to which those powers,
authority, duties, or responsibilities apply; removal during
the Period of Employment of the Executive from the highest
office held on or after the Agreement Date; or change during
the Period of Employment in the Executive's chain of
supervision as it existed as of the Agreement Date (unless
as a result of, and only during, Executive's Disability); or
(iii) a material beach of this Agreement by the Company;
provided that notice of the Executive's election to terminate his employment
under this Agreement is given in accordance with Section 7(C) below. Failure
to elect to terminate with respect to one event giving rise to Good Reason
does not preclude the Executive from making the election with respect to a
subsequent event.
(C) Termination Procedure.
(1) Notice.
(a) Notice of termination of employment under this Agreement
shall be provided in writing by the Company or the Executive, as applicable,
and shall specify the date as of which the Executive's employment shall be
deemed to have ceased, which date shall in no event be earlier than 60 days
from the date of such notice.
(b) In the event that the Company elects to terminate employment,
the Company shall provide to the Executive the notice described in Section
7(C)(1)(a) above. If termination is alleged to be for Cause, such notice
shall also state that the Executive was guilty of conduct set forth in Section
7(A), with the particulars thereof specified in detail.
(c) In the event that the Executive elects to terminate
employment, the Executive shall provide to the Company the notice described in
Section 7(C)(1)(a) above. If termination is alleged to be for Good Reason,
such notice shall also specify the reason for such termination, as set forth
in Section 7(B), with the particulars thereof specified in detail, and shall
be given, except in the case of a continuing breach, within three calendar
months after the most recent event giving rise to Good Reason.
(2) Cure.
(a) In the case of the Executive's alleged breach or gross
misconduct set forth in Sections 7(A)(ii) or (iii), the Executive shall be
given the opportunity to remedy such alleged breach or gross misconduct within
30 days from his receipt of the notice referred to above, or take all
reasonable steps to that end during such 30-day period and thereafter.
(b) In the case of the Executive's allegation of Good Reason, the
Company shall be given the opportunity to remedy the alleged Good Reason
within 30 days from its receipt of the notice referred to above, or take all
reasonable steps to that end during such 30-day period and thereafter.
(3) Arbitration. In the event that the Executive's employment
shall be terminated by the Company and such termination is alleged to be for
Cause, the Executive shall have the right, in addition to all other rights and
remedies provided by law or equity, to seek arbitration as described below.
In the event that the Executive's employment shall be terminated by the
Executive and such termination is alleged to be for Good Reason, the Company
shall have the right, in addition to all other rights and remedies provided by
law or equity, to seek arbitration as described below. Such arbitration shall
be sought in Alachua County, State of Florida, under the rules of the American
Arbitration Association, by serving notice to arbitrate upon the other party
no more than 60 days after such party received the notice of termination
referred to above.
8. CONSEQUENCES OF TERMINATION, DEATH OR DISABILITY
(A) Termination by the Company Other Than for Cause or by the
Executive for Good Reason. In the event of a termination by the Company of
the Executive's employment during the Contract Term other than for Cause or by
the Executive for Good Reason, the Company shall, as liquidated damages, pay
to the Executive and provide him, in lieu of all other rights, remedies,
damages, and relief to which he might otherwise be entitled under this
Agreement, with the benefits described below in this Section 8(A):
(1) Severance. A lump-sum payment in an amount equal to (i) the
aggregate base compensation at the then current rate payable through the
Expiration Date but not less than one times Executive's base compensation in
effect on the Termination Date or, (ii) in event of a Change of Control, the
lesser of such amount and 299% of the "base amount" of the Executive as
determined under section 280G of the Internal Revenue Code of 1986. This
amount shall be reduced by any severance payments made to the Executive under
any other employment contract or severance arrangement with the Company.
(2) Annual Incentive Compensation. A payment in respect of the
annual incentive compensation of the Executive of the following amounts:
(a) any Annual Bonus payments awarded for a year prior to the
year in which the Termination Date occurs but not paid as of the Termination
Date, which amount shall not be less than the Executive's annual base
compensation for such year multiplied by item (ii) of Section 8(A)(2)(b)
below; and
(b) an amount in respect of the annual incentive compensation
that would have been earned in respect of the year in which such Termination
Date occurs, in an amount calculated by multiplying (i) the rate of annual
base compensation in effect for the Executive immediately prior to the
Termination Date by (ii) the average of the annual awards under the Annual
Bonus Plan payable in respect of the two calendar years immediately preceding
the year for which payment is made, with each such award expressed as a
percentage of the annual base compensation paid to the Executive for the
respective calendar years.
(3) Stock Option Plan. With respect to the Company's Stock
Option Plan, the following:
(a) All unvested options shall immediately vest on the
Termination Date;
(b) Any option which is unexerciseable shall be accelerated to
become immediately exercisable on the Termination Date; and
(c) All unexercised options shall remain exercisable for the
maximum period then permitted by the Internal Revenue Code of the United
States.
(4) Restricted Stock; Right to Purchase Stock. All unvested
restricted stock shall immediately vest on the Termination Date. Executive
shall have the right to convert all, or a portion, of any outstanding balances
of any loan to the Company, or any deferred compensation account into voting
common stock of the Company at a price equal to the lowest price (after
adjustment for stock splits or stock dividends) at which common stock has been
sold (other than pursuant to the exercise of outstanding options under the
Stock Option Plan, the Board Retainer Plan, or any similar plan) at any time
during the 24 months immediately preceding the Termination Date. Such right
shall be exercisable not later than 60 days after the Termination Date.
(5) Other Compensation and Benefits. With respect to
compensation and benefits other than those specified in this Section 8, the
Executive shall receive the amounts and arrangements, if any, ordinarily
provided to senior executives of the Company upon termination of employment in
accordance with the plans, programs, and practices of the Company applicable
to senior executives, as in effect on the Termination Date or, at Executive's
election, on the date of a Change in Control. In addition, the Executive
shall receive the amounts and arrangements provided upon termination of
employment in accordance with the Company's Deferred Compensation Plan, the
subordinated note agreement, and any other agreement between the Company and
the Executive executed on or after the Agreement Date.
(B) Disability or Death.
(1) Disability. In the event of the Executive's Disability
during the Period of Employment, the Executive shall be entitled to the
compensation and benefits provided for in Sections 5(A), (C) and (D) of this
Agreement for the Period of Employment. Payment shall be without prejudice to
any other payments due in respect of the Executive's death or Disability.
(2) Death. In the event of the death of the Executive during the
Period of Employment, the Executive's representative shall be entitled to the
compensation provided in Section 5(A) of this Agreement through the Period of
Employment. Payments shall be without prejudice to any other payment due in
respect of the Executive's death or Disability.
(3) Incentive Compensation. In the event of the Executive's
Disability or death during the Period of Employment, the Company shall pay the
Executive or his legal representative, in addition to the payments required by
this Section 8(B): an award under the Annual Bonus Plan, determined in
accordance with Section 8(A)(2) on a pro-rata basis, for the portion of the
calendar year prior to the Termination Date (or, in the case of Disability,
the earlier of the Termination Date and the Expiration Date).
(4) Reduction of Payments. The amount of any payments due under
this Section 8(B) shall be reduced by any payments to which the Executive is
entitled for the same period because of disability under any disability
benefit plan of the Company providing salary continuation.
(C) Termination by the Company for Cause or by the Executive Other
Than for Good Reason. In the event of a termination by the Company of the
Executive's employment during the Contract Term for Cause or by the Executive
other than for Good Reason, the Executive shall be entitled to the
compensation and benefits ordinarily provided to senior executives of the
Company upon termination of employment in accordance with the plans, programs,
and practices of the Company applicable to senior executives as in effect on
the Termination Date of the date of the Change in Control, at Executive's
election.
(D) Time of Payment. All lump-sum payments to be made by the
Company under this Section 8 shall be made within five days after the
Termination Date. Annuity payments shall commence on the last day of the
calendar month in which the Termination Date occurs.
9. INTEREST ASSUMPTIONS
Determination of any present values relating to this Agreement for
purposes of sections 280G and 4999 of the Internal Revenue Code shall be based
upon a discount rate equal to 120 percent of the applicable Federal rate
(determined under section 1274(d) of the Internal Revenue Code of 1986 and the
regulations thereunder), compounded semiannually. The Executive shall be
deemed to have elected the discount rate as in effect on the Agreement Date.
The Company hereby agrees to use the discount rate that is deemed to be
elected by the Executive.
10. WITHHOLDING
All payments required to be made by the Company hereunder to the
Executive shall be subject to the withholding of such amounts, if any,
relating to tax, excise tax, and other payroll deductions as the Company may
reasonably determine it should withhold pursuant to any applicable law or
regulation.
11. INDEMNIFICATION AND INSURANCE; LEGAL EXPENSES
(A) Indemnification and Insurance. The Company will indemnify the
Executive (including payment of expenses in advance of final disposition of
the proceeding) to the fullest extent permitted by the laws of the State of
Florida and the Certificate of Incorporation and By-Laws of the Company, in
each case as in effect on the date of the Change in Control or on the
Termination Date, whichever affords greater protection to the Executive; and
the Executive shall be entitled to the protection of any insurance policies
the Company may elect to maintain generally for the benefit of its directors
and officers, against all costs, charges, and expenses whatsoever incurred or
sustained by him in connection with any action, suit, or proceeding to which
he may be made a party by reason of his being or having been a director,
officer, or employee of the Company or any of its subsidiaries or affiliates
or his serving or having served any other enterprise as a director, officer,
or employee at the request of the Company. The Company shall cause to be
maintained in effect for not less than six years from the Termination Date
policies of directors' and officers' liability insurance of at least the same
coverage as those policies, if any, maintained by the Company on the
Termination Date or the date of the Change in Control and containing terms and
conditions which are no less advantageous than such policies, or if such
coverage is not available, the best available coverage for equal cost to the
Company.
(B) Legal Expenses. In the event of any litigation, arbitration, or
other proceeding between the Company and the Executive with respect to the
subject matter of this Agreement or the enforcement of the Executive's rights
hereunder, the Company shall reimburse the Executive, regardless of the
outcome, for all of his reasonable costs and expenses relating to such
litigation, arbitration, or other proceeding, including, without limitation,
reasonable attorneys' fees and expenses. In no event shall the Executive be
required to reimburse the Company for any of the costs or expenses relating to
such litigation, arbitration, or other proceeding.
12. NOTICES
All notices, requests, demands and other communications provided for
by this Agreement shall be in writing and shall be sufficiently given if and
when mailed in the continental United States by registered or certified mail
or personally delivered to the party entitled thereto at the address stated
below or to such changed address as the addressee may have given by a similar
notice:
To the Company: Ixion Biotechnology, Inc.
One Progress Blvd., Box 26
Alachua, FL 32615
To the Executive: David C. Peck
115 Golfview Drive
Homosassa, FL 34446
13. REGISTRATION RIGHTS
(A) Mandatory Registration under the Act. Provided the Company is
then a public company, promptly after the Company's receipt of a request, made
by the Executive at any time during the Contract Term or prior to the third
anniversary of the Termination Date, whichever is later, to register under the
Securities Act of 1933 (the "Act"), at least 100,000 shares of Company common
stock owned by Executive, to enable such Executive to make an underwritten or
other public secondary offering thereof, the Company shall cause a
registration statement to be filed with the Securities and Exchange
Commission (the "Commission") with respect to the number of such shares
specified in the request, and shall use its best efforts to cause the
registration statement to become effective. The Company shall not be required
to cause more than one registration statement to be filed pursuant to this
Section 13(A). The Company shall be entitled to include other securities of
the Company to be offered either by the Company or other stockholders of the
Company in any such registration statement; provided, however, that the
Company or the holder or holders of other securities of the Company to be
registered, as the case may be, shall agree to execute and deliver the
underwriting agreement, if any, to be executed and delivered in connection
with any such registration and the Executive requesting the registration shall
have control of such registration and may require that any such other
securities of the Company not be included in the registration statement if he
is advised by the investment banking firm managing the underwriting that it
reasonably believes that such inclusion would adversely affect the offering of
the shares to be covered by the proposed registration statement. The Company
shall be entitled to postpone the filing of any such registration statement
for a reasonable period of time if the Company is, at the time at which it
receives any such request by Executive, conducting or is about to conduct, an
offering of its securities, and the Company is advised by its investment
banking firm that such offering would be adversely affected by the
registration requested.
(B) Inclusion in Other Registrations. If, at any time during the
period referred to in section 13(A) above, the Company shall determine or be
required to register any shares of its common stock (whether on behalf of
itself or any other person) under the Act on Forms S-1, S-2, S-3, SB-1, or SB-
2 (or if such forms are rescinded by the Commission, the forms which supplant
such forms), excluding any registration for the offering and sale of
securities of the Company to its employees, it will notify Executive in order
that he may request that all or a part of the any shares of common stock owned
by him be included in the registration statement. If requested by the
Executive in writing within 20 days after the Company's notice, the Company
will include the requested number of shares in such registration statement.
Any such request shall include the agreement of the Executive requesting the
registration to execute and deliver the underwriting agreement, if any, to be
executed and delivered in connection with such registration. The Company may,
however, decline to include all or a part of the requested number of shares in
a registration statement pursuant to this section if it is advised by the
investment banking firm managing the underwriting that such inclusion would
adversely affect the offering of the shares to be covered by the proposed
registration statement.
The Company shall use its best efforts to file such post-effective
amendments to any registration statement described in this Section 13(B) as
shall be necessary to keep it effective until six months after the effective
date of the registration statement or the date on which all of the shares of
the Purchasers covered thereunder shall have been sold, whichever is earlier.
As a condition to the Company's obligation under this Section 13(B)
to cause a registration statement or amendment to be filed or shares to be
included in a registration statement, the Executive shall provide such
information and execute such documents as may reasonably be required in
connection with such registration. In addition, the Company shall not be
required to include such shares in a registration statement if it shall have
received opinions of its and the Executive's counsel to the effect that the
proposed disposition of such shares may be effected without registration under
the Act.
14. GENERAL PROVISIONS
(A) Determinations of Value. Whenever, under this Agreement, it is
necessary to determine whether one benefit is less than, equal to, or larger
than another in value (whether or not such benefits are provided under this
Agreement), such determination shall be made using the assumptions described
in Section 9.
(B) Other Existing Agreements. Except as specifically set forth
in this Agreement, this Agreement shall supersede any right under any other
agreement relating to terms of employment between the Company and the
Executive existing as of the Agreement Date.
(C) Limitation. This Agreement shall not confer any right or
impose any obligation on the Executive to continue in the employ of the
Company, or limit the right of the Company or the Executive to terminate his
employment.
(D) Company Set-Off and Counterclaim. The Company shall have no
right of set-off or counterclaim in respect of any claim, debt, or obligation
against any payments provided for in this Agreement.
(E) Assignment of Interest. No right to or interest in any
payments shall be assignable by the Executive; provided, however, that this
provision shall not preclude him from designating one or more beneficiaries to
receive any amount that may be payable after his death and shall not preclude
his executor or administrator from assigning any right hereunder to the person
or persons entitled thereto.
(F) Amendment, Modification and Waiver. No provision of this
Agreement may be amended, modified or waived unless such amendment,
modification or waiver shall be agreed to in writing signed by the Executive
and by a duly authorized Company officer.
(G) Enforceability. If any provision of this Agreement shall be
determined to be invalid or unenforceable by a court of competent
jurisdiction, the remaining provisions of this Agreement shall remain in full
force and effect to the fullest extent permitted by law.
(H) Entirety of Agreement. This Agreement constitutes the entire
agreement between the Company and the Executive relating to the subject matter
hereof. Any compensation or benefits to which the Executive is entitled under
this Agreement shall be provided based solely upon its terms, without regard
to any materials used in the preparation or consideration of this Agreement,
including any summary of terms or estimate of amounts relating to this
Agreement.
(I) Company and Successors. This Agreement shall be binding upon
and inure to the benefit of the Company and any successor of the Company
including, without limitation, any corporation or corporations acquiring
directly or indirectly all or substantially all of the assets of the Company,
whether by merger, consolidation, sale, or otherwise (and such successor shall
thereafter be deemed "the Company" for the purposes of this Agreement), but
shall not otherwise be assignable by the Company.
(J) Definition of Executive. The word "Executive" shall,
wherever appropriate, include his dependents, beneficiaries, and legal
representatives.
(K) Conflict of Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Florida, without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the day and year first above written.
IXION BIOTECHNOLOGY
By
Weaver H. Gaines
Chairman and Chief Executive
Officer
[SEAL]
ATTEST:
Secretary
David C. Peck
Executive
Employdp.Agr
Ixion Biotechnology, Inc.
1994 Stock Option Plan,
as amended June 27, 1997
1. Purpose of Plan. The purpose of the Ixion Biotechnology, Inc. 1994
Stock Option Plan (the "Plan") is to provide a means by which Ixion
Biotechnology, Inc. (the "Company") may attract and retain directors,
executive officers, other key employees who have been or who will be given
responsibility for the management or administration of the Company's business
and the growth of the Company, Consultants, and Members of the Scientific
Advisory Board, by providing those personnel with an opportunity to
participate in the growth, development and financial success of the Company
which their efforts, initiative, and skill have helped produce.
2. Definitions. Wherever the following capitalized terms are used in the
Plan, they shall have the following respective meaning:
2.1 "Board of Directors" means the board of directors of the Company.
2.2 "Change in Control" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the Common Stock, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company's then outstanding securities
which vote generally in the election of Directors (referred to herein as
"Voting Securities"); or
(b) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors and any new
Directors 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;
or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other entity, 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
surviving entity) more then 50% 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
(d) 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 transactions) all or
substantially all of the Company's assets.
2.3 "Code" means the Internal Revenue Code of 1986, as amended.
2.4 "Committee" means the Audit and Benefits Committee of the
Company.
2.5 "Common Stock" means the Common Stock of the Company, par value
$0.01 per share.
2.6 "Company" means Ixion Biotechnology, Inc., a Delaware
corporation. In addition, "Company" shall mean any corporation assuming or
issuing new employee stock options in substitution for Incentive Stock Options
outstanding under the Plan, in a transaction to which Section 424(a) of the
Code applies.
2.7 "Consultant" means any person designated a consultant by the
Board of Directors providing services in connection with the Company's
business or research.
2.8 "Director" means a member of the Board of Directors.
2.9 "Disability" or "disabled" means, with respect to an Employee, a
physical or mental condition resulting from any medically determinable
physical or mental impairment that renders such Employee incapable of engaging
in any substantial gainful employment and that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than six consecutive months.
2.10 "Disinterested Person" means a person who, pursuant to Rule 16b-
3 has not been granted stock, stock options, or stock appreciation rights of
the Company, under the Plan or any other plan during the period beginning one
year prior to his appointment to the Committee, and during his period of
service on the Committee (except grants made pursuant to Section 4.3 or 4.4).
2.11 "Employee" means any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of its subsidiaries or affiliated entities, or of
members of its Affiliated Group, whether such employee is so employed at the
time this Plan is adopted or becomes so employed subsequent to the adoption of
this Plan.
2.12 "Exchange Act" means the Securities Exchange Action of 1934, as
amended.
2.13 "Fair Market Value" means the per share value of the Common
Stock as of a given date, determined as follows:
(a) If the Common Stock is listed or admitted for trading on any
national securities exchange, the Fair Market Value of the Common Stock is the
closing quotation for such stock on the day preceding such date, or, if shares
were not traded on the day preceding such date, then on the next preceding
trading day during which a sale occurred.
(b) If the Common Stock is not traded on any national securities
exchange, but is quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System (Nasdaq System) or any similar system of
automated dissemination of quotations of prices in common use, the Fair Market
Value of the Common Stock is the last sales price (if the stock is then listed
as a national market issue under the Nasdaq System) or the mean between the
closing representative bid and asked prices (in all other cases) for the stock
on the day preceding such date as reported by Nasdaq System (or such similar
quotation system).
(c) If neither clause (a) nor clause (b) of this Section 2.13 is
applicable, the Fair Market Value of the Common Stock is the fair market value
per share as of such valuation date, as determined by the Board of Directors
in good faith and in accordance with uniform principles consistently applied.
Such Fair Market Value shall be determined on a regular basis, not less than
annually.
2.14 "Incentive Stock Option" means an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option
by the Committee.
2.15 "Member of the Scientific Advisory Board" means a member of the
Company's Scientific Advisory Board.
2.16 "Nonqualified Option" means an Option which is not an Incentive
Stock Option and which is designated as a Nonqualified Option by the
Committee.
2.17 "Officer" means an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such rule may be amended from time to
time.
2.18 "Option" means the Incentive Stock Options and Nonqualified
Options granted under this Plan.
2.19 "Optionee" means an Employee or an Outside Director to whom an
Option is granted under this Plan.
2.20 "Outside Director" means a Director who is Independent (if the
Common Stock is listed or admitted for trading on any national securities
exchange, then "Independent" as such term is defined in the applicable rules
and regulations of such exchange, or if the Common Stock is not listed or
admitted for trading on any national securities exchange, then "Independent"
as such term is defined in applicable rules and regulations of the New York
Stock Exchange, Inc.)
2.21 "Participant" means an Optionee who is granted Options pursuant
to Section 4 of the Plan.
2.22 "Plan" means the Ixion Biotechnology, Inc. 1994 Stock Option
Plan, as it may be amended from time to time.
2.23 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act, as such rule may be amended from time to time.
2.24 "Secretary" means the Secretary of the Company.
2.25 "Securities Act" means the Securities Act of 1933, as amended.
2.26 "Termination of Employment" means:
(a) With respect to any Employee, the time when the employee-
employer relationship between the Optionee and the Company, its subsidiaries
or affiliated entities, is terminated for any reason, with or without cause.
The Committee, in its absolute discretion, shall determine the effect of all
other matters and questions relating to Termination of Employment, including
without limitation, the question of whether a particular leave of absence
constitutes a Termination of Employment; provided, however, that, with respect
to Incentive Stock Options, a leave of absence shall constitute a Termination
of Employment if, and to the extent that, such leave of absence interrupts
employment for the purposes of Section 422(a)(2) of the Code and the then
applicable regulations and revenue rulings under said Section.
Notwithstanding any other provision of this Plan, and subject to any
applicable agreements between the Optionee and the Company, the Company has an
absolute and unrestricted right to terminate the Optionee's employment at any
time for any reason whatsoever, with or without cause.
(b) With respect to any Outside Director, Consultant, or Member of
the Scientific Advisory Board, the time when such person ceases to be a
Director, Consultant, or Member of the Scientific Advisory Board of the
Company for any reason, with or without cause, including without limitation, a
termination by resignation, removal, death, disability, or failure to be
nominated or reelected by the Company's stockholders. Nothing in this Plan
or any Stock Option Agreement hereunder shall confer upon any such person,
Consultant, or Member of the Scientific Advisory Board, any right to continue
his or her association with the Company or shall interfere with or restrict in
any way the rights of the Company and its stockholders, which are hereby
expressly reserved, to remove any such person at any time for any reason
whatsoever, with or without cause.
3. Stock Subject to Plan.
3.1 Stock Subject to Plan. The stock subject to an Option shall be
shares of the Company's Common Stock. The aggregate number of such shares
which may be issued upon exercise of Options granted to Employees and
Consultants shall not exceed 250,000, and the aggregate number of such shares
which may be issued upon exercise of option granted to Directors and Members
of the Scientific Advisory Board shall not exceed 75,000.
3.2 Types of Awards. Options granted under the Plan may be intended
to qualify for favorable tax treatment as Incentive Stock Options, and as
Nonqualified Options, being those not qualified or intended for such favorable
tax treatment under the Code.
3.3 Unexercised options. If any Option expires or is canceled
without having been fully exercised, additional Options for the number of
shares of Common Stock that would have been issued upon exercise of such
Option may be re-granted under this Plan, subject to limitations of Section
3.1.
3.4 Changes in Company Capitalization. In the event that (i) the
outstanding shares of Common Stock are hereafter changed into or exchanged for
a different number or kind of shares or other securities of the Company, or of
another entity, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, or (ii) the number of shares is increased
or decreased by reason of a stock split, stock dividend, combination of shares
or any other increase or decrease in the number of such shares of Common Stock
effected without receipt of consideration by the Company (provided, however,
that conversion or exchange of any convertible or exchangeable securities of
the Company shall not be deemed to have been "effected without receipt of
consideration"), then the Committee shall make appropriate adjustments in the
number and kind of shares for the purchase of which options may be granted,
including adjustments to the limitations in Section 3.1 on the maximum number
and kind of shares which may be issued on exercise of an Option.
4. Granting of Options.
4.1 Eligibility. Any Officer or other key Employee of the Company
and any Outside Director, Consultant, or Member of the Scientific Advisory
Board shall be eligible to be granted Options. Each Outside Director,
including a member of the Committee, each Member of the Scientific Advisory
Board, and each Consultant shall be eligible to be granted only Nonqualified
Options.
4.2 Incentive Stock Options. No Incentive Stock Option shall be
granted unless it qualifies as an "incentive stock option" under Section 422
of the Code when granted.
4.3 Grants. (a)
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are key Employees, taking
into account the nature of the services rendered by the particular Employee,
the Employee's potential contribution to the long-term success of the Company,
and such other factors as the Committee deems relevant, and select from among
the key Employees (including those to whom Options have been previously
granted under the Plan, Outside Directors who are not members of the
Committee, Consultants, and Members of the Scientific Advisory Board, such of
them as in its opinion should be granted Options; and
(ii) Determine the number of shares to be subject to such
Options granted to such selected individuals, and determine whether such
Options are to be Incentive Stock Options or Nonqualified Options; and
(iii) Determine the terms and conditions of such Options.
(b) Upon the selection of such individual to be granted an
Option, the Committee shall instruct the Secretary to issue such Option and
may impose such conditions on the grant of such Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition of the grant of an Option to an individual that the
individual surrender for cancellation some or all of the unexercised Options
which have been previously granted to him. An Option, the grant of which is
conditioned upon such surrender, may have an Option price lower (or higher)
than the Option price of the surrendered Option, may cover the same (or a
lesser or greater) number of shares as the surrendered Option, may contain
such other terms as the Committee deems appropriate and shall be exercisable
in accordance with its terms, without regard to the number of shares, price,
Option period or any other term or condition of the surrendered Option.
4.4 Granting of Nonqualified Options to Outside Directors.
(a) Each person who is an Outside Director of the Company at the
date of the adoption of this Plan shall be granted Nonqualified Options to
purchase 2,000 shares of Common Stock.
The Committee shall grant to each Outside Director annually
(so long as he or she is an Outside Director on each such anniversary date)
Nonqualified Options to purchase an additional 2,500 shares of Common Stock.
4.5 Administration of the Plan.
(a) The Plan shall be administered by the Committee. The
Committee shall consist of at least two Outside Directors (if there are such)
selected by the Board of Directors, one of whom, if possible, shall be a
Disinterested Person. Committee members may resign by delivering written
notice to the Secretary. Vacancies on the Committee shall be filled by the
Board of Directors.
(b) Except as otherwise provided in the Plan and except as
otherwise expressly stated to the contrary in the Company's Certificate of
Incorporation, Bylaws, or elsewhere, the Committee shall have the sole
discretionary authority (i) to select the Officers, other key Employees,
Directors, Consultants, or Members of the Scientific Advisory Board who are to
be granted Options under the Plan, (ii) to determine the number of Options to
be granted to any person at any time, (iii) to authorize the granting of
Options, (iv) to impose such conditions and restrictions on Options as it
determines appropriate, (v) to interpret the Plan and the Options, (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan, and
(vii) to take any other actions in connection with the Plan and to make all
determinations under the Plan as it may deem necessary or advisable for the
administration of the Plan. The determinations of the Committee on the
matters referred to in this Section 4 shall be binding and conclusive on all
persons.
(c) A majority of the members of the Committee shall constitute
a quorum. All determinations of the Committee shall be made by a majority of
its members. Any decision or determination reduced to writing and signed by
all of the members of the Committee shall be fully effective as if it had been
made by a majority vote at a meeting duly called and held.
(d) The Committee may delegate to one or more persons any of its
powers, other than its power to authorize the granting of Options, or
designate one or more persons to do or perform those matters to be done or
performed by the Committee, including administration of the Plan. Any person
or persons delegated or designated by the Committee shall be subject to the
same obligations and requirements imposed on the Committee and its members
under the Plan.
(e) Members of the Committee shall receive such compensation for
their services as members as may be determined by the Board of Directors. All
expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants, appraisers, brokers,
or other persons. The Committee, the Company, and its Officers and Directors
shall be entitled to rely upon the advice, opinions, or valuations of any such
persons. All elections taken and all interpretations and determinations made
by the Committee in good faith shall be final and binding upon all Optionees,
the Company, and all other interested persons. No member of the Committee
shall be personally liable for any action, determination or interpretation
made in good faith with respect to the Plan. Members of the Committee and
each person or persons designed or delegated by the Committee shall be
entitled to indemnification by the Company for any action or any failure to
act in connection with services performed by or on behalf of the Committee for
the benefit of the Company to the fullest extent provided or permitted by the
Company's Certificate of Incorporation, Bylaws, any insurance policy or other
agreement intended for the benefit of the Committee, or by any applicable law.
5. Terms of Options.
5.1 Option Agreement. Each Option shall be evidenced by a written
Stock Option Agreement, which shall be executed by the Optionee and an
authorized Officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with the Plan. Stock
Option Agreements evidencing Incentive Stock Options shall contain such terms
and conditions as may be necessary to qualify such Options as "incentive stock
options" under Section 422 of the Code.
5.2 Vesting of Options.
(a) Options granted to Outside Directors in accordance with
Section 4.4 hereof shall vest 20% at the end of the first year of service
after the grant and 1/12 of 20% for each month thereafter. All other Options
granted under the Plan shall vest as determined by the Committee and as set
forth in the respective Stock Option Agreement, whether such vesting is based
on the attainment of performance goals, chronologically, or otherwise.
(b) Options which have been granted but not yet vested under
this Section 5.2 shall be forfeited if the Optionee dies, becomes disabled, or
leaves the employment of the Company, its subsidiary, or affiliated entity for
any or no reason, with or without cause, or otherwise, unless provided to the
contrary in any agreement approved by the Committee between the Optionee and
the Company, its subsidiary, or affiliated entity, which agreement shall
govern any further vesting of Options.
5.3 Option Exercise Price.
(a) The price per share for Options granted pursuant to Section
4.3 shall be set by the Committee; provided, however, that the price per share
shall be not less than 100% of the Fair Market Value of such shares on the
date such Option is granted; provided, further, that, in the case of an
Incentive Stock Option, the price per share shall not be less than 110% of the
Fair Market Value of such shares on the date such Option is granted in the
case of an individual then owning (within the meaning of Section 424(d) of the
Code) more than 10% of the total combined voting power of all classes of stock
of the Company or any subsidiary of the Company.
(b) The price of shares subject to each Nonqualified Option
granted pursuant to Section 4.4 shall be the Fair Market Value of such shares
on the date such Option is granted.
5.4 Exercise Periods.
(a) No Option may be exercised in whole or in part until it has
vested, except as may be provided in Sections 5.4(c) or 5.6 or as may
otherwise be provided for in a Stock Option Agreement which has been approved
by the Committee.
(b) Subject to the provisions of Sections 5.2, 5.4(c), 5.4(d)
and 5.6, Options shall become exercisable at such times and in such
installments (which may be cumulative) as the Committee shall provide in the
terms of each individual Stock Option Agreement; provided, however, that by
resolution adopted after an Option is granted the Committee may, on such terms
and conditions as it may determine to be appropriate and subject to Sections
5.2, 5.4(c), 5.4(d) and 5.6, accelerate the time at which such Option or any
portion thereof may be exercised, or such rights may be set forth in an
agreement between the Optionee and the Company which has been approved by the
Committee.
(c) No portion of an Option which is unexercisable at
Termination of Employment shall thereafter become exercisable; provided,
however, that provision may be made that such Option shall become exercisable
in the event of a Termination of Employment as may be determined by the
Committee, or such rights may be set forth in an agreement between the
Optionee and the Company which has been approved by the Committee.
(d) To the extent the aggregate Fair Market Value of Common
Stock with respect to which Incentive Stock Options (within the meaning of
Section 422 of the Code, but without regard to Section 422(d) of the Code) are
exercisable for the first time by an Optionee during any calendar year (under
the Plan and all other incentive stock option plans of the Company) exceeds
$100,000, such options shall be treated as Nonqualified Options. The rule set
forth in the preceding sentence shall be applied by taking Options into
account in the order in which they were granted. For purposes of this Section
5.4(d), the Fair Market Value of Common Stock shall be determined as of the
time the Option with respect to such Common Stock is granted.
(e) No Option may be exercised to any extent by anyone after the
first to occur of the following events:
(i) In the case of an Incentive Stock Option:
(A) the expiration of ten years from the date the
Option was granted;
(B) in the case of an Optionee owning (within the
meaning of Section 424(d) of the Code), on the Date of Grant, more than 10% of
the total combined voting power of all classes of stock of the Company or any
subsidiary of the Company, the expiration of ten years from the date the
Option was granted;
(C) except in the case of any Optionee who is disabled
(within the meaning of Section 22(a)(3) of the Code), the expiration of three
months from the date of the Optionee's Termination of Employment for any
reason other than such Optionee's death unless the Optionee dies within said
three-month period;
(D) in the case of an Optionee who is disabled (within
the meaning of Section 22(a)(3) of the Code), the expiration of one year from
the date of the Optionee's Termination of Employment for any reason other than
such Optionee's death unless the Optionee dies within said one-year period;
(E) the expiration of one year from the date of the
Optionee's death.
(ii) In the case of a Nonqualified Option:
(A) the expiration of ten years and one day from the
date the Option was granted; or
(B) the expiration of one year from the date of the
Optionee's Termination of Employment (whether by death or otherwise).
(f) Subject to the provisions of Section 5.4(a), the Committee
shall provide, in terms of each individual stock Option Agreement when such
Option expires and when it becomes unexercisable, and (without limiting the
generality of the foregoing) the Committee may provide in the terms of
individual Stock Option Agreements that said Options expire immediately upon a
Termination of Employment; provided, however, that provision may be made that
such options shall become exercisable in the event of a Termination of
Employment because of the Optionee's retirement, death, disability, or as may
otherwise be determined by the Committee.
5.5 Adjustments in outstanding Options. In the event that the
outstanding shares of Common Stock subject to Options are changed into or
exchanged for a different number or kind of shares of the Company or other
securities of the Company by reason of merger, consolidation,
recapitalization, reclassification, or the number of shares is increased or
decreased by reason of a stock split, stock dividend, combination of shares or
any other increase or decrease in the number of such 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"), the
Committee shall make appropriate adjustments in the number and kind of shares
as to which all outstanding Options, or portions thereof then unexercised,
shall be exercisable, to the end that after such event the Optionee's
proportionate interest shall be maintained as before the occurrence of such
event. Such adjustment in an outstanding Option shall be made without change
in the total price applicable to the Option or the unexercised portion of the
Option (except for any change in the price resulting from rounding-off share
quantities or prices) and with any necessary corresponding adjustment in
Option price per share; provided, however, that, in the case of Incentive
Stock Options, each such adjustment shall be made in such manner as not to
constitute a "modification" within the meaning of Section 424(h)(3) of the
Code. Any such adjustment made by the Committee shall be final and conclusive
upon all Optionees, the Company, and all other interested persons.
5.6 Change of Control, Merger, Consolidation, Acquisition,
Liquidation or Dissolution. Notwithstanding the provisions of Section 5.5, in
its absolute discretion, and on such terms and conditions as it deems
appropriate, the Committee may provide by the terms of any Option that such
Option cannot be exercised after a change of control or the merger or
consolidation of the Company with or into another entity, the acquisition by
another entity (excluding any employee benefit plan of the Company or any or
other fiduciary holding securities under an employee benefit plan of the
Company) of all or substantially all of the Company's assets or 51% or more of
the Company's then outstanding voting stock, or the liquidation or dissolution
of the Company, and if the Committee so provides, it may, in its absolute
discretion and on such terms and conditions as it deems appropriate, also
provide, either by the terms of such Option or by a resolution adopted prior
to the occurrence of such change of control, merger, consolidation,
acquisition, liquidation or dissolution, that, for some period of time prior
to such event, such Option shall be exercisable as to all shares covered
thereby, notwithstanding anything to the contrary in Section 5.4(a), Section
5.4(b) and/or any installment provision of such Option; and if the Committee
so provides, it may, in its absolute discretion and on such terms and
conditions as it deems appropriate, also consent to, cause or otherwise
effectuate an assumption, assignment, or other transfer of the Plan and any
outstanding Stock Option Agreements by or to the successor entity.
5.7 No Right to Continued Employment. Nothing in this Plan or in any
Stock Option Agreement issued hereunder shall confer upon any Optionee any
right to continue in the employ of the Company or its subsidiaries or shall
interfere with or restrict in any way the rights of the Company, and its
subsidiaries, which are hereby expressly reserved, to terminate or discharge
any optionee at any time for any reason whatsoever, with or without cause.
6. Exercise of Options.
6.1 Person Eligible to Exercise. During the lifetime of the
Optionee, only such Optionee may exercise an Option (or any portion thereof)
granted to such Optionee. After the death of the Optionee, any exercisable
portion of an Option may, prior to the time when such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement, be
exercised by the personal representative of such Optionee or by any person
empowered to do so under the deceased Optionee's will or under the then
applicable laws of descent and distribution.
6.2 Partial Exercise. At any time and from time to time prior to the
time when any exercisable Option or exercisable portion thereof becomes
unexercisable under the Plan or the applicable Stock Option Agreement, such
Option or portion thereof may be exercised in whole or in part; provided,
however, that the Company shall not be required to issue fractional shares and
the Committee may, by the terms of the Stock Option Agreement, require any
partial exercise to be with respect to a specified minimum number of shares.
6.3 Manner of Exercise. An exercisable Option, or any exercisable
portion thereof, may be exercised solely by delivery to the Secretary of all
of the following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person
then entitled to exercise such Option or portion stating that such Option or
portion is exercised, such notice complying with all applicable rules
established by the Committee; and
(b) either:
(i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised; or
(ii) With the consent of the Committee, (A) shares of the
Company's Common Stock owned by the Optionee duly endorsed for transfer to the
Company, or (B) subject to the timing requirements of Section 6.4, shares of
the Company's Common Stock issuable to the Optionee upon exercise of the
Option, with a Fair Market Value on the date of Option exercise equal to the
aggregate Option price of the shares with respect to which such Option or
portion is thereby exercised; or
(iii) With the consent of the Committee, a full recourse
promissory note bearing interest (at least at such rate as shall then preclude
the imputation of interest under the Code or any successor provision) and
payable upon such terms as may be prescribed by the Committee. The Committee
may also prescribe the form of such note and the security to be given for such
note. No Option may, however, be exercised by delivery of a promissory note
or by a loan from the Company when or where such loan or other extension of
credit is prohibited by law; or
(iv) With the consent of the Committee, any combination of
the consideration provided in the foregoing subsections (i), (ii) and (iii);
and
(c) The payment of the Company (or other employer) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; with the consent of the
Committee, (i) shares of the Company's Common Stock owned by the Optionee duly
endorsed for transfer, or (ii) subject to the timing requirements of Section
6.4, shares of the Company's Common Stock issuable to the Optionee upon
exercise of the Option, valued at Fair Market Value as of the date of Option
exercise, may be used to make all or part of such payment; and
(d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with
all applicable provisions of the Securities Act and any other federal or
state securities laws or regulations. The Committee may, in its absolute
discretion, also take whatever additional actions it deems appropriate to
effect such compliance including without limitation, placing legends on share
certificates and issuing stop-transfer orders to transfer agents and
registrars; and
(e) In the event that the Option or portion thereof shall be
exercised pursuant to Section 6.1 by any person or persons other than the
Optionee, appropriate proof of the right of such person or persons to exercise
the Option or portion thereof.
6.4 Timing Requirements. Shares of the Company's Common Stock
issuable to the Optionee upon exercise of the Option may be used to satisfy
the Option price or the
tax withholding consequences of such exercise only (i) during the period
beginning on the third business day following the date of release of the
quarterly or annual summary statement of sales and earnings of the Company and
ending on the twelfth business day following such date, or (ii) pursuant to an
irrevocable written election by the Optionee to use shares of the Company's
Common Stock issuable to the Optionee upon exercise of the Option to pay all
or part of the Option price or the withholding taxes (subject to the approval
of the Committee) made at least six months prior to the payment of such option
price or withholding taxes.
6.5 Conditions to Issuance of Stock Certificates. The shares of
Common Stock issuable and deliverable upon the exercise of an Option, or any
portion thereof, may be either previously authorized but unissued shares or
issued shares which have then been reacquired by the Company. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of Common Stock purchased upon the exercise of any Option or portion
thereof prior to fulfillment of all of the following conditions:
(a) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its
absolute discretion determine to be necessary or advisable; and
(b) The payment to the Company (or other employer corporation)
of all amounts which it is required to withhold under federal, state or local
law in connection with the exercise of the Option; and
(c) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience.
6.6 No Rights as Stockholders. The holders of Options shall not be,
nor have any of the rights or privileges of, stockholders of the Company in
respect to any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders. Except in accordance with Section 3.4 hereof, no
adjustment shall be made for dividends (ordinary or extraordinary, whether
cash or other property) or distributions or other rights for which the record
date is prior to the date on which the exercise price has been received by the
Company and shares have been issued.
6.7 Transfer Restrictions. Unless otherwise approved in writing by
the Committee, no shares of Common Stock acquired upon exercise of any Option
by any Officer or Director may be sold, assigned, pledged, encumbered, or
otherwise transferred until at least six months have elapsed from (but
excluding) the date that such Option was exercised. The Committee, in its
absolute discretion, may impose such other restrictions on the transferability
of the shares purchasable upon the exercise of an Option as it deems
appropriate. Any such other restriction shall be set forth in the respective
Stock Option Agreement and may be referred to on the certificates evidencing
such shares. The Committee may require any Optionee to give the Company
prompt notice of any disposition of shares of stock, acquired by exercise of
an Incentive Stock Option, within two years from the date of granting such
Option or one year after the transfer of such shares to such optionee. The
Committee may direct that the certificates evidencing shares acquired by
exercise of an Option refer to such requirement to give prompt notice of
disposition.
7. Additional Provisions.
7.1 Approval of Plan by Stockholders. This Plan will be submitted
for the approval of the Company's stockholders within twelve months before or
after the date of the Board of Director's initial adoption of the Plan.
Options may be granted prior to such stockholder approval; provided, however,
that such Options shall not be exercisable prior to the time when the Plan is
approved by the stockholders; provided, further, that if such approval has not
been obtained at the end of said twelve-month period, all Options previously
granted under the Plan shall thereupon be canceled and become null and void.
The Company shall take such actions with respect to the Plan as may be
necessary to satisfy the requirements of Rule 16b-3(b).
7.2 Nontransferability. No Option or interest or right therein or
part thereof shall be liable for the debts, contracts or engagements of the
Optionee or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any
other means whether such disposition be voluntary or involuntary or by
operation of law by judgment, levy, attachment, garnishment or any other legal
or equitable proceedings (including bankruptcy and divorce proceeding), and
any attempted disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 7.2 shall prevent transfers by
will or by the applicable laws of descent and distribution.
7.3 Securities Act. Upon issuance of Common Stock of the Company to
the Participant, or his heirs, the recipient of that stock shall represent
that the shares of stock are taken for investment and not resale and shall
make such other representations as may be necessary to qualify the issuance of
the shares as exempt from the Securities Act and applicable federal and state
securities laws and regulations, or to permit registration of the shares and
shall represent that he or she shall not dispose of those shares in violation
of the Securities Act or of applicable federal and state securities laws and
regulations. The Company reserves the right to place a legend on any stock
certificate issued pursuant to the Plan to assure compliance with this Section
and with the vesting requirements of Section 5.2. No shares of Common Stock
of the Company shall be required to be distributed until the Company shall
have taken such action, if any, as is then required to comply with the
provisions of the Securities Act or any other then applicable federal or state
securities law or regulation.
7.4 Withholding of Tax. The Company shall have the right to deduct
from any payment made under the Plan any federal, state or local income or
other taxes required by law to be withheld with respect to such payment. It
shall be a condition to the obligation of the Company to deliver Common Stock
upon exercise of an Option that the Optionee pay to the Company such amount as
may be requested by the Company for the purpose of satisfying any liability
for such withholding taxes. Any grant under this Plan may provide by its
terms that the Optionee may elect, in accordance with any applicable
regulations, to pay a portion or all of the amount of such minimum required
or additional permitted withholding taxes in shares of Common Stock, subject
to the timing restrictions set forth in Section 6.4 hereof. The Optionee
shall authorize the Company to withhold, or shall agree to surrender back
to the Company, on or about the date such withholding tax liability is
determinable, shares of Common Stock previously owned by such Optionee or a
portion of the shares that were or otherwise would be distributed to such
Optionee pursuant to such award having a Fair Market Value equal to the amount
of such required or permitted withholding taxes to be paid in shares.
7.5 Termination and Amendment of Plan. The Committee may at any time
suspend or terminate the Plan, or make such modifications of the Plan as it
shall deem advisable, provided that the Plan not be changed to increase the
cost of the Plan to the Company. However, without approval of the Company's
stockholders given within twelve (12) months before or after the action by the
Committee, no action of the Committee may, except as provided in Section 3.4,
increase any limit imposed in Section 3.1 on the maximum number of shares
which may be issued upon exercise of Options, materially modify the
eligibility requirements of Section 4.1, reduce the minimum Option price
requirements of Section 5.3, extend the limit imposed on this Section 7.5 on
the period during which Options may be granted or amend or modify the Plan in
a manner requiring stockholder approval under Rule 16b-3. Notwithstanding
anything to the contrary contained herein, the Committee shall not amend or
modify the Plan more than once every six (6) months or in any other manner
inconsistent with the requirements of Rule 16b-3(c)(2)(ii) except to the
extent required by changes in the Code, the Employee Retirement Income
Security Act of 1974, or regulations and rules issued thereunder. No
termination or amendment of the Plan may, without the consent of a
Participant, adversely affect the rights of such Participant notwithstanding
anything to the contrary herein. No Option may be granted during any period
of suspension of the Plan nor after termination of the Plan, and in no event
may any Option be granted under this Plan after the first to occur of the
following events:
(a) The expiration of ten years from the date the Plan is
adopted by the Board of Directors; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's stockholders under Section 7.1.
7.6 Duties of the Company. The Company shall, at all times during
the term of each Option, reserve and keep available for issuance or delivery
such number of shares of Common Stock as will be sufficient to satisfy the
requirements of all Options at the time outstanding, shall pay all original
issue taxes with respect to the issuance or delivery of shares pursuant to the
exercise of such Option and all other fees and expenses necessarily incurred
by the Company in connection therewith.
7.7 Absence of a Committee. Should the Board of Directors fail to
appoint the Committee or should there be no Committee for any other reason,
then the Plan shall be administered by the Board of Directors. All action
with respect to Options granted to any Officer or key Employee who is subject
to Section 16 of the Exchange Act shall be taken by the Board of Directors if
each member is a Disinterested Person, or if the entire Board of Directors is
not comprised of Disinterested Persons, then by not less than two of the
Directors who are Disinterested Persons. In the absence of a Committee, the
Board of Directors (or that portion thereof comprised in accordance with this
Section 7.7) shall have all the powers of the Committee as set forth herein in
administration of the Plan.
7.8 Effective Date of Plan. In accordance with Section 7.5 hereof,
the effective date of the Plan will be the date on which it was approved by
the stockholders of the Company. The Plan was adopted by the Board of
Directors, subject to stockholder approval on August 31, 1994.
8. General Provisions.
8.1 No Rights. No Employee shall have any claim or right to be
granted Options under the Plan. Neither the adoption and maintenance of the
Plan nor the granting of Options pursuant to the Plan shall be deemed to
constitute a contract of employment between the Company and any Employee or to
be a condition of the employment of any person. The Plan and any Options
granted under the Plan shall not confer upon any Participant any right with
respect to continued employment by the Company, nor shall they interfere in
any way with the right of the Company to terminate the employment of any
Participant at any time, and for any reason, with or without cause, it being
acknowledged, unless expressly provided otherwise in writing, that the
employment of any Participant is "at will".
8.2 Costs of Administration. The Company shall pay all costs and
expenses of administering the Plan.
8.3 Controlling Laws. The granting of Options and the issuance of
shares of Common Stock under the Plan shall be subject to all applicable laws,
rules and regulations, and to such approvals by any governmental agencies or
national securities exchanges as may be required. The provisions of this Plan
shall be interpreted so as to comply with the conditions and requirements of
the Securities Act, the Exchange Act, and rules and regulations issued
thereunder, including without limitation Rule 16b-3, unless a contrary
interpretation of any such provisions otherwise required by applicable law.
Except to the extent preempted by Federal law, this Plan and all Stock Option
Agreements entered into pursuant hereto shall be construed and enforced in
accordance with, and governed by, the laws of the State of Delaware,
determined without regard to its conflict of laws rules.
8.4 No Obligation to Exercise. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
8.5 Language. Whenever the context so indicates, the singular or
plural number, and the masculine, feminine or neuter gender shall each be
deemed to include the other.
8.6 No Employment Contract. The Plan is not a contract of
employment, and the terms of employment of any recipient of any award
hereunder shall not be affected in any way by the Plan or related instruments
except as specifically provided therein. The establishment of the Plan shall
not be construed as conferring any legal rights upon any recipient of any
award hereunder for a continuation of employment, nor shall interfere with the
right of the Company or any subsidiary to discharge any recipient of any award
hereunder and to treat him or here without regard to the effect with such
treatment might have upon him or her as the recipient of any award hereunder.
8.7 No Rights as Stockholder. No Optionee of any Option shall have
any rights as a stockholder with respect to any shares subject to his or her
Option prior to the date on which he or she is recorded as the holder of such
shares on the records of the Company. No Optionee of any Option shall have
the rights of a stockholder until he or she has paid in full the Option price.
Ixion Biotechnology, Inc.
1994 Board Retainer Plan
as amended June 27, 1997
1. Purpose of Plan. The purpose of the Ixion Biotechnology, Inc. 1994
Board Retainer Plan (the "Plan") is to provide a means by which Ixion
Biotechnology, Inc. (the "Company") may attract and retain Outside Directors
and Members of the Scientific Advisory Board by providing those personnel with
an opportunity to participate in the growth, development and financial success
of the Company which their efforts, initiative, and skill have helped produce.
2. Definitions. Wherever the following capitalized terms are used in
the Plan, they shall have the following respective meaning:
2.1 "Award" means a grant of fully-paid and non-assessable shares of
Common Stock under the Plan.
2.2 "Board of Directors" means the board of directors of the Company.
2.3 "Change in Control" shall be deemed to have occurred if:
(a) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company, a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of the Common Stock, becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 50% or more of the
total voting power represented by the Company's then outstanding securities
which vote generally in the election of Directors (referred to herein as
"Voting Securities"); or
(b) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors and any new
Directors 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;
or
(c) the stockholders of the Company approve a merger or
consolidation of the Company with any other entity, 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
surviving entity) more then 50% 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
(d) 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 transactions) all or
substantially all of the Company's assets.
2.4 "Committee" means the Audit and Benefits Committee of the Company.
2.5 "Common Stock" means the Common Stock of the Company, par value
$0.01 per share.
2.6 "Company" means Ixion Biotechnology, Inc., a Delaware corporation.
2.7 "Director" or "Outside Director" means a member of the Board of
Directors who is not an officer or employee of the Company.
2.8 "Disability" or "disabled" means, with respect to a Participant a
physical or mental condition resulting from any medically determinable
physical or mental impairment that renders such person incapable of engaging
in any substantial gainful employment and that can be expected to result in
death or that has lasted or can be expected to last for a continuous period of
not less than six consecutive months.
2.9 "Exchange Act" means the Securities Exchange Action of 1934, as
amended.
2.10 "Fair Market Value" means the per share value of the Common Stock
as of a given date, determined as follows:
(a) If the Common Stock is listed or admitted for trading on any
national securities exchange, the Fair Market Value of the Common Stock is the
closing quotation for such stock on the day preceding such date, or, if shares
were not traded on the day preceding such date, then on the next preceding
trading day during which a sale occurred.
(b) If the Common Stock is not traded on any national securities
exchange, but is quoted on the National Association of Securities Dealers,
Inc. Automated Quotation System (Nasdaq System) or any similar system of
automated dissemination of quotations of prices in common use, the Fair Market
Value of the Common Stock is the last sales price (if the stock is then listed
as a national market issue under the Nasdaq System) or the mean between the
closing representative bid and asked prices (in all other cases) for the stock
on the day preceding such date as reported by Nasdaq System (or such similar
quotation system).
(c) If neither clause (a) nor clause (b) of this Section 2.9 is
applicable, the Fair Market Value of the Common Stock is the fair market value
per share as of such valuation date, as determined by the Board of Directors
in good faith and in accordance with uniform principles consistently applied.
Such Fair Market Value shall be determined on a regular basis, not less than
annually.
2.11 "Member of the Scientific Advisory Board" means a member of the
Company's Scientific Advisory Board.
2.12 "Officer" means an officer of the Company, as defined in Rule 16a-
1(f) under the Exchange Act, as such rule may be amended from time to time.
2.13 "Participant" means an Director or Member to whom an award is
granted under this Plan.
2.14 "Plan" means the Ixion Biotechnology, Inc. 1994 Board Retainer
Plan, as it may be amended from time to time.
2.15 "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act,
as such rule may be amended from time to time.
2.16 "Secretary" means the Secretary of the Company.
2.17 "Securities Act" means the Securities Act of 1933, as amended.
2.18 "Termination of Relationship" means with respect to any Director or
Member of the Scientific Advisory Board, the time when such person ceases to
be a Director or Member of the Scientific Advisory Board of the Company for
any reason, with or without cause, including without limitation, a termination
by resignation, removal, death, disability, or failure to be nominated or
reelected by the Company's stockholders. Nothing in this Plan shall confer
upon any such Director or Member of the Scientific Advisory Board, any right
to continue his or her association with the Company or shall interfere with or
restrict in any way the rights of the Company and its stockholders, which are
hereby expressly reserved, to remove any such
person at any time for any reason whatsoever, with or without cause.
3. Stock Subject to Plan.
3.1 Stock Subject to Plan. The stock subject to an Award shall be
shares of the Company's Common Stock. The aggregate number of such shares
issued and outstanding pursuant to Awards shall not exceed 75,000.
3.2 Changes in Company Capitalization. In the event that (i) the
outstanding shares of Common Stock are hereafter changed into or exchanged for
a different number or kind of shares or other securities of the Company, or of
another entity, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, or (ii) the number of shares is increased
or decreased by reason of a stock split, stock dividend, combination of shares
or any other increase or decrease in the number of such shares of Common Stock
effected without receipt of consideration by the Company (provided, however,
that conversion or exchange of any convertible or exchangeable securities of
the Company shall not be deemed to have been "effected without receipt of
consideration"), then the Committee shall make appropriate adjustments in the
number and kind of shares available for Awards, including adjustments to the
limitations in Section 3.1 on the maximum number and kind of shares which may
be issued and outstanding pursuant to Awards.
4. Granting of Awards
4.1 Eligibility. Any serving Outside Director or Member of the
Scientific Advisory Board shall be eligible for Awards.
4.2 Grants. Each person who is an Outside Director or Member of the
Scientific Advisory Board of the Company at the date of the adoption of this
Plan shall be granted an Award of 5,000 shares of Common Stock. Thereafter,
immediately following the Annual Meeting of the Company, the Committee shall
grant a further Award of 1,000 shares of Common Stock to each Participant (so
long as he or she is an Outside Director or Member of the Scientific Advisory
Board on each such date).
4.3 Administration of the Plan.
(a) The Plan shall be administered by the Committee. The
Committee shall consist of at least two Outside Directors (if there are such)
selected by the Board of Directors. Committee members may resign by
delivering written notice to the Secretary. Vacancies on the Committee shall
be filled by the Board of Directors.
(b) Except as otherwise provided in the Plan and except as
otherwise expressly stated to the contrary in the Company's Certificate of
Incorporation, Bylaws, or elsewhere, the Committee shall have the sole
discretionary authority (i) to impose such conditions and restrictions on
Awards as it determines appropriate, (ii) to interpret the Plan, (iii) to
prescribe, amend, and rescind rules and regulations relating to the Plan, (iv)
to determine Fair Market Value in accordance with Section 2.9 (c), and (v) to
take any other actions in connection with the Plan and to make all
determinations under the Plan as it may deem necessary or advisable for the
administration of the Plan. The determinations of the Committee on the
matters referred to in this Section 4 shall be binding and conclusive on all
persons.
(c) A majority of the members of the Committee shall constitute
a quorum. All determinations of the Committee shall be made by a majority of
its members. Any decision or determination reduced to writing and signed by
all of the members of the Committee shall be fully effective as if it had been
made by a majority vote at a meeting duly called and held.
(d) The Committee may delegate to one or more persons any of its
powers, or designate one or more persons to do or perform those matters to be
done or performed by the Committee, including administration of the Plan. Any
person or persons delegated or designated by the Committee shall be subject to
the same obligations and requirements imposed on the Committee and its members
under the Plan.
(e) Members of the Committee shall receive such compensation for
their services as members as may be determined by the Board of Directors. All
expenses and liabilities incurred by members of the Committee in connection
with the administration of the Plan shall be borne by the Company. The
Committee may employ attorneys, consultants, accountants, appraisers, brokers,
or other persons. The Committee, the Company, and its Officers and Directors
shall be entitled to rely upon the advice, opinions, or valuations of any such
persons. All elections taken and all interpretations and determinations made
by the Committee in good faith shall be final and binding upon all
Participants, the Company, and all other interested persons. No member of the
Committee shall be personally liable for any action, determination or
interpretation made in good faith with respect to the Plan. Members of the
Committee and each person or persons designed or delegated by the Committee
shall be entitled to indemnification by the Company for any action or any
failure to act in connection with services performed by or on behalf of the
Committee for the benefit of the Company to the fullest extent provided or
permitted by the Company's Certificate of Incorporation, Bylaws, any insurance
policy, or other agreement intended for the benefit of the Committee, or by
any applicable law.
5. Terms of Grants
5.1 Grant Agreement. Each Grant shall be evidenced by a written
Grant Agreement , which shall be signed by the Participant and by an
authorized Officer of the Company and which shall refer to such terms and
conditions as the Committee shall determine, consistent with the Plan.
5.2 Issuance of Shares. Participants shall be issued a certificate for
fully-paid and nonassessable shares of Common Stock for the number of shares
covered by the Award, which certificate may contain a legend referring to
restrictions on vesting and transfer and such other terms and conditions as
the Committee shall determine, consistent with the Plan.
5.3 Forfeiture of Unvested Shares. Shares which have been awarded but
not yet vested under this Section 5.3 shall be forfeited if the Participant
ceases to be a Director or Member of the Scientific Advisory Board of the
Company for any reason, with or without cause, including without limitation, a
termination by resignation, removal, death, disability, or failure to be
nominated or reelected by the Company's stockholders, unless provided to the
contrary in any Grant Agreement approved by the Committee between the
Participant and the Company, which Agreement shall govern any further vesting
of shares pursuant to Awards.
5.4 Fair Market Value. The Company shall provide to each Participant
who receives an Award information regarding the Fair Market Value of the
Company's shares on the date such Award is granted. Such information shall be
provided to permit the Participant to determine his or her federal income tax
liability, if any, for such Award, or to permit the Participant to make the
election contemplated by Section 78 of the Internal Revenue Code.
5.5 Transfer Restrictions; Vesting.
(a) Unless otherwise approved in writing by the Committee, no
shares of Common Stock issued pursuant to an Award may be sold, assigned,
pledged, encumbered, or otherwise transferred until (i) they have vested, and
(ii) either the Company has made an offering of its shares to the public
pursuant to a registration statement under the Securities Act or there has
been a Change of Control of the Company, except as may be provided in Section
5.5(c) or as may otherwise be provided for in an Grant Agreement which has
been approved by the Committee. The Committee, in its absolute discretion,
may impose such other restrictions on the transferability of the shares
granted pursuant to an Award as it deems appropriate. Any such other
restriction shall be set forth in the respective Grant Agreement and may be
referred to on the certificates evidencing such shares.
(b) Shares issued to members of the Board of Directors pursuant
to Awards shall vest 20% at the end of the first year of service after the
date of the Award and 1/12 of 20% at the end of each month thereafter.
Subject to the provisions of Sections 5.3, 5.5(c), and 5.5(d), Awards shall
otherwise become vested at such times and in such installments (which may be
cumulative) as the Committee shall provide in the terms of each individual
Grant Agreement; provided, however, that by resolution adopted after an Award
is granted the Committee may, on such terms and conditions as it may determine
to be appropriate and subject to Sections 5.3, 5.5(c), and 5.5(d), accelerate
the time at which such Award or any portion thereof may be vested, or such
rights may be set forth in an agreement between the Participant and the
Company which has been approved by the Committee. Shares issued to members of
the Scientific Advisory Board shall vest 25% at the end of each three months
of service after the date of the award.
(c) No portion of an Award which is unvested at Termination of
Relationship shall thereafter become vested; provided, however, that provision
may be made that such Award shall become vested in the event of a Termination
of Relationship as may be determined by the Committee, or such rights may be
set forth in a Grant Agreement between the Participant and the Company which
has been approved by the Committee.
(d) Subject to the provisions of Section 5.5(a), the Committee
shall provide, in terms of each individual Grant Agreement when such Award
becomes vested, and (without limiting the generality of the foregoing) the
Committee may provide in the terms of individual Grant Agreements that
unvested shares shall be forfeited immediately upon a Termination of
Relationship; provided, however, that provision may be made that such shares
shall become vested in the event of a Termination of Relationship because of
the Participant's retirement, death, disability, or as may otherwise be
determined by the Committee.
5.6 No Right to Continued Relationship. Nothing in this Plan or in any
Grant Agreement issued hereunder shall confer upon any Participant, any right
to continue his or her association with the Company or shall interfere with or
restrict in any way the rights of the Company and its stockholders, which are
hereby expressly reserved, to remove any such person at any time for any
reason whatsoever, with or without cause.
6. Additional Provisions.
6.1 Nontransferability. No unvested shares issued pursuant to an Award
or interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Participant or his successors in interest or
shall be subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment, or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy
and divorce proceeding), and any attempted disposition thereof shall be null
and void and of no effect.
6.2 Securities Act. Upon issuance of Common Stock of the Company to the
Participant, or his heirs, the recipient of that stock shall represent that
the shares of stock are taken for investment and not resale and shall make
such other representations as may be necessary to qualify the issuance of the
shares as exempt from the Securities Act and applicable federal and state
securities laws and regulations, and shall represent that he or she shall not
dispose of those shares in violation of the Securities Act or of applicable
federal and state securities laws and regulations. The Company reserves the
right to place a legend on any stock certificate issued pursuant to the Plan
to assure compliance with this Section and with the vesting and
transferability requirements of Section 5. No shares of Common Stock of the
Company shall be required to be distributed until the Company shall have taken
such action, if any, as is then required to comply with the provisions of the
Securities Act or any other then applicable federal or state securities law or
regulation.
6.3 Withholding of Tax. The Company shall have the right to deduct from
any Award made under the Plan any federal, state or local income or other
taxes required by law to be withheld with respect to such Award. It shall be
a condition to the obligation of the Company to deliver Common Stock upon an
Award that the Participant pay to the Company such amount as may be requested
by the Company for the purpose of satisfying any liability for such
withholding taxes. Any grant under this Plan may provide by its terms that
the Participant may elect, in accordance with any applicable regulations, to
pay a portion or all of the amount of such minimum required or additional
permitted withholding taxes in shares of Common Stock, subject to the timing
restrictions set forth in Section 6 hereof. The Participant shall authorize
the Company to withhold, or shall agree to surrender back to the Company, on
or about the date such withholding tax liability is determinable, shares of
Common Stock previously owned by such Participant or a portion of the shares
that were or otherwise would be distributed to such Participant pursuant to
such award having a Fair Market Value equal to the amount of such required or
permitted withholding taxes to be paid in shares.
6.4 Termination and Amendment of Plan. The Committee may at any time
suspend or terminate the Plan, or make such modifications of the Plan as it
shall deem advisable, provided that the Plan not be changed to increase the
cost of the Plan to the Company. Notwithstanding anything to the contrary
contained herein, the Committee shall not amend or modify the Plan more than
once every six (6) months or in any other manner inconsistent with the
requirements of Rule 16b-3(c)(2)(ii) except to the extent required by changes
in the Internal Revenue Code, the Employee Retirement Income Security Act of
1974, or regulations and rules issued thereunder. No termination or amendment
of the Plan may, without the consent of a Participant, adversely affect the
rights of such Participant notwithstanding anything to the contrary herein.
No Award may be granted during any period of suspension of the Plan nor after
termination of the Plan, and in no event may any Award be granted under this
Plan after August 30, 2004.
6.5 Duties of the Company. The Company shall pay all original issue
taxes with respect to the issuance or delivery of shares pursuant to an Award
and all other fees and expenses necessarily incurred by the Company in
connection therewith.
6.6 Absence of a Committee. Should the Board of Directors fail to
appoint the Committee or should there be no Committee for any other reason,
then the Plan shall be administered by the Board of Directors. In the
absence of a Committee, the Board of Directors (or that portion thereof
comprised in accordance with this Section 6.6) shall have all the powers of
the Committee as set forth herein in administration of the Plan.
7. General Provisions.
7.1 No Rights. Neither the adoption and maintenance of the Plan, the
granting of Awards pursuant to the Plan, nor issuance of shares pursuant to
Awards shall be deemed to constitute a contract of employment between the
Company and any Participant or to be a condition of the employment of any
person. The Plan and any Awards granted under the Plan shall not confer upon
any Participant any right with respect to a continued relationship with the
Company, nor shall they interfere in any way with the right of the Company or
its shareholders to terminate the relationship of any Participant with the
Company at any time, and for any reason, with or without cause.
7.2 Costs of Administration. The Company shall pay all costs and
expenses of administering the Plan.
7.3 Controlling Laws. The issuance of shares of Common Stock under the
Plan shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges
as may be required. The provisions of this Plan shall be interpreted so as to
comply with the conditions and requirements of the Securities Act, the
Exchange Act, and rules and regulations issued thereunder, including without
limitation Rule 16b-3, unless a contrary interpretation of any such provisions
otherwise required by applicable law. Except to the extent preempted by
Federal law, this Plan and all Stock Option Agreements entered into pursuant
hereto shall be construed and enforced in accordance with, and governed by,
the laws of the State of Delaware, determined without regard to its conflict
of laws rules.
CONSULTANT AGREEMENT
October 6, 1994
Dr. Ammon B. Peck
Department of Pathology
Box J-275
J. Hillis Miller Health Center
University of Florida College of Medicine
Gainesville, FL 32610
You have been performing consulting services for us, and we propose that
you continue to perform consulting services for us, and we understand you are
willing to perform such services for us, upon terms and conditions set forth
below.
Therefore, we agree with you as follows:
1. You will perform such consulting services as we may request during
the term of this Agreement as Chief Scientist of the Company. You will be
available to perform such services at reasonable times during the term of this
Agreement as may be determined by you in your discretion taking into account
your obligations as a full-time professor in the Department of Pathology at
the University of Florida College of Medicine. In no event shall you be
obligated to perform services hereunder for a total of more than four days in
any calendar month during the term of this agreement.
2. In full compensation for your services and agreements hereunder, we
will pay you at the rate of $30,000.00 per year, plus, in connection with the
assignment of intellectual property rights referred to in section 5, below,
the issuance of 650,000 of common stock, par value $0.01. In addition, we
will reimburse you (as discussed below) for all reasonable traveling and
living expenses necessarily incurred by you while you are away from your
regular place of business or at our premises at our request and are engaged in
the performance of services for us under this Agreement. You will submit
invoices promptly showing any disbursements for reasonable and necessary
expenses incurred on this engagement.
3. The manner in which you render services to us will be within your
sole control and discretion.
4. You will observe our rules, policies, and regulations with respect
to conduct and the health, safety, and protection of persons and property,
while on our premises. You will comply with all governmental laws,
ordinances, rules and regulations applicable to your services hereunder, or to
the performance thereof.
5. All of the following sections 5 and 6 are subject to your
obligations to the University of Florida under its patent policy (including
the University's policy respecting publication of the results of scientific
investigation). All patentable and unpatentable inventions, discoveries, and
ideas relating to the field of study of oxalate or oxalate-related disorders,
which are made or conceived by you during the term of this Agreement, if
rights thereto are waived or not owned by the University of Florida, shall be
our sole and exclusive property throughout the world. Promptly upon
conception of such invention, discovery, or idea, you will disclose it to us,
and we shall have full power and authority to file and prosecute patent
applications throughout the world thereon and to procure and maintain patents
thereon. You shall, at our request and expense, execute documents and perform
such acts as our counsel may deem advisable, to confirm in us all right,
title, and interest throughout the world, in and to, such invention,
discovery, or idea, and all patent applications, patents, and copyrights
thereon, and to enable and assist us in procuring, maintaining, enforcing and
defending patents, petty patents, copyrights, and other applicable statutory
protection throughout the world on any such invention, discovery, or idea
which may be patentable or copyrightable.
6. All information and know-how which you in any way obtain from us and
all inventions, discoveries, and ideas which shall become our property
pursuant to paragraph 5 hereof, shall be held secret and confidential by you
and shall not be used or revealed by you unless, until, and to the extent we
shall consent thereto in writing, or such information, know-how, inventions,
discoveries, and ideas are generally available to the public through no action
or inaction of yours.
7. You will not disclose to us any knowledge, information, inventions,
discoveries, or ideas which you possess under an obligation of secrecy to a
third party.
8. You do not have any express or implied obligation to a third party
which in any way conflicts with any of your obligations under this Agreement,
except your obligations as an employee of the University of Florida, of which
we are aware.
9. It is understood that we will have the royalty-free and unrestricted
right to use and disclose to third parties, any unpatented information, know-
how, inventions, discoveries, and ideas disclosed to us by you in the course
of your services under this Agreement.
10. All written information, drawings, documents and materials prepared
by you in the course of your service hereunder shall be our sole and exclusive
property, and will be delivered to us by you promptly after expiration or
termination of this Agreement, together with all written information,
drawings, documents and materials, if any, furnished by us to you in
connection with your services hereunder and not consumed by you in the
performance of such services.
11. You assume all risk and liability for loss of, or damage to, your
property, and for personal injury, sickness and/or disease, including death
resulting therefrom, sustained by you, if or where such loss or damage is
incurred or such injury, sickness, or disease is sustained, in connection with
your presence on our property and/or any services hereunder, unless caused by
our negligence or the negligence of our employees or agents.
12. During the term of this Agreement, you agree not to perform for a
third party any services which are in the field of this Agreement. During
the period of this Agreement, and for the two years thereafter, you will not,
directly or indirectly, engage in any business which is substantially
competitive with any business then actively being conducted by us, or
contemplated by us in the near future, nor will you consult with or advise any
such competitive business or otherwise, directly or indirectly, engage in any
activity which is substantially competitive with or in any way adversely
affects any material activity of ours.
13. The term of this Agreement shall commence on October 1, 1994, and
shall terminate a) on December 31, 1997, or b) upon thirty days notice by
either party, unless sooner terminated by your death, or in accordance with
the terms of this Agreement.
14. The provisions of paragraphs 5, 6, 9, 10, 11, and 16 shall survive
and continue after expiration or termination of this Agreement.
15. Any assignment by you of this Agreement or of any of the rights or
obligations hereunder, without our written consent, shall be void. No
modifications of this Agreement or waiver of any of the terms or conditions
contained hereunder shall be binding unless in writing and signed by both
parties. This Agreement shall be governed by the laws of the State of
Florida.
16. You understand that we are a start-up company, which has not yet
obtained financing to conduct its operations. Accordingly, we will not be
able to pay your cash compensation until we have received funding adequate to
our operating purposes and available to pay you. We will have the sole and
exclusive power to determine when we have adequate resources available to pay
your cash compensation.
If you agree to the foregoing, please indicate your acceptance thereof
by signing the enclosed duplicate copy of this Agreement and returning it to
us.
Very truly yours,
IXION Biotechnology, Inc.
By
Weaver H. Gaines
Chairman and Chief Executive Officer
Accepted and Agreed to this
6th day of October 1994
Ammon B. Peck, Ph.D.
AMENDMENT NO.5
SUPPLEMENTARY LICENSE FEE
This Amendment No. 5, dated July 19, 1997 is between University of Florida
Research Foundation, Inc., a not-for-profit corporation duly organized and
existing under the laws of the State of Florida and having its office in 223
Grinter Hall, Gainesville, FL 32611-2037 ("UFRFI"), and Ixion Biotechnology,
Inc., a company duly organized under the laws of Florida, and having its
principle office at 12085 Research Drive, Alachua, Florida 32615 ("Ixion")
WITNESSETH
WHEREAS, UFRFI and Ixion Biotechnology entered into an Incubator License
Agreement relating to licensed space at the Sid Martin Biotechnology
Development Institute in Alachua, Florida, dated on June 26, 1995 (the "ILA"),
and
WHEREAS, UFRFI and Ixion amended the ILA in connection with the exercise
by Ixion of the option for the second renewal term ending July 31, 1998;
WHEREAS, Ixion Biotechnology desires a change in its payment of the
Supplementary License Fee;
WHEREAS, UFRFI and Ixion Biotechnology desire to amend the ILA in
connection with the exercise by Ixion Biotechnology of the option for the
second renewal term ending July 31,1998;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties agree as follows:
1. Ixion Biotechnology, Inc. and UFRFI agree to change from a Warrant
payment option to a Royalty option under Section 4 of the Incubator License
Agreement, effective August 1, 1997.
2.Cash payments shall commence on the first day of August, 1997. The
cash license fee for laboratories and office space during this term shall be
payable by Licensees in equal monthly installments, on or before the first day
of each month in addition to the fee paid under the terms of the second
renewal term and shall be as follows:
Lab Space and office, Rooms 168 & 168 A:
951 square feet
Lab Space and office, Rooms 170 & 170 A:
963 square feet
Entrepreneurial office 122:
160 square feet
Entrepreneurial office 126:
188 square feet
Entrepreneurial office 125:
139 square feet
Total square feet:
2,401 square feet at the rate of
$12.00/square foot
From August 1, 1997 to July 31, 1998, Ixion will pay a license fee of
$2,401 monthly (of which
$2,074 shall be paid in cash and $327.00 shall be deemed paid pursuant to
Attachment F).
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this agreement as of the day and the year first set forth
above.
University of Florida Research Foundation Ixion
Biotechnology, Inc.
Arnold A. Heggestad, Ph.D. Weaver
H. Gaines
Executive Director
Chairman & Chief Executive Officer
ATTACHMENT B
SUPPLEMENTARY LICENSE FEE
ROYALTY TERM SHEET
1. Agreement is to pay a 1.0% royalty on net sales as that term is
defined in the agreement regarding any product or process sold or licensed
that is based upon a technology or know-how whether patented or patentable or
not, which is developed, enhanced, or discovered during the term of the
Incubator License Agreement while Licensee is occupying Licensed Space in the
BDI building..
2. Such royalties shall continue until necessary to pay the
supplementary license fee which is $6.00 per square foot per year multiplied
by the footage of occupied space ($6.00 X 2,401 square feet = $14,406) plus an
annual rate of 12%, compounded on December 31 of the second renewal term of
the Incubator License Agreement, and annually thereafter on the unpaid
balance.
3. Licensee must make reasonable efforts to commercialize such
technology or know-how.
NOTE: Ixion also licenses an additional 139 square feet in exchange for
services, which is not subject to routine license fee or Supplementary License
Fee
OPTION D -- ROYALTIES
ATTACHMENT B
TO
INCUBATOR LICENSE AGREEMENT
AGREEMENT TO PAY ROYALTIES, dated as of July 21, 1997, among Ixion
Biotechnology, Inc., a Florida corporation ("Licensee") and the
University of Florida Research Foundation, Inc., a Florida not-for-
profit corporation in Gainesville, Florida ("UFRFI")
WHEREAS, Licensee has agreed to pay a supplementary license fee to UFRFI
pursuant to an Incubator License Agreement dated as of June 26, 1995; and
WHEREAS, Licensee has elected to pay such supplementary license fee upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein the parties hereto agree as follows:
ARTICLE I - DEFINITIONS
For the purposes of this Agreement, the following words and phrases
shall have the meaning set forth in the Incubator License Agreement or the
following meanings:
1.1 "Licensee" shall mean the Licensee under the Incubator License
Agreement, and shall also include the following for the purposes of this
agreement to pay royalties:
(a) a related company of Licensee, the voting stock of which
is directly or indirectly at least fifty percent (50%) owned
or controlled by Licensee;
(b) an organization which directly or indirectly controls more
than fifty percent (50%) of the voting stock of Licensee;
(c) an organization, the majority ownership of which is
directly or indirectly common to the ownership of Licensee.
1.2 "Product Rights" shall mean all of the following Licensee
intellectual property:
(a) the technologies and know-how listed in Appendix A,
whether patented or patentable; or
(b) any development or enhancement of any item listed in
Appendix A or any new technology or know-how on which
research or development is accomplished in the Licensed
Space at the BDI during the term of the Incubator License
Agreement prior to termination thereof.
1.3 A "Royalty Product" shall mean any product or part thereof
which:
(a) makes use in whole or in part any intellectual property in
the Product Rights;
(b) is manufactured using a process which makes use in whole
or in part any intellectual property in the Product Rights ;
or
(c) is derived from Product Rights, know-how, and/or trade
secrets related to or described in Product Rights.
1.4 A "Royalty Process" shall mean:
(a) any process which makes use in whole or in part any
intellectual property covered in whole or in part in the
Product Rights; or
(b) is derived from Product Rights, know-how, and/or trade
secrets related to or described in Product Rights.
1.5 "Net Sales" shall mean Licensee's, and its sublicensees'
billings for Royalty Products and Royalty Processes and shall include
licensing and sublicensing fees less the sum of the following:
(a) discounts allowed in amounts customary in the trade,
(b) sales taxes, tariff duties, and/or use taxes which are
directly imposed and are with reference to particular sales;
(c) outbound transportation prepaid or allowed; and
(d) amounts allowed or credited on returns.
No deductions shall be made for commissions paid to individuals whether they
be with independent sales agencies or regularly employed by Licensee and on
its payroll, or for cost of collections. Royalty Products shall be considered
"sold" when billed out or invoiced.
1.6 "Know-How" shall mean any and all technical data, information,
or knowledge which relate to the Royalty Product, the Royalty Process or the
manufacture, marketing, registration, purity, quality, potency, safety, and
efficacy of the Royalty Product or Royalty Process.
1.7 "Royalty Cap" shall mean the amount of the supplementary license
fees as set forth in the Incubator License Agreement with interest at an
annual rate of twelve percent (12.0%), compounded on December 31 of the
initial year of this Agreement, and annually thereafter on the unpaid balance
thereof.
ARTICLE II - GRANT
2.1 Licensee hereby grants to UFRFI a royalty on the sale, use,
license, or lease of the Royalty Products, and the practice of Royalty
Processes until the royalty cap is reached.
2.2 The royalty granted hereunder shall not be construed to confer
any other rights upon UFRFI by implication, estoppel, or otherwise.
ARTICLE III - DUE DILIGENCE
3.1 Licensee shall use reasonable efforts to bring one or more
Royalty Products or Royalty Processes to market through a program for
exploitation of the Product Rights to attain reasonable commercialization of
Royalty Products and Royalty Processes.
ARTICLE IV - ROYALTIES
4.1 For the supplementary license fee referred to in the Incubator
License Agreement, Licensee shall pay to UFRFI a running royalty in an amount
equal to one percent (1.0 %) of the Net Sales of the Royalty Products or
Royalty Processes used, leased licensed, or sold by or for Licensee or its
sublicensees until the reaching of the Royalty Cap.
4.2 Royalty payments shall be paid in United States dollars in
Gainesville, Florida or at such other place as UFRFI may reasonably designate
consistent with the laws and regulations controlling in any foreign country.
If any currency conversion shall be required in connection with the payment of
royalties hereunder, such conversion shall be made by using the exchange rate
prevailing at the Chase Manhattan Bank (N.A.) on the last business day of the
calendar quarterly reporting period to which such royalty payments relate.
4.3 In the event the royalties set forth herein are higher than the
maximum royalties permitted by the law or regulations of a particular country,
the royalty payable for sales in such country shall be equal to the maximum
permitted royalty under such law or regulations. Notice of said event shall
be provided to UFRFI. An authorized representative of Licensee shall notify
UFRFI, in writing, within thirty (30) days of discovering that such royalties
are approaching or have reached the maximum amount, and shall provide UFRFI
with written documentation regarding the laws or regulations establishing such
maximum.
4.4 In the event that any taxes, withholding or otherwise, are
levied by any taxing authority in connection with accrual or payment of any
royalties payable by Licensee under this Agreement, and Licensee determines in
good faith that it must pay such taxes, Licensee shall have the right to pay
such taxes to the local tax authorities on behalf of UFRFI and payment of the
net amount due after reduction by the amount of such taxes, shall fully
satisfy Licensee's royalty obligations under this Agreement. Licensee shall
provide UFRFI with appropriate receipts or other documentation supporting such
payment. Licensee shall inform UFRFI in writing, within thirty (30) days of
notification that taxes will or have been levied by a taxing authority.
ARTICLE V - REPORTS AND RECORDS
5.1 Licensee shall keep full, true and accurate books of account
containing all particulars that may be necessary for the purpose of showing
the amounts payable to UFRFI hereunder. Said books of account shall be kept
at Licensee's principal place of business or the principal place of business
of the appropriate division of Licensee to which this Agreement relates. Said
books and the supporting data shall be open at all reasonable times for five
(5) years following the end of the calendar year to which they pertain, to the
inspection of UFRFI or its agents for the purpose of verifying Licensee's
royalty statement or compliance in other respects with this Agreement.
5.2 Licensee, within forty-five (45) days after December 31 of each
year, shall deliver to UFRFI true and accurate reports, giving such
particulars of the business conducted by Licensee and its sublicensees during
the preceding year under this Agreement as shall be pertinent to a royalty
accounting hereunder. These shall include at least the following;
(a) number of Royalty Products manufactured and sold.
(b) total billings for Royalty Products sold.
(c) accounting for all Royalty Processes used or sold.
(d) deductions applicable as provided in Paragraph 1.5.
(e) any licensing or sublicensing fees relating to the Royalty
Products or Royalty Processes.
(f) total royalty due.
5.3 With each such report submitted, Licensee shall pay to UFRFI the
royalties due and payable under this Agreement. If no royalties shall be due,
Licensee shall so report.
5.4 The royalty payments set forth in this Agreement shall, if
overdue, bear interest until payment at the monthly rate of one percent (1%).
The payment of such interest shall not foreclose UFRFI from exercising any
other rights it may have as a consequence of the lateness of any payment.
ARTICLE VI - PRODUCT LIABILITY
Licensee shall at all times during the term of this Agreement and
thereafter, indemnify, defend and hold UFRFI and the University of Florida,
their trustees, officers, employees and affiliates, harmless against all
claims and expenses, including legal expenses and reasonable attorneys' fees,
whether arising from a third party claim or resulting from UFRFI's enforcing
this indemnification clause against Licensee, or arising out of the death of
or injury to any person or persons or out of any damage to property and
against any other claim, proceeding, demand, expense and liability of any kind
whatsoever resulting from the production, manufacture, sale, use, lease,
consumption or advertisement of the Royalty Product(s) and/or Royalty
Process(es) or arising from any obligation of Licensee hereunder.
ARTICLE VII - ASSIGNMENT
This Agreement is not assignable and any attempt to do so shall be void.
ARTICLE VIII - TERMINATION
Upon termination of this Agreement for any reason, nothing herein shall
be construed to release either party from any obligation that matured prior to
the effective date of such termination.
ARTICLE IX- PAYMENTS, NOTICES AND OTHER COMMUNICATIONS
Any payment, notice or other communication pursuant to this Agreement
shall be sufficiently made or given on the date of mailing if sent to such
party by certified first class mail, postage prepaid, addressed to it at its
address below or as it shall designate by written notice given to the other
party:
In the case of UFRFI:
President
University of Florida Research Foundation, Inc.
223 Grinter Hall
Gainesville, Florida 32611
With a copy to:
Director
Biotechnology Program
All payments to:
UFRFI
223 Grinter Hall
Gainesville, Florida 32611
PLEASE MAKE ALL CHECKS PAYABLE TO:
University of Florida Research Foundation, Inc.
In the case of Licensee:
Weaver H. Gaines, Chairman & CEO
Ixion Biotechnology, Inc.
12085 Research Drive
Alachua, FL 32615
ARTICLE X - MISCELLANEOUS PROVISIONS
10.1 This Agreement shall be construed, governed, interpreted and
applied in accordance with the laws of the State of Florida, .
10.2 The parties hereto acknowledge that this Agreement and the
Incubator License Agreement set forth the entire Agreement and understanding
of the parties hereto as to the subject matter hereof, and shall not be
subject to any change or modification except by the execution of a written
instrument subscribed to by the parties hereto.
10.3 The provisions of this Agreement are severable, and in the
event that any provisions of this Agreement shall be determined to be invalid
or unenforceable under any controlling body of the law, such invalidity or
unenforceability shall not in any way affect the validity or enforceability of
the remaining provisions hereof.
15.4 The failure of either party to assert a right hereunder or to
insist upon compliance with any term or condition of this Agreement shall not
constitute a waiver of that right or excuse a similar subsequent failure to
perform any such term or condition by the other party.
IN WITNESS WHEREOF, the parties have hereunto set their hands and seals
and duly executed this Agreement the day and year set forth below.
UNIVERSITY OF FLORIDA RESEARCH FOUNDATION, INC.
By _________________________________
Name _______________________________
Title ______________________________
Date _______________________________
Ixion Biotechnology, Inc.
By
Weaver H. Gaines
Chairman & CEO
Date _________________________________
APPENDIX A
TECHNOLOGY KNOW-HOW AND RESEARCH DEVELOPMENT
Exhibit 24.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form SB-2 of our
report dated February 4, 1997, except for Note 12, as to which the date is
June 27, 1997, on our audits of the financial statements of Ixion
Biotechnology, Inc. as of December 31, 1996, and for the years ended December
31, 1996, and 1995, and for the period March 25, 1993 (date of inception)
through December 31, 1996. We also consent to the reference to our Firm under
the caption "Experts."
/S/ Coopers & Lybrand L.L.P.
Orlando, Florida
August 12, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted
from Financial Statements for the year ended December 31, 1996, and is
qualified in its entirety by reference to such Financial Statements filed
with form SB2 and for the annual period ended December 31, 1996.
<MULTIPLIER> 1
<S> <C>
<PERIOD-START> JAN-01-1996
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 611,539
<SECURITIES> 0
<RECEIVABLES> 8,159
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 627,976
<PP&E> 41,409
<DEPRECIATION> (12,754)
<TOTAL-ASSETS> 797,863
<CURRENT-LIABILITIES> 75,738
<BONDS> 806,319
<COMMON> 24,435
0
0
<OTHER-SE> (596,667)
<TOTAL-LIABILITY-AND-EQUITY> 797,863
<SALES> 0
<TOTAL-REVENUES> 171,205
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 705,788
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,136
<INCOME-PRETAX> (534,583)
<INCOME-TAX> 0
<INCOME-CONTINUING> (534,583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (534,583)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> 0
</TABLE>
