<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/ x / Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996, or
/ / Transition Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to .
------------- -------------
COMMISSION FILE NO.: 0-25978
-----------
THERAPEUTIC ANTIBODIES INC.
----------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 62-1212485
------------------------------------- ------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1500 21ST AVENUE SOUTH, SUITE 310
NASHVILLE, TENNESSEE 37212
--------------------------------------- ------------------------
(Address of Principal Executive Offices) (Zip Code)
(615) 327-1027
---------------------------------------
(Registrant's Telephone Number,
Including Area Code)
NOT APPLICABLE
----------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
--- ---
As of August 14, 1996, 21,428,795 shares of the registrant's Common Stock were
outstanding.
<PAGE> 2
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,167,935 $ 3,397,082
Trade receivables 175,942 109,435
Value added tax receivable 225,858 162,655
Inventories 398,750 393,094
Other current assets 281,250 338,760
------------ -------------
Total current assets 3,249,735 4,401,026
Property and equipment, net 10,232,116 10,119,160
Patent costs, net 418,300 342,246
Other assets, net 269,145 294,667
------------ -------------
Total assets $ 14,169,296 $ 15,157,099
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,424,249 $ 1,506,124
Accrued interest 241,175 177,493
Current portion of notes payable 6,311,382 2,478,858
------------ -------------
Total current liabilities 7,976,806 4,162,475
Notes payable, net of current portion 7,925,763 9,595,420
Deferred revenue 329,800 349,425
Other liabilities 155,200 155,300
------------ -------------
Total liabilities 16,387,569 14,262,620
------------ -------------
Stockholders' equity:
Common stock - par value $.001 per share; 30,000,000 shares authorized; 17,166,502
June 30, 1996 and 16,556,603 - December 31, 1995 issued and outstanding 17,167 16,557
Additional paid-in capital 34,855,993 30,879,879
Deficit accumulated during the development stage (1984-1996) (36,883,269) (29,818,548)
Cumulative translation adjustment (208,164) (183,409)
------------ -------------
Total stockholders' equity (2,218,273) 894,479
------------ -------------
Total liabilities and stockholders' equity $ 14,169,296 $ 15,157,099
============ =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Cumulative
For the Six Months Ended For the Three Months Ended Development Stage
June 30, June 30, from August 10, 1984
--------------------------- ------------------------- (inception) Through
1996 1995 1996 1995 June 30, 1996
------------ ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Sales and contract revenue $ 222,995 $ 211,266 $ 186,235 $ 156,819 $ 2,020,617
Interest income 32,908 56,166 13,913 14,971 461,604
Grant income 97,853 19,919 88,281 9,988 506,268
Value-added tax and insurance recoveries -- -- -- -- 577,170
Other 37,104 6,913 22,747 7,563 265,647
------------ ------------ ----------- ----------- ------------
390,860 294,264 311,176 189,341 3,831,306
------------ ------------ ----------- ----------- ------------
Expenses:
Cost of goods sold 56,182 17,771 46,511 11,368 155,610
Research and development 4,171,267 2,502,632 2,334,272 1,285,143 25,694,066
General and administrative 947,879 716,636 500,011 333,385 7,479,796
Marketing and distribution 169,333 234,606 107,271 127,058 1,170,026
Depreciation and amortization 701,784 386,143 368,584 206,280 3,181,616
Interest 607,539 286,257 292,734 153,198 2,134,828
Debt conversion expense 801,597 -- -- -- 801,597
Other -- -- -- -- 97,036
------------ ------------ ----------- ----------- ------------
7,455,581 4,144,045 3,649,383 2,116,432 40,714,575
------------ ------------ ----------- ----------- ------------
Net loss $ (7,064,721) $ (3,849,781) $(3,338,207) $(1,927,091) $(36,883,269)
============ ============ =========== =========== ============
Net loss per share $ (0.42) $ (0.26) $ (0.19) $ (0.12) $ (4.39)
============ ============ =========== =========== ============
Weighted average shares used in
computing net loss per share 17,001,819 14,838,432 17,154,294 15,912,552 8,401,805
============ ============ =========== =========== ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Cumulative
For the Six Months Ended Development Stage
June 30, from August 10, 1984
---------------------------- (Inception) Through
1996 1995 June 30, 1996
----------- ------------ -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(7,064,721) $ (3,849,781) $(36,883,269)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 701,784 386,143 3,181,616
Debt conversion expense 801,597 801,597
Warrant expense -- -- 147,050
Changes in:
Accounts receivable (129,710) 779,792 (152,429)
Inventories (5,656) (164,959) (284,576)
Other current assets 57,509 (187,593) (282,401)
Accounts payable and accrued expenses (81,875) (599,961) 1,165,368
Accrued interest 128,786 -- 943,300
Other -- 5,325 190,811
----------- ------------ ------------
Net cash used in operating activities (5,592,286) (3,631,034) (31,172,933)
----------- ------------ ------------
Cash flows from investing activities:
(Increase) in restricted cash -- (40,302) --
Purchase of property and equipment (796,320) (1,427,583) (10,022,366)
Patent costs (80,331) (46,216) (433,117)
Cash received from PAL acquisition -- -- 124,496
Other (31,908) 371,797 (86,654)
----------- ------------ ------------
Net cash used in investing activities (908,559) (1,142,304) (10,417,641)
----------- ------------ ------------
Cash flows from financing activities:
Proceeds from notes payable, net 5,538,772 2,480,288 18,811,933
Payments on notes payable (946,326) (561,426) (3,855,448)
Proceeds from line of credit -- -- 3,186,010
Payments on line of credit (1,012,076) (259,571) (3,202,275)
Proceeds from convertible debt, net 1,081,732 5,304,232
Proceeds from issuance of stock, net 610,022 2,844,750 23,937,252
Other -- -- (116,154)
----------- ------------ ------------
Net cash from financing activities 5,272,124 4,504,041 44,065,550
----------- ------------ ------------
Effect of foreign currency translation on cash (426) (221,611) (307,041)
----------- ------------ ------------
Net increase (decrease) in cash and cash equivalents (1,229,147) (490,908) 2,167,935
Cash and cash equivalents at beginning of period 3,397,082 593,154 --
----------- ------------ ------------
Cash and cash equivalents at end of period $ 2,167,935 $ 102,246 $ 2,167,935
=========== ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
THERAPEUTIC ANTIBODIES INC. AND SUBSIDIARIES
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
JUNE 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying interim financial statements are unaudited, but include all
adjustments (consisting of normal recurring accruals) which are, in the opinion
of management, necessary for a fair statement of the results for such periods.
The unaudited interim consolidated financial statements should be read in
conjunction with the audited December 31, 1995, consolidated financial
statements of the Company.
The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year ending December 31,
1996.
NOTE 2 - FINANCING ACTIVITIES
On July 23, 1996, the Company completed an initial public offering of its
Common Stock on the London Stock Exchange. The Company issued 4,190,477 shares
of Common Stock at L.5.25 ($8.14) per share raising L.22,000,000 ($34,100,000).
The offering raised net proceeds of approximately $30,500,000, which proceeds
will be used to repay certain indebtedness and to fund working capital,
operations and capital expenditures.
In June 1996, the Company completed a private placement of $5,000,000 principal
amount of the Company's 15% Subordinated Promissory Notes due May 1, 1997, (the
"15% Notes"), of which $4,250,000 were purchased for cash and $750,000 were
issued upon conversion of other indebtedness. Warrants to purchase 360,000
shares of the Company's Common Stock at $8.00 per share were issued in
connection with the 15% Notes.
In April 1996, Martin S. Brown loaned $1,000,000 to the Company in exchange for
a short-term unsecured note bearing interest at an annual rate of 12%. In May
1996, Mr. Brown converted $750,000 principal amount of the 12% note into an
equal principal amount of the Company's 15% Notes. The $250,000 principal
balance on the 12% note is payable in full, together with accrued interest, on
August 18, 1996.
During the first half of 1996, the Company repaid a $950,000 short-term line of
credit borrowing due to SunTrust Bank .
During the six months ended June 30, 1996, the Company's subsidiary, TAb
Australia, Pty. Ltd. borrowed an additional $227,000 on its collateralized loan
from the South Australian Minister for Primary Industries. As of June 30,
1996, the Company had drawn a total of $487,000 on this loan.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and
results of operations of the Company should be read in conjunction with the
financial statements and notes thereto. This discussion and analysis contains
both historical and forward looking information. The forward looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Forward looking statements may be
significantly impacted by certain risks and uncertainties described herein.
GENERAL
Since its inception, Therapeutic Antibodies Inc. ("TAb" or the
"Company") has been in the development stage, devoting its efforts and
resources to drug discovery and development programs relating to the
development of highly purified, polyclonal antibodies for the treatment of
disease. Since inception the Company's revenues have been from contract
agreements with corporate partners, product sales, grant income, interest
income, and insurance and value added tax recoveries. Net losses have been
incurred each year since its inception and the Company does not expect to
realize positive cash flow during at least the next two years due to continued
spending on research, product development and increasing requirements for
process development, preclinical and clinical testing, regulatory affairs,
initial manufacturing activities and administration. To fund these activities,
the Company conducted additional financings in the first six months of 1996.
See "Liquidity and Capital Resources."
The Company conducts its operations from its headquarters in the
United States and through subsidiaries located in the United Kingdom, Australia
and New Zealand. International operations are primarily located in the United
Kingdom.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1996 Compared to Three Months Ended June 30, 1995
Revenues for the three months ended June 30, 1996, increased by 64% to
$311,000 from $189,000 for the three months ended June 30, 1995. This increase
is due to an increase in ViperaTAb(TM) sales and an increase in grant income.
Second quarter 1996, ViperaTAb(TM) sales increased 40% to $147,000 from
$105,000 in the second quarter ended June 30, 1995. Grant income increased
784% to $88,000 from $10,000. The Company received a $79,000 grant in the
second quarter ended June 30, 1996, from the Economic Development Authority of
the Government of South Australia to assist the Company with the expansion of
its Australian operations.
Expenses increased by 72% to $3,649,000 in the second quarter of 1996,
from $2,116,000 in the second quarter of 1995. Research and development
expenses increased by 82% to $2,334,000 in the second quarter of 1996 from
$1,285,000 in the second quarter of 1995, as a result of increases in the
levels of clinical trials of products in development, including CytoTAb(TM),
CroTAb(TM), DigiTAb(TM) and PulchellaTAb(TM). Management expects that research
and development expenses will continue to increase in the remaining two
quarters of 1996 as the Company's current clinical trials progress.
6
<PAGE> 7
General and administrative expenses increased by 50% in the second
quarter of 1996 to $500,000 from $333,000 in the second quarter of 1995. The
increase is attributable to the hiring of new personnel and the additional
associated costs.
Marketing and distribution expenses in the second quarter of 1996,
decreased by 16% to $107,000 compared to $127,000 in the second quarter of 1995
due to a reduction in marketing personnel and related salary expenses. This
decrease was partially offset by an increase of $13,000 in distribution
expenses over the same period in 1995 as a result of the increased sales of
ViperaTAb(TM).
Depreciation and amortization expense in the second quarter of 1996,
increased by 79% to $369,000 from $206,000 compared to the second quarter of
1995. This increase is the result of the initial depreciation of the
$4,000,000 capital expenditure relating to the expansion of the Welsh
production facility which was placed in service in December 1995.
Interest expense in the second quarter of 1996 increased by 91% to
$293,000 from $153,000 in the second quarter of 1995 as a result of increased
borrowing by the Company to fund working capital and operations, including the
issuance of $5,305,000 principal amount of the Company's 6% Convertible Notes
due October 1, 2000 (the "6% Notes") and $5,000,000 principal amount of its 15%
Subordinated Promissory Notes due May 1, 1997, (the "15% Notes"). Management
anticipates that the Company will repay up to $4,750,000 of certain of its debt
obligations from the proceeds of the sale of Common Stock in the United Kingdom
in July 1996. See "Liquidity and Capital Resources". Any such repayment of
debt would result in a decrease in the Company's interest expense from current
levels.
Six Months Ended June 30, 1996 Compared to Six Months Ended June 30, 1995
TAb's revenues for the first six months of 1996 increased by 33% to
$391,000 from $294,000 for the same period of 1995. ViperaTAb(TM) sales
increased by 42% to $151,000 for the first half of 1996 from $106,000 for the
first half of 1995 while non-core contract production revenue decreased 32% to
$72,000 from $105,000. Grant income for the six months ended June 30, 1996,
increased by 390% to $98,000 from $20,000 in the six months ended June 30,
1995. In June 1996 the Company received a $79,000 grant from the Economic
Development Authority of the Government of South Australia to assist the
Company with the expansion of its Australian operations.
Expenses for the first half of 1996 increased by 80% to $7,456,000
from $4,144,000 for the same period in 1995. Research and development expenses
during the same periods increased by 67% to $4,171,000 from $2,503,000 as a
result of increased clinical trial activities, including clinical trials for
CytoTAb(TM), CroTAb(TM), DigiTAb(TM) and PulchellaTAb(TM). These costs are
related to manufacturing TAb's products for clinical trials and conducting
clinical trials.
General and administrative expenses for the first half of 1996
increased by 32% to $948,000 from $717,000 for the first half of 1995. This
increase relates primarily to expanded staffing and related overhead expenses.
Marketing and distribution expenses decreased by 28% to $169,000 in
the first half of 1996 from $235,000 in the first half of 1995 due to a
reduction in marketing personnel and related salary expenses.
7
<PAGE> 8
Depreciation and amortization expense in the six month period ended
June 30, 1996, increased by 82% to $702,000 from $386,000 compared to the six
month period ended June 30, 1995. This increase is the result of the initial
depreciation of the $4,000,000 capital expenditure relating to the expansion of
the Welsh production facility, which was placed in service in December 1995.
Interest expense in the first half of 1996 increased by 112% to
$608,000 from $286,000 in the first half of 1995 due to increased borrowings by
the Company including the issuance of the 6% and 15% Notes.
In the first quarter of 1996, the Company recorded a one-time debt
conversion expense of $801,597, relating to the conversion of an aggregate of
$2,565,105 of principal and interest on the Company's 6% Notes into shares of
Common Stock, which represents the difference between the stated conversion
price on the debt of $8.00 per share and the actual conversion price of $5.50.
The Company's net loss for the first half of 1996, was $7,100,000
compared to a net loss of $3,800,000 for the first half of 1995. This increase
was due to the one-time debt conversion expense and the other increased
expenses described above.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, TAb has been in the development stage, devoting
its efforts and resources to drug discovery and development programs. Capital
resources have been used for the establishment and expansion of production
facilities, research and development, clinical testing and to meet TAb's
increased working capital needs in connection with such activities. Management
does not expect revenues from product sales to be a significant source of
funding until additional products receive regulatory approval. Future capital
requirements will depend on numerous factors, including the progress of its
research programs and clinical trials, the development of regulatory
submissions, the commercial viability of the Company's products, the
development of sales, distribution and marketing capabilities, and the terms of
any new licensing arrangements. Financing for the Company's operating and
capital requirements historically has been provided by the sale of equity,
convertible debt and through other borrowings.
At June 30, 1996, the Company had cash and cash equivalents totaling
$2,168,000. The Company's net cash used in operating activities during the six
months ending June 30, 1996, totaled $5,592,000, an increase of 54% from the
six months ending June 30, 1995. Capital expenditures of $796,000 in the first
six months of 1996 related primarily to the expansion of the Company's
production facility in Australia. TAb anticipates that capital expenditures in
1996 will be less than $1,700,000 and expects to fund these capital
expenditures with existing resources, a portion of the UK offering (discussed
below), and the $1,180,000 loan from the South Australian Minister for Primary
Industries (discussed below).
On July 23, 1996, the Company completed an initial public offering of
its Common Stock on the London Stock Exchange. The Company issued 4,190,477
shares of Common Stock at L.5.25 ($8.14) per share raising L.22,000,000
($34,100,000). The offering raised net proceeds of approximately $30,500,000,
which proceeds will be utilized to fund working capital, operations and capital
expenditures. Approximately $4,750,000 of the proceeds of the U.K. offering
will be used to repay the Company's 15% Notes and certain other indebtedness.
8
<PAGE> 9
During the six months ended June 30, 1996, TAb Australia Pty. Ltd.,
the Company's Australian operating subsidiary ("TAb Australia"), made a
$227,000 draw on its collateralized loan from the South Australian Minister for
Primary Industries. Under this loan agreement, TAb Australia may draw up to
$1,180,000 to assist with construction and equipping of buildings at its
Turretfield location in South Australia. The loan bears interest at an annual
rate of 11%, payable annually. Principal is to be repaid in ten equal annual
installments. As of June 30, 1996, the Company had outstanding draws of
$487,000 on this loan.
In June 1996, the Company completed a private placement of $5,000,000
principal amount of the Company's 15% Subordinated Promissory Notes due May 1,
1997, of which $4,250,000 were purchased for cash and $750,000 were issued upon
conversion of indebtedness. Each $250,000 unit of the 15% Notes was
accompanied by a Stock Purchase Warrant to purchase 18,000 shares of Common
Stock at $8.00 per share. Warrants to purchase 360,000 shares of Common Stock
were issued in connection with the 15% Notes.
In April 1996, Martin S. Brown loaned $1,000,000 to the Company in
exchange for a short-term unsecured note bearing interest at an annual rate of
12%. In May 1996, Mr. Brown converted $750,000 principal of the 12% Note into
an equal principal amount of the Company's 15% Notes. The $250,000 principal
balance on the 12% Note is payable in full, together with accrued interest, on
August 18, 1996. It has been agreed to extend both of these debt obligations
through the end of 1998.
The Company repaid a $950,000 short-term line of credit borrowing from
SunTrust Bank in the first half of 1996.
9
<PAGE> 10
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On July 5, 1996, shareholders of the Company approved certain
amendments to the Company's Certificate of Incorporation and Bylaws, which were
necessary to facilitate the listing of the Company's Common Stock on the London
Stock Exchange and the marketing of the Common Stock in the United Kingdom.
The amendments included changes to the shareholder voting requirements for
certain amendments to the Certificate of Incorporation and Bylaws. The Company
filed its Amended and Restated Certificate of Incorporation in Delaware on July
15, 1996. A complete discussion of the amendments to the Company's Certificate
of Incorporation and Bylaws, as well as the complete text of such amendments,
is hereby incorporated by reference to the Company's Proxy Statement, dated
June 24, 1996, relating to the Special Meeting of Shareholders to be held on
July 5, 1996.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of shareholders of the Company was held on
Thursday, April 25, 1996. The election of the Company's directors was the only
matter voted upon by the Company's shareholders at the meeting. Proxies for
the meeting were solicited pursuant to Regulation 14 under the Securities and
Exchange Act of 1934. There was no solicitation in opposition to management's
nominees as listed in the proxy statement, and all of such nominees were
elected. The following persons were elected to serve as directors of the
Company until the next annual meeting or until their respective successors are
elected and qualified. The vote was as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Cast Broker Non-Votes/
Nominee in Favor Against Abstentions
- ------- -------- ------- -----------
<S> <C> <C> <C>
Thomas G. Andrews 13,128,317 6,250 4,007,519
Martin S. Brown 13,128,317 6,250 4,007,519
Harry G. Browne, M.D. 13,128,317 6,250 4,007,519
Timothy Chard, M.D. 13,128,317 6,250 4,007,519
Robert C. Hilton 13,128,317 6,250 4,007,519
A.J. Kazimi 13,128,317 6,250 4,007,519
John Landon, M.D. 13,128,317 6,250 4,007,519
Steven L. Stroup, M.D. 13,128,317 6,250 4,007,519
Joseph D. Williams 13,128,317 6,250 4,007,519
</TABLE>
10
<PAGE> 11
A special meeting of the shareholders of the Company was held on
Friday, July 5, 1996. The shareholders voted on the amendment and restatement
of the Company's Certificate of Incorporation and Bylaws and on the amendment
to the Company's 1990 Stock Incentive Plan. The amendment to the Certificate
of Incorporation and Bylaws were necessary to facilitate the listing of the
Company's Common Stock on the London Stock Exchange. See "Item 2. Changes in
Securities" above. The amendment to the 1990 Stock Incentive Plan increased
the number of shares of Common Stock authorized for issuance under the Plan
from 1,200,000 shares to 1,600,000 shares. The vote was as follows:
<TABLE>
<CAPTION>
Votes Cast Votes Cast Broker Non-Votes
Matter In Favor Against Abstentions
- ------ -------- ------- -----------
<S> <C> <C> <C>
Amendment of Certificate
of Incorporation and
Bylaws 12,937,334 0 37,875
Amendment of 1990
Stock Incentive Plan 12,720,966 198,616 55,625
</TABLE>
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description of Exhibits
----- -----------------------
3.1 Amended and Restated Certificate of Incorporation of
Therapeutic Antibodies Inc. (incorporated by
reference to Appendix A to the Company's Proxy
Statement on Schedule 14A filed with the Commission
on June 24, 1996.)
3.2 Amended and Restated Bylaws of Therapeutic Antibodies
Inc. (incorporated by reference Appendix B to the
Company's Proxy Statement on Schedule 14A filed with
the Commission on June 24, 1996.)
4.1 Agreement dated April 29, 1996, between Minister for
Industry, Manufacturing, Small Business and Regional
Development and TAb Australia, Pty. Ltd.
4.2 Form of Note Purchase Agreement with respect to the
Company's 15% Promissory Note due May 1, 1997
4.3 Specimen of 15% Promissory Note due May 1, 1997
11.1 Statement re: computation of per share earnings
27 Financial Data Schedule (SEC use only)
(b) Reports on Form 8-K.
The Company has not filed any Current Reports on Form
8-K during the second quarter of 1996.
12
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be filed on its behalf by the
undersigned thereunto duly authorized.
Date: August 14, 1996 /s/ Martin S. Brown
---------------------------------
Martin S. Brown
Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)
Date: August 14, 1996 /s/ Robert D. Brown
---------------------------------
Robert D. Brown, CPA
Financial Controller
(Principal Accounting Officer)
13
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibits Page
------ ----------------------- ----
<S> <C> <C>
4.1 -- Agreement dated April 29, 1996, between Minister for
Industry, Manufacturing, Small Business and Regional
Development and TAb Australia, Pty. Ltd.
4.2 -- Form of Note Purchase Agreement with respect to the
Company's 15% Promissory Note due May 1, 1997
4.3 -- Specimen of 15% Promissory Note due May 1, 1997
11.1 -- Statement re: computation of per share earnings
27 -- Financial Data Schedule (SEC use only)
</TABLE>
14
<PAGE> 1
EXHIBIT 4.1
THIS AGREEMENT is made the day of 1996
(Agreement manually dated 29th April 1996)
BETWEEN:
MINISTER FOR INDUSTRY, MANUFACTURING, SMALL BUSINESS AND REGIONAL DEVELOPMENT
a body corporate pursuant to the Administrative Arrangements Act 1994 of Level
9, Terrace Towers, 178 North Terrace, Adelaide 5000 in the State of South
Australia (hereinafter called the "MINISTER");
AND
The person referred to in Item 1 of the Schedule being a company duly
incorporated in the State or Territory specified in Item 2 of the Schedule and
having its registered office at the address specified in Item 3 of the Schedule
in the said State (hereinafter called the "BORROWER").
BACKGROUND
Whereas the Minister has agreed, at the request of the BORROWER, to lend by way
of interest free loan the ADVANCE on the terms of this AGREEMENT.
NOW THE PARTIES AGREE AS FOLLOWS:
1. INTERPRETATION AND DEFINITIONS
1.1 When interpreting this AGREEMENT, unless the context otherwise
requires:-
(a) words in bold and italics have specific meanings
given to them in Clause 1.2;
(b) headings do not affect the interpretation or
construction;
(c) references to an Act include the amendments to that
Act which are in force, any Act passed in substitution for that
Act and any regulations in force under that Act;
(d) words importing the singular include the plural and
vice versa;
(e) words importing any gender includes every other
gender;
<PAGE> 2
(f) references to a person include a corporation or
company;
(g) references to "winding up" when applied to
individuals will be taken to refer to "bankruptcy";
(h) references to any deed or agreement include
references to that deed or agreement as varied or amended;
(i) if under or in connection with this AGREEMENT the
day on or by which any act, matter or thing is required to be
done is not a BUSINESS DAY that act, matter or thing can be
done on the next succeeding day which is a BUSINESS DAY;
(j) reference to a clause, schedule or item in a
schedule shall mean a reference to a clause, schedule or item
in a schedule of this AGREEMENT.
1.2 In this AGREEMENT unless the context otherwise requires:-
"ADVANCE" means the sum specified in Item 4 of the Schedule expressed in
the legal currency of Australia;
"AGREEMENT" means this AGREEMENT and any other agreement, deed or
instrument expressed to supplemental to this AGREEMENT and any
amendment, variation or modification made in accordance with the
terms of this AGREEMENT;
"AUTHORISED OFFICER" means:
(a) in the case of the MINISTER, the Chief Executive Officer of the
Economic Development Authority, a person for the time being acting in
that capacity and any other person approved by the MINISTER to act as
an AUTHORISED OFFICER for the purpose of this AGREEMENT;
(b) in the case of the BORROWER, a director or secretary of the
BORROWER and any other person approved by the BORROWER in writing to
the MINISTER to act as an AUTHORISED OFFICER for the purpose of this
AGREEMENT;
"BORROWER" means the BORROWER described in Item 1 of the Schedule and its
successors and permitted assigns;
"BUSINESS" means the BORROWER'S business trading under the business name
specified in Item 5 of the Schedule;
"BUSINESS DAY" means any day on which trading banks are open for business
in Adelaide;
<PAGE> 3
"DEFAULT RATE" means the rate of interest being the aggregate of 2% per
annum and the GOVERNMENT INVESTMENT RATE;
"DRAWDOWN" means the advance of the ADVANCE under this AGREEMENT;
"DRAWDOWN DATE" means the date specified in Item 6 of the Schedule;
"EARLY TERMINATION DATE" has the meaning given to it in Clause 5;
"EVENT OF DEFAULT" has the meaning given to it in Clause 5;
"EXPIRY DATE" means that anniversary specified in Item 7 of the Schedule
of the date of this Deed;
"FTE" means a person who:
(a) resides in South Australia;
(b) is taken to be an employee of the BORROWER under the PAYROLL
TAX ACT (SA) 1971; and
(c) for the purposes of an applicable industrial award or agreement
is regarded as an employee working on a full time basis, or if no
such award or agreement exists, is required by the BORROWER to work
at least thirty seven and a half (37.5) hours a week.
For the purposes of paragraph (c) of this definition where two or
more such person are employed by the BORROWER, who each work less
than thirty seven and a half (37.5) hours a week, their weekly hours,
with the exception of the hours they may have performed in relation
to overtime, may be combined to equate to a FTE (i.e thirty seven and
a half (37.5) hours) and for the purposes of this AGREEMENT will be
treated as FTE.
"GOVERNMENT INVESTMENT RATE" means the aggregate of one percent (1%) per
annum and the rate percent per annum determined by the MINISTER to be
that which expresses as a percentage per annum the cost to the
Government of South Australia of funding the amount of the ADVANCE to
the BORROWER under this AGREEMENT;
"MINISTER" means the Minister, its successors and permitted assigns;
"OUTSTANDING MONEY" means and includes the aggregate of:
(a) the ADVANCE; and
<PAGE> 4
(b) all other money, including interest due and payable
under this AGREEMENT and not paid and all loss and damages for
which the BORROWER is now or after the date of this AGREEMENT
indebted or liable or contingently indebted or liable to the
MINISTER on any account whatever arising under or in connection
with this AGREEMENT including payments, obligations and
liabilities actual or contingent which the MINISTER incurs or
has incurred for the protection, preservation or enforcement of
its rights, powers and privileges under this AGREEMENT;
"PURPOSE" means the purpose specified in Item 8 of the Schedule;
"RELATED CORPORATION" means a corporation related to the BORROWER as
defined by Section 50 of the Corporations Law;
"REVIEW PERIOD" means the six (6) month period commencing on the DRAWDOWN
DATE and every subsequent six (6) month period thereafter until the
second anniversary of the DRAWDOWN DATE.
"TERMINATION DATE" means the earlier of the following:
(a) the EXPIRY DATE; and
(b) the date on which the MINISTER demands payment from the
BORROWER of the OUTSTANDING MONEY provided that no demand will be
made by the MINISTER unless and until an EVENT OF DEFAULT has
occurred.
1.3 Except where otherwise provided in this AGREEMENT any
determination, statement or certificate by the MINISTER or an
AUTHORISED OFFICER of the MINISTER provided for in this AGREEMENT
will be conclusive and binding on the parties in the absence of
manifest error.
1.4 All notifications, opinions, certificates or decisions given,
expressed or made for the purposes of and under this AGREEMENT by the
MINISTER, will be prima facie evidence of those matters.
2. ACKNOWLEDGMENTS BY THE BORROWER
The BORROWER acknowledges that:
<PAGE> 5
(a) the MINISTER has determined that the lending of the ADVANCE to the
BORROWER, on the terms of this AGREEMENT, will be in the interests
of the public of the State of South Australia; and
(b) the MINISTER, based on that determination, and at the request of the
BORROWER, has agreed to lend the ADVANCE to the BORROWER interest
free on the basis of the BORROWER'S agreement to comply with its
obligations under this AGREEMENT; and
(c) if it fails to comply with its obligations under this AGREEMENT the
MINISTER will suffer loss.
3. LENDING OF THE ADVANCE
3.1 The MINISTER will not be under an obligation to lend the
ADVANCE to the BORROWER:
(a) if the MINISTER has not received, on or before the DRAWDOWN
DATE, the following in form and substance satisfactory to the
MINISTER:
(i) a copy of the Memorandum and Articles of Association
of the BORROWER certified by an officer of the
BORROWER; and
(ii) a copy of extracts of all minutes of meeting and
other authorisations of the BORROWER required for the
execution, delivery and performance of its obligations
under this AGREEMENT and authorising a named person or
persons to sign on the BORROWER's behalf this
AGREEMENT and any other notice or document required
under this AGREEMENT certified by an officer of the
BORROWER; and
(iii) a list of the names, titles and specimen signatures
signatures of the persons authorised to take action on
behalf of the BORROWER as specified in sub-clauses
(i), (ii) and (v); and
(iv) a written direction from the BORROWER as to the
payment of the ADVANCE signed by a duly authorised
officer of the BORROWER; and
(v) a certified copy of any power of attorney issued in
favour of any person executing this AGREEMENT or any
required notices hereunder on behalf of the BORROWER;
and
(vi) a certificate of currency in respect of the
insurances required to be effected by the BORROWER in
accordance with Clause 10; and
(vii) the documents listed in Item 9 of the Schedule, if
any; and
<PAGE> 6
(viii) such other documents as the MINISTER may reasonably
require; and anything required to be certified under
this Clause must be certified by the secretary or a
director of the BORROWER as being true, complete and
up-to-date;
<PAGE> 7
(b) if an EVENT OF DEFAULT, or event which, with the
giving of notice, lapse of time or fulfilment of any condition
would be likely to become a EVENT OF DEFAULT has occurred and
is subsisting at the DRAWDOWN DATE.
3.2 Subject to Clause 3.1 the MINISTER will lend the ADVANCE to the
BORROWER on the DRAWDOWN DATE on the terms of this AGREEMENT and the
BORROWER accepts the ADVANCE on the terms of this AGREEMENT.
3.3 The BORROWER will repay the ADVANCE to the MINISTER in
accordance with Item 4.5 of the Schedule. On the TERMINATION DATE
the BORROWER will pay to the MINISTER that part of the OUTSTANDING
MONEY which does not comprise the ADVANCE.
3.4 On the TERMINATION DATE the MINISTER'S obligations under this
AGREEMENT terminate.
4. PREPAYMENT OF THE ADVANCE BY THE BORROWER
The BORROWER may prepay at any time prior to the TERMINATION DATE the
whole or any part of the ADVANCE together with any other money payable
under this AGREEMENT to the MINISTER but not paid by the BORROWER by
giving not less than six (6) BUSINESS DAYS notice in writing to the
MINISTER but not otherwise.
5. EVENTS OF DEFAULT
5.1 The occurrence at any time of any of the following events
constitutes an event of default ("EVENT OF DEFAULT"):
(a) the BORROWER fails to pay when due any payment
under this AGREEMENT if that failure is not remedied on or
before the second BUSINESS DAY after notice, given by the
MINISTER of the failure, is treated as being received by the
BORROWER under Clause 16; or
(b) the BORROWER fails to comply with and perform its
obligations under this AGREEMENT (other than an obligation to
make a payment) if that failure is not remedied on or before
the fourteenth day after notice, by the MINISTER, of the
failure is treated as being received by the BORROWER under
Clause 16; or
(c) a representation or warranty made in connection
with or under this AGREEMENT or, the making of it or any
statement or report concerning the assets, liabilities and the
financial condition of the BORROWER given in connection with or
under this AGREEMENT, proves at any time to have been or to be
incorrect, inaccurate or misleading in any material respect; or
<PAGE> 8
(d) a material term, condition or provision of this AGREEMENT is
or becomes void, voidable, illegal, invalid or unenforceable
or the BORROWER alleges or any court decides that any material
term, condition or provision is void, voidable, illegal or
invalid or unenforceable; or
(e) a Liquidator, Receiver, Receiver or Manager, Voluntary
Administrator, Mortgagee's Agent in Possession or Official
Trustee in Bankruptcy is appointed in respect of the BORROWER
or any RELATED CORPORATION and their respective assets or an
order is made or resolution is proposed or passed for the
winding up of the BORROWER or any RELATED CORPORATION; or
(f) without the prior written consent of the MINISTER, a
compromise, arrangement or scheme is proposed or entered into
between the BORROWER and its creditors or any class of them or
a RELATED CORPORATION and its creditors or any class of them or
the BORROWER or any RELATED CORPORATION makes an assignment for
its creditors or any class thereof or ceases to pay its debts
as they mature; or
(g) the BORROWER ceases or threatens to cease to carry on the
BUSINESS in South Australia or disposes or threatens to
dispose of a substantial part of its business, property or
assets or a substantial part of its property or assets is
seized or appropriated or reduces or threatens to reduce the
number of FTE employed in the BUSINESS by the BORROWER below an
average of ten (10) FTE within ten (10) years of the DRAWDOWN
DATE; or
(h) there occurs any material adverse change in the condition or
stability of the BORROWER or a RELATED CORPORATION which in
the reasonable opinion of the MINISTER could result in the
BORROWER being unable to perform its obligations under this
AGREEMENT; or
(i) an inspector is appointed to investigate the
affairs of the BORROWER or any RELATED CORPORATION; or
(j) the effective control of the BORROWER will without the
previous consent in writing of the MINISTER change in any
respect and which in the opinion of the MINISTER will be
detrimental to the interest of the MINISTER; or
(k) the events specified in Item 10 of the Schedule, if
any.
5.2 At any time after an EVENT OF DEFAULT has occurred, and whether
or not the relevant EVENT OF DEFAULT is continuing, the MINISTER may,
by notice in writing to the BORROWER specifying the relevant EVENT OF
DEFAULT designate a date as an early termination date for the
purposes of this AGREEMENT ("EARLY TERMINATION DATE") being a date
not
<PAGE> 9
earlier than the third day after the notice is treated as being
received by the COMPANY under Clause 16.
5.3 If the MINISTER gives a notice to the BORROWER designating an
EARLY TERMINATION DATE and whether or not the relevant EVENT OF
DEFAULT is continuing, the BORROWER will pay to the MINISTER on the
EARLY TERMINATION DATE the OUTSTANDING MONEY, on receipt of which the
MINISTER'S obligations under this AGREEMENT will terminate.
6. AVOIDANCE OF PAYMENTS MADE BY THE BORROWER
If any payment, obligation, settlement, conveyance, transfer or
other transaction of the AGREEMENT relating to or under this AGREEMENT is:
(a) void, voidable or unenforceable, in whole or in part; or
(b) claimed to be void, voidable or unenforceable, in whole or in
part, and that claim is upheld, conceded or compromised in whole or
in part,
the rights of the MINISTER and the liability of the BORROWER are the
same as if:
(c) that payment, obligation, settlement, conveyance, transfer or
transaction (or the void, voidable or unenforceable part of it); and
(d) any release, settlement or discharge made in reliance on
anything referred to in paragraph (c),
had not been made and the BORROWER must immediately take all action, and
sign all documents necessary or required by the MINISTER to restore all
rights and interests held by the MINISTER before the payment, obligation,
settlement, conveyance, transfer or transaction. This obligation applies
whether or not the MINISTER knew, or ought to have known, of anything
referred to in paragraph (a) or (b).
7. REPRESENTATIONS BY THE BORROWER
7.1 The BORROWER represents and warrants to the MINISTER as follows:-
(a) The BORROWER is duly incorporated and qualified to carry on the
BUSINESS.
(b) The execution, delivery and performance by the BORROWER of this
AGREEMENT is within the powers of the BORROWER and is valid and
enforceable and the BORROWER has been duly authorised by all
necessary action and does not and will not contravene or result
<PAGE> 10
in any breach of any law or contractual arrangement or agreement by
which the BORROWER or any of its assets are bound.
(c) All authorizations, approvals, consents, licences, exemptions,
filings, registrations and other requirements with respect to the
BORROWER of governmental, judicial and public bodies and authorities
required in connection with the execution, delivery and performance
by the BORROWER of this AGREEMENT have been obtained or effected or
will be obtained or effected within any relevant time or statutory
period and are or will be in full force and effect and there has
been no default by the BORROWER in the performance of any of those
terms or conditions.
(d) No EVENT OF DEFAULT or event which with the giving of notice or
lapse of time or both would if it continued become an EVENT OF
DEFAULT, has occurred and is continuing.
(e) The information contained in all financial statements, accounts,
certificates, balance sheets, financial projections, schedules and
other documents, accounting and financial information supplied to
the MINISTER relating to the BORROWER or any matter related to the
ADVANCE presents, as the case may be, a true and fair view of the
financial position of the BORROWER as of the DRAWDOWN DATE and is
true and correct and not misleading in any material respect and the
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with
that in respect of previous financial years (unless notified to the
contrary to the MINISTER) and there are no material facts known to
the BORROWER relating to the condition of the BORROWER financial or
otherwise or any matter relating to the ADVANCE which could or might
affect the willingness of a lender to enter into an agreement with
the BORROWER in terms similar to the terms of this AGREEMENT which
have not been disclosed to the MINISTER.
(f) As at the DRAWDOWN DATE the BORROWER already employs ten (10) FTE
Each of the above representations and warranties shall
survive the execution of this AGREEMENT and the provision of the
ADVANCE and will be correct and complied with in all material
respects on the DRAWDOWN DATE as if repeated then by reference
to the then existing circumstances, except that each reference
to accounts in (e) shall be construed as a reference to the then
latest available annual accounts.
7.2 The BORROWER hereby indemnifies the MINISTER against all losses,
liabilities, costs, claims, charges, expenses, actions or demands
which he may incur or which may be made against him as a result of,
or in relation to, or in connection with, any misrepresentation by
the BORROWER or any breach of the representations and warranties
made by the BORROWER.
<PAGE> 11
8. OBLIGATIONS OF THE BORROWER
The BORROWER agrees with the MINISTER that until the OUTSTANDING MONEY
has been repaid or paid to the MINISTER:
(a) the BORROWER will not, except with the prior consent in writing
of the MINISTER, apply the ADVANCE for purposes other than the
PURPOSE;
(b) the BORROWER will carry on and maintain the BUSINESS in South
Australia and will not, except with the prior written consent of the
MINISTER, reduce or threaten to reduce the scale of its operations in
South Australia within ten (10) years from the DRAWDOWN DATE from
that which is being carried on at the date of this AGREEMENT;
(c) the BORROWER will provide at all reasonable times such
information and particulars (including, without limitation, any books
of account, balance sheets, profit and loss statements, monthly
financial reports, documents or papers of any kind whatever relating
to the BORROWER) as the MINISTER reasonably requires in connection
with affairs and operations of the BORROWER and the MINISTER will be
entitled to make copies or take extracts of them, and inspect all or
any buildings, fixtures, fittings, machinery, implements, utensils,
stock-in-trade, and other things belonging to the BORROWER or in
which the BORROWER may have an interest of whatever nature;
(d) give the MINISTER notice in writing forthwith upon becoming
aware of the occurrence of any EVENT OF DEFAULT or other event which,
with the giving of notice or lapse of time or upon the MINISTER
making the relevant determination would constitute an EVENT OF
DEFAULT;
(e) the BORROWER will comply with the obligations specified in Item
11 of the Schedule, if any.
9. NO WITHHOLDINGS AND DEDUCTIONS BY THE BORROWER
All amounts payable by the BORROWER under this AGREEMENT will be
calculated without reference to any set-off, counterclaim or withholding
by the BORROWER and will be made free and clear of and without any
deduction for or on account of any set-off, counterclaim or withholding
unless in the case of a withholding it is required by law.
10. REQUIREMENTS AS TO INSURANCE
The BORROWER will insure and keep insured the whole of its assets and
undertakings with a reputable insurer for their full insurable value
against fire, storm, tempest and all other risks as are usually insured
against by persons or companies pursuing a business enterprise of
<PAGE> 12
the same or similar kind to that pursued by the BORROWER AND in addition
the BORROWER will effect those workers compensation, public risk and other
insurances as are usually effected by persons or companies engaged in an
enterprise of the same or similar kind to that carried on by the BORROWER
AND will produce such certificates of insurances or other satisfactory
evidence of it to the MINISTER within two (2) days of a request by the
MINISTER AND if any default will be made in the performance of the
foregoing covenants for insurance then and in every such case it will be
lawful for but not obligatory on the MINISTER to effect or revive or keep
on foot those insurance or insurances for the like or any less amount and
the costs incurred by the MINISTER in doing so will be paid by the BORROWER
to the MINISTER within two (2) days (exclusive of the date of receipt) of
the date a written demand for payment of those costs by the MINISTER is
treated as being received under Clause 16.
11. SEVERABILITY
In the event that any one or more of the provisions of this AGREEMENT
are invalid, void, illegal or unenforceable in respect of any law the
validity, existence, legality and enforceability of the remaining
provisions of this AGREEMENT will not in any way be affected, prejudiced
or impaired.
12. DEFAULT INTEREST PAYABLE BY THE BORROWER
If the BORROWER defaults in the payment of any amount under this
AGREEMENT on the due date for its payment the BORROWER will pay interest
on that amount for the period from (and including) the due date until
(but excluding) the date of its payment (both before and after any
judgement) at the DEFAULT RATE. The interest will accrue from day to
day, be calculated on a 365 day year basis, be paid within two (2) days
of the date a written demand by the MINISTER for interest is treated as
being received by the BORROWER under Clause 16 and will be capitalised
every 30 days and itself bear interest in accordance with the terms of
this Clause.
13. DELEGATION BY THE MINISTER
The parties agree and acknowledge that any act, matter, or thing,
including any demand or communication, which is required to be
performed, given or done or is permitted to be performed, given or done
by the MINISTER may be performed, given or done by an AUTHORISED OFFICER
of the MINISTER.
14. GOVERNING LAW
14.1 This AGREEMENT shall be governed by and construed in
accordance with the law for the time being in force in
South Australia and the parties to this AGREEMENT irrevocably
<PAGE> 13
agree for the benefit of the other that the courts of the State
of South Australia have jurisdiction to hear and determine any
suit, action or proceeding and to settle any disputes which may
arise out of or in connection with this AGREEMENT and for such
purposes irrevocably submit to the jurisdiction of such courts.
Each party waives any right it has to object to an action being
brought in those courts, to claim that the action has been
brought in an inconvenient forum, or to claim that those courts
do not have jurisdiction.
14.2 Without preventing any other mode of service, any document in an
action (including, without limitation, any writ or summons or
other originating process or any third or other party notice) may
be served on any party by being delivered to or left for that
party at its address for service of notices under Clause 16.
15. COSTS PAYABLE BY THE PARTIES
15.1 Each party will bear its own costs, charges and expenses of and
relating to the negotiation, preparation and execution of this
AGREEMENT. Any stamp duty or registration fees shall be payable by
the MINISTER.
15.2 The BORROWER will pay to the MINISTER on demand all duties,
fees, costs (including legal costs), charges and other expenses
incurred by the MINISTER as a result of any and every breach of, or
non-compliance with the terms of this AGREEMENT, by the BORROWER and
in or incidental to the exercise or attempted exercise (as a result
of any breach or non-compliance) of any right, power, privilege,
authority or remedy of the MINISTER under or by virtue of this
AGREEMENT at law or in equity.
16. GIVING OF NOTICES
16.1 In any circumstances where pursuant to the terms of this
AGREEMENT any demand or notice in writing is required to be given it
will be sufficient for it to be given by notice in writing signed by
the party giving the notice or for and on behalf of the party giving
the notice by an AUTHORISED OFFICER of that party or by its
solicitors and that demand or notice may be served upon the party
intended to receive the demand or notice by delivering it at the
following relevant address, telex or facsimile number:-
(a) if to the MINISTER:
Minister for Industry, Manufacturing, Small Business and
Regional
Development
Level 9
Terrace Towers
178 North Terrace
Adelaide SA 5000
<PAGE> 14
Facsimile No: (08) 303 2410
Attention: The Chief Executive Officer
Department of Industry, Manufacturing, Small Business and
Regional Development.
(b) if to the BORROWER:
the address or facsimile number specified in Item 12 of the
Schedule;
and will (if delivered by hand), be treated as having been received
when left at the address or (if sent by post) four (4) days after
deposit in the post, and will be treated as having been received or
delivered on dispatch if made by facsimile message and dispatch
confirmed by telephone call made by the originator of the facsimile
message to the current address advised by the recipient.
16.2 Any communication or document received on a non-working day in the
place of receipt or after 5.00 p.m. (local time) on a working day
will be effective at the commencement of business on the next
working day in the place of receipt.
16.3 Either party hereto may vary its address for service for the
purposes of this clause by notifying the other party hereto in
writing thereof.
17. NO ASSIGNMENT BY THE BORROWER
The BORROWER may not assign or transfer all or any part of its rights
or obligations under this AGREEMENT without the prior written consent
of the MINISTER.
18. NO WAIVERS BY THE MINISTER
No failure or delay by the MINISTER in exercising any right, power or
privilege hereunder will impair or operate as a waiver of it nor will
any single or partial exercise of any right, power or privilege preclude
any further exercise of it or the exercise of any other right, power or
privilege. The rights and remedies provided in this AGREEMENT are
cumulative and not exclusive of any rights and remedies provided by law.
<PAGE> 15
19. ATTORNEYS
Persons who have signed this AGREEMENT as attorney acknowledge and
declare that they have no notice of revocation of the power of attorney
under which they have signed this AGREEMENT.
EXECUTED AS AN AGREEMENT
THE COMMON SEAL of MINISTER )
)
FOR INDUSTRY, MANUFACTURING, SMALL )
)
BUSINESS AND REGIONAL DEVELOPMENT )
)
was hereunto affixed in the presence of: )
...............................................
Witness
(Print Name: )
<TABLE>
<CAPTION>
<S> <C>
SIGNED by ROBERT GEORGE EDWARDS ) TAB AUSTRALIA PTY LTD
) (A.C.N. 062 369 724)
of 27 Old Belair Road, Belair South Australia ) By its Attorney
)
5052 who certifies that he is one of the ) ...............................
) Power of Attorney No. 7985949
Directors of TAB AUSTRALIA PTY LTD )
)
(A.C.N. 062 369 724) as Attorney for )
)
TAB AUSTRALIA PTY LTD (A.C.N. 062 369 724) )
)
in the presence of: )
...............................................
Witness
(Name: )
</TABLE>
<PAGE> 16
SCHEDULE HEREINBEFORE REFERRED
ITEM 1
("the BORROWER")
TAB AUSTRALIA PTY LTD A.C.N. 062 369 724
ITEM 2
(Company's place of incorporation)
SOUTH AUSTRALIA
ITEM 3
(address of Company's registered office)
C/- Coopers and Lybrand
Level 14
91 King William Street
Adelaide, SA 5000
ITEM 4
("Advance")
4.1 An amount not exceeding TWO HUNDRED THOUSAND DOLLARS ($200,000) interest
free to be advanced by the MINISTER to the BORROWER as follows:
(i) ONE HUNDRED THOUSAND DOLLARS ($100,000) on the DRAWDOWN DATE; and
(ii) Subject to (iii) and (iv) of this clause 4.1, FIVE THOUSAND
DOLLARS ($5,000) for each FTE engaged by the BORROWER in the BUSINESS
in the period between the DRAWDOWN DATE and the second anniversary of
the DRAWDOWN DATE:
(a) both over and above the ten (10) FTE described in
Clause 7.1(f); and
(b) over and above the average number of FTE employed
in the preceding REVIEW PERIOD, provided that the aggregate of
the monies paid does not exceed a total amount of ONE HUNDRED
THOUSAND DOLLARS ($100,000).
<PAGE> 17
(iii) In the event that the average number of FTE employed by the
BORROWER in the BUSINESS during any one REVIEW PERIOD is less than
the average number of FTE employed in the preceding REVIEW PERIOD,
no payment will be made in relation to the first mentioned REVIEW
PERIOD.
(iv) If any one REVIEW PERIOD is preceded by a REVIEW PERIOD in
which no monies were paid, in order to assess what monies are payable
to the BORROWER in the REVIEW PERIOD firstmentioned, the average
number of FTE in the REVIEW PERIOD in which monies were last paid
should be referred to.
(v) Subject to Clause 4.2 of the Schedule, payment of any monies to
which the BORROWER becomes entitled under subclause (ii) will be made
every six months during the period between the DRAWDOWN DATE and the
second anniversary of the DRAWDOWN DATE.
4.2 The MINISTER shall advance the monies described in Clause 4.1(ii) of the
Schedule to the BORROWER upon the BORROWER providing to the MINISTER, a
written request in a form which complies with Clause 4.3 of the Schedule
("CLAIM").
4.3 In respect of the monies to be provided under Clause 4.1(ii) of the
Schedule a CLAIM will only be valid and effective to oblige the MINISTER
to provide the amount if the CLAIM:
(i) is signed by an AUTHORISED OFFICER of the BORROWER;
(ii) specifies the number of FTE which are employed by the BORROWER
in its BUSINESS in South Australia, as at the date of the CLAIM;
(iii) specifies the FTE in respect of which the CLAIM is being made
and the amount of the CLAIM;
(iv) is accompanied by such records and information so as to
substantiate the employment by the BORROWER of the FTE to which
the CLAIM relates including (without limitation) pay roll tax
returns lodged with the South Australian State Taxation Office;
and
(v) no TERMINATION EVENT has occurred or is continuing.
4.4 If the BORROWER sends a CLAIM to the MINISTER complying with Clause 4.3
of the Schedule and being in respect of the monies payable under Clause
4.1(ii) of the Schedule then the MINISTER shall advance the amount within
five (5) BUSINESS DAYS.
4.5 The BORROWER shall repay the ADVANCE in the following manner:
(i) with respect to the monies advanced pursuant to Clause 4.1(i)
of the Schedule the BORROWER shall repay those monies on the
TERMINATION DATE or upon a later date that the MINISTER may in his
absolute discretion, in writing agree to; and
<PAGE> 18
(ii) with respect to the monies advanced pursuant to Clause 4.1(ii)
of the Schedule the BORROWER shall repay those monies on the tenth
(10th) anniversary of the DRAWDOWN DATE or on the TERMINATION DATE,
whichever is earlier.
ITEM 5
("Business")
TAb Australia Pty Ltd
ITEM 6
("DRAWDOWN DATE")
Within thirty (30) days of the execution of the AGREEMENT.
ITEM 7
("Expiry Date")
ninety ninth (99th) anniversary
ITEM 8
("Purpose")
To assist the BORROWER to establish a facility in South Australia for the
downstream processing of sheep serum at which facility the BORROWER will use
its best endeavours to employ not less than twenty (20) FTE.
ITEM 9
(documents under Clause 3.1(a)(vii))
Written evidence that at the DRAWDOWN DATE the BORROWER employs the persons
described in Clause 7.1(f).
ITEM 10
(events under Clause 5.1(k))
ITEM 11
(obligations of the BORROWER under Clause 8(e))
11.1 The BORROWER shall use its best endeavours to ensure that an average of
not less than ten (10) FTE are employed by the BORROWER in the BUSINESS in
the period between the DRAWDOWN DATE and the tenth anniversary of the
DRAWDOWN DATE.
<PAGE> 19
11.2 The BORROWER shall provide the MINISTER with an annual report ("the
REPORT") in the period between the second and tenth anniversary of the
DRAWDOWN DATE which:
(i) is signed by an AUTHORISED OFFICER of the BORROWER;
(ii) specifies the number of FTE which were employed on average in
each month by the BORROWER in the BUSINESS in the previous
twelve (12) months; and
(iii) is accompanied by such records and information so as to
substantiate the employment by the BORROWER of the FTE to which
the REPORT relates including (without limitation) pay roll tax
returns lodged with the South Australian State Taxation Office.
ITEM 12
(Borrower's details for service of notices under Clause 16)
TAB AUSTRALIA PTY LTD A.C.N. 062 369 724
Address: C/- Coopers and Lybrand
Level 14
91 King William Street
Adelaide SA 5000
Facsimile No: 278 7261
Attention: Dr Robert Edwards, Managing Director
<PAGE> 1
EXHIBIT 4.2
THERAPEUTIC ANTIBODIES INC.
NOTE PURCHASE AGREEMENT
DATED AS OF:
To each of the Purchasers executing
a counterpart of this Agreement
Dear Investor:
Therapeutic Antibodies Inc., a Delaware corporation (the "Company"), hereby
agrees with you as set forth below:
1. Description of Notes. The Board of Directors of the Company (the
"Board") has authorized the issuance and sale of up to $5,000,000 aggregate
principal amount of the Company's 15% Subordinated Promissory Notes due May 1,
1997 (the "Notes"), to certain persons who are Accredited Investors as that
term is defined in Rule 501 of Regulation D under the Securities Act of 1933,
as amended (the "Securities Act").
2. Purchase and Sale of Securities. (a) The Company has entered or will
enter into purchase agreements (the "Other Agreements") identical to this
Agreement with certain other purchasers (such other purchasers, together with
you, being called collectively herein "Purchasers" and each individual
purchaser being called herein the "Purchaser"). This Agreement together with
the Other Agreements provides for the sale by the Company of Notes for an
aggregate purchase price of up to $5,000,000.
(b) The Company will sell to each Purchaser and each Purchaser, severally,
will purchase from the Company, in both cases subject to the terms and
conditions set forth herein and in reliance on the representations, warranties
and covenants of the Company and the Purchasers contained herein, the principal
amount of Notes set forth opposite the name of the Purchaser on the signature
page of this Agreement (the "Purchase Price"). The investment unit by each
Purchaser of Notes shall be $250,000 in the United States or L.125,000 in the
United Kingdom (a "Unit"). The Company, in its sole discretion, may authorize
the sale of Notes to individual investors in lesser principal amounts.
3. Subscription, Payment and Issuance of Notes.
3.1 Subscription. Two copies of this Agreement executed by the
Purchaser shall be returned by the Purchaser to G. Thomas Curtis, Vice
President, Finance at the offices of the Company at Suite 310, 1500 21st
Avenue, South, Nashville, Tennessee 37212. The Agreements shall be accompanied
by certified or official bank check or checks payable to the order of
Therapeutic Antibodies Inc. in the amount set forth opposite the name of the
Purchaser at the end of this Agreement.
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<PAGE> 2
3.2 Issuance of the Notes. Within fifteen (15) business days of
acceptance by the Company of the Purchaser's subscription and receipt of the
purchase price for the Notes, the Company will deliver to each Purchaser a
fully executed copy of this Agreement and a Note, substantially in the form
attached hereto as Exhibit A, in the aggregate principal amount subscribed for
by such Purchaser, payable to the order of such name or names as such Purchaser
or authorized representative shall have specified on the last page of this
Agreement.
4. Representations and Warranties of the Company. The Company represents
and warrants to the Purchasers that:
4.1 Certificate of Incorporation; Bylaws. The Company has made
available to the Purchasers or their authorized representatives a complete and
correct copy of its Certificate of Incorporation, as amended, and Bylaws.
4.2 Capital Stock. As of December 31, 1995, the Company's
authorized capital stock consists of (i) 30,000,000 shares of Common Stock, par
value $.001 per share, of which (A) 16,556,603 shares are validly issued and
outstanding, fully paid and non-assessable; (B) up to 360,000 shares have been
reserved for issuance to Purchasers upon the exercise of warrants at $8.00 per
share(C) 2,303,135 shares have been reserved for issuance upon the exercise of
warrants previously granted to investors, consultants, officers, directors, key
employees and advisors of the Company; and (D) 1,108,626 shares have been
reserved for issuance upon the exercise of options available for grant under the
Company's 1990 Stock Incentive Plan; and (ii) 500,000 shares of Preferred Stock,
par value $10.00 per share, with rights and preferences to be fixed by the
Board, none of which shares have been issued. No stockholder of the Company has
any preemptive rights with respect to the issuance of the Notes or the Warrants
pursuant hereto.
4.3 Issuance of Notes. Upon receipt of the Purchase Price, the
Notes will be issued free and clear of all pledges, liens, encumbrances and
restrictions other than those contained or specified in this Agreement.
4.4 Authority. The Company has full corporate power and authority
to enter into this Agreement and to carry out the transactions contemplated
hereby. The execution, delivery and performance by the Company of this
Agreement and the issuance of the Notes have been duly authorized by all
necessary corporate action properly taken and constitutes the legal, valid and
binding obligation of the Company, enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws and subject to general
principles of equity (regardless of whether such enforceability is considered
in a proceeding in equity or at law).
4.5 Litigation. To the best of the Company's knowledge there is no
litigation or proceeding pending or threatened against the Company at law or in
equity before any court or other governmental agency that could have a material
adverse effect on the Company's business or properties.
4.6 Corporate Status. The Company is duly organized, validly
existing and in good standing in the corporate form and is in material
compliance with all requirements of United States law and all requirements of
all United States governmental bodies or agencies having jurisdiction over the
Company, governing the conduct of its business, the use of its properties and
assets, and all premises occupied by it in the United States. The Company has
all required licenses, permits, certificates, and authorizations
2
<PAGE> 3
needed for the conduct of business and use of its properties and premises
occupied by it and the Company is duly qualified or licensed as a foreign
corporation in good standing in the State of Tennessee and each other
jurisdiction in the United States wherein the nature of its activities or of
its properties owned or leased makes such qualification or licensing necessary
and failure to be so qualified or licensed would have a material adverse impact
on its business.
4.7 Financial Statements. The audited consolidated financial
statements of the Company for the years ending December 31, 1995, 1994, and 1993
and for the period from inception through December 31, 1995 (the "Financial
Statements"), true and complete copies of which are enclosed in Part II of the
attached Annual Report on Form 10-K for the Year Ended December 31, 1995 (the
"Form 10-K"), fairly present the financial and business condition of the Company
as of the dates thereof and the results of the operations of the Company for the
periods covered by such statements; such Financial Statements are in accordance
with the books and records of the Company, have been prepared in accordance with
the requirements of all relevant statutes and on the basis of generally accepted
accounting principles consistently applied; and there has not occurred a
material change in the financial condition of the Company between the date of
the latest Financial Statements and the date of this Agreement. To the best of
the Company's knowledge these statements have been prepared in accordance with
the requirements of all relevant statutes and on the basis of generally accepted
accounting principles consistently applied.
4.8 Outstanding Securities. Except for options granted to
employees under the Company's 1990 Stock Incentive Plan and employee stock
purchases in the ordinary course of business since December 31, 1995, there are
no outstanding subscriptions, options, warrants, calls, contracts, demands,
commitments or other agreements or arrangements of any character or nature
whatsoever, except as otherwise disclosed in the Form 10-K or as contemplated by
this Agreement, under which the Company is or may be obligated to issue capital
stock or other securities of any kind representing an ownership interest or
contingent ownership interest in the Company.
5. Covenants of the Company. The Company hereby covenants and
agrees with each Purchaser as follows:
5.1 Delivery of Information. Upon the completion of the
sale of Notes under this Agreement, the Company will deliver to each Purchaser,
upon request, copies of all annual, quarterly and other reports filed by the
Company from time to time with the Securities and Exchange Commission (the
"Commission"), all in reasonable detail and all certified by the Company's
financial controller.
5.2 Real Property Holding Corporation. The Company will
provide each of the Purchasers which is not a citizen of the United States (or
its agent) with an affidavit, sworn to by a corporate officer, stating whether
or not the Company is, as of the date of such affidavit, or has been during the
shorter of (x) the period from the date of this Agreement to the date of such
affidavit, or (y) the five year period ending on and including the date of such
affidavit, a United States real property holding corporation ("USRPHC") as
defined in Section 897(c)(a) of the Internal Revenue Code of 1986 in the
following circumstances:
(a) Within 90 days following the end of each fiscal year of
the Company; and
(b) Within 30 days following the request of a Non-U.S.
Purchaser that the Company furnish such Purchaser with such affidavit, provided
that such Purchaser shall reimburse the Company for all expenses connected with
the furnishing of such affidavit.
3
<PAGE> 4
If the Company is required to provide an affidavit to a Non-U.S. Purchaser in
any of the circumstances described in Section 5.2(a) or (b), the Company shall
also, at the request of any Purchaser receiving such affidavit, provide to the
Internal Revenue Service within 30 days after mailing the affidavit to the
Non-U.S. Purchaser, a notice pursuant to the requirements of Treasury
Regulation Section 1.897(h)(2) and a statement of whether the Company is then
or has been during the specified period a USRPHC. The notice shall be mailed
to the following address (or the address then currently prescribed by
regulation for the submission of such notice):
Assistant Commissioner (International)
Director, Office of Compliance
Internal Revenue Service
P.O.: 1:C:E:666
1325 K Street, N.W.
Washington, D.C. 20225 U.S.A.
The Company shall include a supplemental statement in the mailing to the
Internal Revenue Service under any of the circumstances described in Treasury
Regulation Section 1.897-2(h)(5).
5.3 Use of Proceeds. The Company will apply the net proceeds from
the sale of the Notes received by it for continued research and development,
including clinical trials, expansion of production facilities, for working
capital purposes and/or for debt repayment.
6. Representations, Warranties and Covenants of Purchasers. Each
Purchaser hereby severally represents and warrants to, and covenants and agrees
with, the Company as follows:
6.1 Accredited and Sophisticated Investor.
(a) The Purchaser currently meets the requirements of at least one
of the following categories:
(i) A Bank as defined in Section 3(a)(2) of the Securities
Act or a savings and loan association or other institution as defined
in Section 3(a)(5)(A) of the Securities Act whether acting in its
individual or fiduciary capacity; a broker or dealer registered
pursuant to Section 15 of the Securities Exchange Act of 1934 (the
"Exchange Act"); an insurance company as defined in Section 2(13) of
the Securities Act; an investment company registered under the
Investment Company Act of 1940 or a business development company as
defined in Section 2(a)(48) of that Act; a small business investment
company licensed by the U.S. Small Business Administration under
Section 3.01(c) or (d) of the Small Business Investment Act of 1958; a
Plan established and maintained by a state, its political
subdivisions, or any agency or instrumentality of a state or its
political subdivisions for the benefit of its employees, if such Plan
has total assets in excess of $5,000,000; an Employee Benefit Plan
within the meaning of Title 1 of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company, or registered
investment advisor, or if the Employee Benefit Plan has total assets
in excess of $5,000,000, or, if a self-directed plan, with investment
decisions made solely by persons that are accredited investors;
(ii) A private business development company as defined in
Section 202(a)(22) of the Investment Advisers Act of 1940;
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<PAGE> 5
(iii) An organization described in Section 501(c)(3) of the
Internal Revenue Code, a corporation, Massachusetts or similar
business trust, or partnership not formed for the specific purpose of
acquiring the Notes, with total assets in excess of $5,000,000;
(iv) An executive officer or director of the Company;
(v) A natural person whose individual net worth, or joint net
worth with that person's spouse, exceeds $1,000,000;
(vi) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years and
who reasonably expects to reach the same level of income in the
current year;
(vii) A trust, with total assets in excess of $5,000,000, not
formed for the specific purpose of acquiring the securities offered,
whose purchase is directed by a sophisticated person; or
(viii) An entity in which all of the equity owners are accredited
investors as defined in (i) through (vii) above.
(b) The Purchaser is a person, either alone or with his
representative, that has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
purchase of the Notes, is able to bear the economic risk of the investment, and
can afford the complete loss of the investment.
6.2 Purchase for Investment. The Purchaser represents that
he is purchasing the Notes for his own account for investment and not as agent
or nominee, except as disclosed in writing to the Company, with no present
intention of dividing his participation with others or reselling any such
Notes, and not with a view to the resale or distribution in whole or in part
thereof in violation of the Securities Act. Nothing herein contained, however,
shall prevent a Purchaser from requesting the Company to register the Notes so
issued in the name of either the Purchaser's nominee, the Purchaser's immediate
family members, or an "affiliate" of the Purchaser, as such term is defined in
the Exchange Act or in regulations promulgated thereunder. If a Purchaser
submits such a request, the Company will not withhold its consent unreasonably.
The Purchaser acknowledges that appropriate stop transfer instructions will be
entered in the transfer records of the Company. The Purchaser recognizes that,
in view of the matters set forth in this Section 6.2, he must bear the economic
risk of the investment represented by his purchase of the Notes for an
indefinite period.
6.3 Suitability of Investments. The Purchaser has
carefully considered and has, to the extent he believes such discussion
necessary, discussed with his professional legal, tax and financial advisers
the suitability of his acquisition of the Notes for his particular tax and
financial situation.
6.4 Authority. If the Purchaser is an individual, he is
over the age of majority and has the capacity to enter into contracts under the
laws of the applicable jurisdiction; if the Purchaser is an association or
partnership, all of its members have such capacity; and if the Purchaser is a
corporation or trust, it has the requisite power, is authorized or otherwise
duly qualified, and has taken all necessary corporate action, to acquire and
pay for the Notes.
5
<PAGE> 6
6.5 Access to Information. The Purchaser represents that
he has received and read copies of the Form 10-K and the Company's Proxy
Statement with respect to the Annual Meeting of Shareholders on April 25, 1996
(the "Proxy"), that he has had access during the course of the transaction and
prior to his purchase of the Notes to such information relating to the Company
as he has desired, that he has had the opportunity to ask questions of and
receive answers from the Company and its representatives concerning the terms
and conditions of the sale of the Notes and to obtain such additional
information about the business and financial condition of the Company as the
Purchaser or his representative has requested (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense), necessary to verify the accuracy of the information contained in the
Form 10-K and the Proxy.
6.6 Restrictions on Transfer of the Notes. The Purchaser
understands (i) that the Notes have not been registered under the Securities
Act and, unless required by a particular state's securities law, they have not
been registered or qualified under any applicable state securities laws; and
(ii) that the Notes may be required to be held indefinitely unless they are
subsequently registered under the Securities Act or an exemption from such
registration is available. The Purchaser also understands that Rule 144 (or any
successor rule) promulgated under the Securities Act, which provides for
certain limited routine sales of unregistered securities, is not available with
respect to the Notes, that the Company has not covenanted to satisfy the
conditions for resale pursuant to Rule 144 (or any successor rule), and that
compliance with an available exemption under applicable securities laws may be
required for a sale or other disposition of the Notes.
6.7 Legends. The Purchaser is aware that the Notes shall
bear a legend, in addition to any legend required by any particular state's
securities laws, or include language substantially as follows:
THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAW. THIS NOTE HAS BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO OR FOR RESALE IN
CONNECTION WITH THE DISTRIBUTION THEREOF. NO
DISPOSITION OF THIS NOTE MAY BE MADE IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL TO THE COMPANY TO THE EFFECT THAT
SUCH DISPOSITION IS IN COMPLIANCE WITH THE ACT AND
APPLICABLE STATES SECURITIES LAWS.
Appropriate stop transfer instructions will be entered in the transfer records
of the Company.
6.8 Right to Rely; Indemnification. The Purchaser
understands and intends that the Company and its management will rely upon the
Purchaser's representations made in this Agreement and in the Purchaser
Information Questionnaire attached hereto, and they are entitled to rely upon
each and all of the same without further inquiry. The Purchaser covenants and
agrees to indemnify and hold harmless the Company, its officers, directors,
employees and agents, from and against any and all liability, loss, cost or
expense, including reasonable attorneys' fees, arising from or incurred in
connection with any misrepresentation or omission of the Purchaser contained
herein or in the Purchaser Information Questionnaire. The indemnification
provided hereby includes indemnification for the loss of any exemption from
registration of the Notes under federal or state securities laws which is based
on the Purchaser's representations concerning his status as an Accredited
Investor or his investment intent.
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<PAGE> 7
6.9 Periodic Confirmation of Outstanding Balance of Notes.
From time to time, Purchasers may receive from the Company or the Company's
financial advisors a non-binding request for confirmation of the outstanding
principal balance on Purchaser's Notes. Purchaser hereby agrees to complete,
sign and date such confirmation and to promptly return it in accordance with the
instructions contained therein.
6.10 Survival of Covenants. The covenants of the Purchaser
contained herein shall survive the execution and delivery of this Agreement and
the Other Agreements and the purchase of the Notes.
7. Description of the Notes.
7.1 General. The Notes will be the unsecured subordinated
obligations of the Company, will mature in twelve months on May 1, 1997 ("the
Maturity Date"), and will be limited to $5,000,000 aggregate principal amount.
The Notes will bear interest at the rate of 15% per annum from the date of
issuance, payable quarterly on August 1 and November 1, 1996, February 1 and on
May 1, 1997, to the person in whose name such Note is registered in the transfer
records of the Company at the close of business on the July 15, October 15,
January 15 and April 15 preceding each respective payment date.
7.2 Warrant. Each Unit of the Notes shall be accompanied
by a stock purchase warrant to purchase up to 18,000 shares of the Company's
Common Stock (the "Warrants") at an exercise price of $8.00 per share of
Common Stock (the "Exercise Price"). The Warrants shall expire on May 1, 1999.
Holders desiring to exercise their Warrants shall present their Warrants
at the principal office of the Company as set forth in Section 7.6 hereof.
Promptly upon receipt of such Warrants, the Company shall record such exercise
on the Company's transfer records and, within fifteen (15) business days of the
receipt of such Warrants, shall cause to be issued in the name of the holder
set forth in the Company's records one or more certificates evidencing the
number of shares of the Company's Common Stock that the holder of such Warrants
has requested for exercise at the Exercise Price. In the event a holder
desires to exercise less than all of his or her Warrants, the Company shall
deliver to such holder, in addition to certificates representing shares of
Common Stock, a replacement Warrant evidencing the balance of such holder's
Warrants not tendered for exercise. The Warrants and certificate evidencing
any shares of Common Stock issued upon exercise of the Warrants shall bear a
restrictive legend substantially in the form set forth in Section 6.7 hereof.
7.3 Redemption of Notes. At any time prior to maturity, the
Company may, at its option, redeem the Notes, in whole or in part, upon not
less than thirty (30) days prior notice mailed to each holder of Notes to be
redeemed at the holder's address appearing in the Company's transfer records, at
a redemption price equal to 100% of the outstanding principal amount of the
Notes, plus accrued interest to the redemption date (the "Redemption Price").
Upon receipt by the holder of a Note of the written notice of the
Company's intent to redeem his or her Note in accordance with this Section 7.3,
the holder, within the time specified in such notice, shall tender said Note to
the Company at its principal offices as set forth in Section 7.6 hereof. Upon
presentment of the Note, the Company shall tender to such holder cash in an
amount equal to the Redemption Price for the Note so redeemed. In the event
the Company elects to redeem less than all of the principal amount of a Note
held by a holder, the Company shall issue to such holder a replacement Note
evidencing the balance of the principal amount of such holder's Note not called
for redemption.
7
<PAGE> 8
7.4 Subordination. The Notes will be subordinated and
subject to the extent and in the manner set forth herein, in right of payment
to the prior payment in full of all Senior Indebtedness of the Company. "Senior
Indebtedness" is defined as any indebtedness of, or guarantees by, the Company
for money borrowed, or any indebtedness incurred in connection with an
acquisition or with a merger or consolidation, (a) outstanding on the date of
this Agreement (except as provided below), (b) any renewal, extension,
modification or refunding thereof or (c) hereafter created and for which the
Company has granted a security interest in property or assets of the Company,
for the payment of which the Company (which term includes the Company's
subsidiaries) is at the time of determination responsible or liable as obligor,
guarantor or otherwise, other than indebtedness as to which, in the instrument
creating or evidencing the same or pursuant to which the same is outstanding,
it is provided that such indebtedness is subordinate in right of payment to any
other indebtedness of the Company or that such indebtedness is subordinate to
or equally subordinate with the Notes; provided, however, that the Notes shall
rank pari passu with the Company's 6% Convertible Notes due October 1, 2000.
Notwithstanding any other provision of this Agreement, nothing contained herein
shall limit the amount of Senior Indebtedness which the Company may incur, nor
prohibit the Company from creating liens on its property for any purpose.
The terms of the Senior Indebtedness may prohibit the payment on account
of principal or interest on the Notes if any default or event of default with
respect to any Senior Indebtedness shall have occurred and be continuing. Upon
any acceleration of the principal due on the Notes or any payment or
distribution of assets of the Company to creditors upon any dissolution,
winding up, liquidation or reorganization, whether voluntary or involuntary or
in bankruptcy, insolvency, receivership or other proceedings, the terms of the
Senior Indebtedness may provide that all principal of and interest due or to
become due on all Senior Indebtedness must be paid in full before the holders
of the Notes are entitled to receive or retain any payment (of stock or
subordinated indebtedness provided by a plan of reorganization or adjustment).
7.5 Events of Default. (a) The following shall constitute
an event of default under the Notes (each an "Event of Default"):
(i) default in the payment of any interest installment on the
Notes when due, which default is not cured within fifteen (15) days
of the scheduled Interest Payment Date;
(ii) default in payment of principal due on the Notes, which
default is not cured within fifteen (15) days of the scheduled
Payment Date;
(iii) default in the performance by the Company of any other
covenant in this Agreement for thirty (30) days after receipt of
written notice to the Company by the holders of 25% in principal
amount of the outstanding Notes;
(iv) default by the Company under any mortgage, indenture, loan
agreement or other debt instrument of the Company (other than this
Agreement or the Notes) under which the outstanding amount of
indebtedness is not less than $100,000 and which results in
acceleration of such indebtedness if such acceleration is not
rescinded or annulled within thirty (30) days after receipt of
written notice to the Company from holders of not less than 25% in
aggregate principal amount of Notes then outstanding; or
(v) an admission by the Company of its inability to pay its
debts as they become due, the filing of a voluntary petition in
bankruptcy, the adjudication of the Company as a
8
<PAGE> 9
bankrupt or insolvent, the filing of any petition or answer seeking
for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any
present or future statute, law or regulation, the filing of any
answer admitting or not contesting the material allegations of a
petition filed against the Company in any such proceeding, the
appointment of any custodian, trustee, receiver or liquidator of the
Company or of all or any substantial part of the properties of the
Company.
(b) If an Event of Default shall occur and be continuing, the
holder of any Note outstanding at the time of the occurrence of such Event of
Default may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in such Note, or for
an injunction against a violation of any of the terms hereof or thereof, or in
aid of the exercise of any power granted hereby or thereby or at law. In case
of a default in the payment of any principal of or interest on any Note, the
Company will pay to the holder thereof such further amount as shall be
sufficient to cover the cost and expenses of collection, including, without
limitation, reasonable attorneys' fees, expenses and disbursements. No course
of dealing and no delay on the part of any holder of any Note in exercising any
right shall operate as a waiver thereof or otherwise prejudice such holder's
rights, powers or remedies. No right, power or remedy conferred by this
Agreement or by any Note upon any holder thereof shall be exclusive of any other
right, power or remedy referred to herein or therein or now or hereafter
available at law, in equity, by statute or otherwise.
7.6 Payments, Presentment. Principal of and interest on
the Notes will be payable and Warrants may be presented for exercise,
redemption or transfer at the principal offices of the Company located at 1500
21st Avenue South, Nashville, Tennessee 37212. In addition, payment of interest
may be made, at the option of the Company, by check mailed to the address of the
person entitled thereto as shown on the records of the Company.
8. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, (a) if
to the Purchaser, at his address as set forth at the end of this Agreement,
marked for attention as there indicated, or at such other address as may have
been furnished to the Company by him/her in writing, or (b) if to the Company,
at Suite 310, 1500 21st Avenue, South, Nashville, Tennessee 37212, or at such
other address as may have been furnished to the Purchaser in writing by the
Company, with a copy to Waller Lansden Dortch & Davis, Nashville City Center,
511 Union Street, Suite 2100, Nashville, Tennessee 37219-1760, Attention:
William F. Carpenter III. Notices shall be effective upon receipt.
9. Miscellaneous.
9.1 Applicable Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Tennessee.
9.2 Binding Effect. All of the terms of this Agreement,
whether so expressed or not, shall be binding upon the respective personal
representatives, successors and assigns of the parties hereto and shall inure
to the benefit of and be enforceable by the respective personal
representatives, successors and assigns of the parties hereto; provided,
however, that this Agreement may not be assigned by either party hereto without
the prior written consent of the other.
9
<PAGE> 10
9.3 Gender. Whenever herein the masculine gender is used,
it shall be deemed to include the feminine and the neuter.
9.4 Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
9.5 Integration: Amendments and Waiver. This Agreement
embodies the entire agreement and understanding between the Purchaser and the
Company and supersedes all prior agreements and understandings relating to the
subject matter hereof. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally or in writing, except that any
term of this Agreement may be amended and the observance of any such term may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with (but only with) the written consent of the Company and the
Purchaser.
9.6 Severability. Should any one or more of the provision
of this Agreement or any agreement entered into pursuant hereto be determined
to be illegal or unenforceable, all other provisions of this Agreement and such
other agreements shall be given effect separately from the provision or
provisions determined to be illegal or unenforceable and shall not be affected
thereby.
10
<PAGE> 11
If you are in agreement with the foregoing, please sign two (2) copies of the
form of this Agreement and return the same to the Company.
Very truly yours,
THERAPEUTIC ANTIBODIES INC.
By:
-----------------------------
Title:
--------------------------
Accepted and Agreed:
Purchaser's name:
Aggregate Principal Amount of Notes
- ------------------------------------------ to be Purchased:
(To be completed by Purchaser) ---------------
By: $
--------------------------------------- -------------------------
(Signature) (Units of $250,000)
Name(s) in which Notes are to be registered:
- ----------------------------------------------
- ----------------------------------------------
- ----------------------------------------------
Address
- ----------------------------------------------
Social Security or Taxpayer Identification
Number of Registered Holder(s)
11
<PAGE> 12
PLEASE SIGN AND RETURN
Purchaser's Last Name:
---------------
THERAPEUTIC ANTIBODIES INC.
PURCHASER INFORMATION QUESTIONNAIRE
The purpose of this Questionnaire is to assist Therapeutic Antibodies Inc.
(the "Company") in determining that its offering of up to $5,000,000 principal
amount of the Company's 15% Subordinated Promissory Notes due May 1, 1997 (the
"Notes") is exempt from registration under applicable federal and state
securities laws. All information provided herein will be treated in
confidence, except that this Questionnaire may be presented to such parties as
are deemed appropriate or necessary to establish the availability of exemptions
from registration under federal and state securities laws. By his signature
below, each person or entity who purchases any of the Notes (each a
"Purchaser") represents that (i) the information contained herein is complete
and accurate and may be relied upon by the Company, and (ii) the Purchaser will
notify the Company immediately of any material change in any of such
information occurring prior to the purchase of any Notes by the undersigned.
The Purchaser agrees to indemnify and hold the Company, its officers,
directors, employees and agents, harmless from any loss or expense incurred by
them by reason of the Company's reliance hereupon.
A. The undersigned is an individual or entity described below (please check
applicable descriptions):
( ) A natural person whose individual net worth or joint net
worth with that person's spouse, at the time of his purchase,
exceeds $1,000,000.
( ) A natural person who had an individual income in excess of
$200,000 in each of the two most recent years or joint income with
that person's spouse in excess of $300,000 in each of those years
and has a reasonable expectation of reaching the same income level
in the current year. ["Income" may include amounts normally
excluded from "adjusted gross income" such as long-term capital
gain deductions, depletion deductions, interest exclusions and
losses allocable to a limited partner. However, "income" is not
necessarily synonymous with "revenue"; for example, a self-employed
person should deduct operating expenses to give an accurate
indication of income.]
( ) A corporation, partnership or revocable trust in which all
of the equity owners meet one of the criteria above. [If this
description is checked, each owner of the partnership or
corporation and each grantor of the revocable trust must complete
this Section A and sign and date the Questionnaire.]
( ) Other accredited entity. [Please describe. See Section
6.1 of the Securities Purchase Agreement.]
1
<PAGE> 13
B. If a corporation or partnership, was the Purchaser formed for the
specific purpose of making this investment:
YES NO
----- -----
C. The undersigned has previously purchased securities which were sold in
reliance on a private placement exemption from registration under the
Securities Act of 1933, as amended:
YES NO
----- -----
D.
--------------
(Initial here) The undersigned has carefully reviewed the risks of, and
other considerations relating to, an investment in the
Company. The undersigned has been furnished any
materials, and had the opportunity to have answered
any questions, relating to the business and financial
condition of the Company, and the Company has given
complete and satisfactory answers to all inquiries that
the undersigned has put to it concerning the matters
mentioned above.
The undersigned has such knowledge and experience in
financial and business matters that the undersigned is
capable of evaluating the merits and risks of an
investment in the securities of the Company and of
protecting the undersigned's own interests in
connection with this transaction; the undersigned is
able to bear the economic risks of the investment and
to afford the complete loss of the investment. The
undersigned does not desire to utilize a Purchaser
Representative in connection with evaluating such
merits and risks.
FOR EXECUTION BY INDIVIDUAL PURCHASERS
<TABLE>
<S> <C>
- ------------------------------ ----------------------------------------
Signature(s) of Prospective Please Print Name
Purchaser(s)
----------------------------------------
----------------------------------------
Address
- ------------------------------ ----------------------------------------
Signature(s) of Prospective Please Print Name
Purchaser(s)
----------------------------------------
----------------------------------------
Address
Executed on this day of , 1996.
--- ------------
</TABLE>
2
<PAGE> 14
FOR EXECUTION BY CORPORATE, PARTNERSHIP OR REVOCABLE TRUST
PURCHASER
-------------------------------------------------------
Name of Corporation, Partnership or Trust (please print)
-------------------------------------------------------
-------------------------------------------------------
Principal Address of Corporation, Partnership or Trust
The names of all of the owners of an equity * interest in the
undersigned (that is, all shareholders of a corporation, partners
of a partnership and the grantor of a revocable trust, but not the
beneficiaries of a true trust) and their respective interests are
as follows:
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
* EACH EQUITY OWNER AND GRANTOR LISTED ABOVE MUST ALSO COMPLETE
SECTION A OF THIS QUESTIONNAIRE AND SIGN A SIGNATURE PAGE HEREOF.
By:
---------------------------------------
Title:
-------------------------------------
Executed on this day of , 1996.
----- ------------
3
<PAGE> 1
EXHIBIT 4.3
THE SALE OF THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THIS NOTE HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO OR FOR RESALE IN CONNECTION WITH
THE DISTRIBUTION THEREOF. NO DISPOSITION OF THIS NOTE MAY BE MADE IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND COMPLIANCE
WITH APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL TO THE BORROWER
TO THE EFFECT THAT SUCH DISPOSITION IS IN COMPLIANCE WITH THE ACT AND
APPLICABLE STATES SECURITIES LAWS.
15% SUBORDINATED PROMISSORY NOTE DUE MAY 1, 1997
$250,000 _____________, 1996
FOR VALUE RECEIVED, THERAPEUTIC ANTIBODIES INC., a Delaware corporation
(the "Borrower"), promises and agrees to pay to the order of
_______________________________________________ (the "Payee"), at the address
of the Payee as the same appears on the records of the Borrower, or such other
address as the Payee may designate, in lawful money of the United States of
America, the principal sum of Two Hundred Fifty Thousand Dollars ($250,000).
Borrower agrees to pay interest on the principal balance of this Note, computed
from the date hereof until maturity or earlier prepayment, at the rate of
fifteen percent (15%) per annum. Interest shall be computed based upon a
365-day year from the number of days elapsed. Such interest shall be payable
on August 1, 1996, November 1, 1996, February 1, 1997 and at maturity on May 1,
1997 or upon earlier prepayment hereof.
This Note was issued pursuant to the terms of a Note Purchase Agreement
(the "Note Purchase Agreement"), dated the date hereof, between Borrower and
Payee.
This Note, and each of the Notes, shall mature and Borrower shall pay to
Payee all then outstanding and unpaid principal, plus all then accrued but
unpaid interest, on May 1, 1997; subject to Borrower's right to redeem the
Notes at any time prior to maturity.
In case of suit, or if this obligation is placed in an attorney's hands
for collection, the Borrower agrees to pay all costs of collection and
litigation, including a reasonable attorney's fee.
<PAGE> 2
Upon a breach of any promise made in this Note, at the option of the
holder, the entire indebtedness hereby evidenced shall become due, payable and
collectible then or thereafter, as the holder may elect, regardless of the date
of maturity. The holder may waive any default before or after the same has been
declared and restore this Note to full force and effect without impairing any
rights hereunder, such right of waiver being a continuing one.
The Borrower, for itself, its successors and assigns, covenants and
agrees, and each holder, by accepting this Note or any portion hereof, likewise
covenants and agrees, that this Note shall be subordinated and subject, to the
extent and in the manner herein set forth, in right of payment to the prior
payment in full of all Senior Indebtedness (as defined in the Note Purchase
Agreement) of Borrower. Senior Indebtedness shall continue to be Senior
Indebtedness and entitled to the benefits of the subordination provisions set
forth herein irrespective of any amendment, modification, or waiver of any term
of the Senior Indebtedness or extension or renewal of the Senior Indebtedness.
The provisions of this paragraph are made for the benefit of all holders of
Senior Indebtedness, and any such holder may proceed to enforce such
provisions.
The maker of this Note, and all who may become liable for same, jointly
and severally waive presentment for payment, protest, notice of protest, notice
of nonpayment of this Note, demand and all legal diligence in enforcing
collection.
Notwithstanding any provisions to the contrary in this Note, or in any
documents relating hereto, in no event shall this Note or such documents
require the payment or permit the charging or collection of interest in excess
of the maximum amount permitted by the laws of the State of Tennessee. If any
such excess of interest is contracted for, charged or received under this Note
or under the terms of any document relating hereto, then in any such event (a)
the provisions of this paragraph shall govern and control, (b) neither the
Borrower nor any other person or entity now or hereafter liable for the payment
hereof shall be obligated to pay the amount of such interest to the extent that
it is in excess of the maximum amount of interest permitted by the laws of the
State of Tennessee, (c) any such excess which may have been collected shall be
applied, at the holder's option, either as a credit against the then unpaid
principal amount hereof or refunded to the Borrower by the holder and (d) the
effective rate of interest shall be automatically reduced to the maximum lawful
rate of interest allowed under the laws of the State of Tennessee as now or
hereafter construed by the courts having jurisdiction thereof. It is further
agreed that, without limitation of the foregoing, all calculations of the rate
of interest contracted for, charged or received under the Note or any such
other documents which are made for the purpose of determining whether such rate
exceeds the maximum lawful rate of interest, shall be made, to the extent
permitted by the laws of the State of Tennessee, by amortizing, prorating,
allocating and spreading, during the period of the full stated term of the
indebtedness evidenced hereby, all interest at any time contracted for, charged
or received from Borrower or otherwise by the holder or holders hereof in
connection with such indebtedness. If for any reason, the laws of any
jurisdiction other than Tennessee should be deemed to govern the construction
of this Note, then and in such event, all references in this paragraph to the
laws of the State of Tennessee shall mean the laws of such other jurisdiction.
2
<PAGE> 3
This Note shall be governed by and be construed according to the laws of
the state of Tennessee except to the extent preempted by applicable laws of the
United States of America.
This Note may not be changed or terminated without the prior written
approval of the Payee and the holder. No waiver of any term or provision hereof
shall be valid unless in writing signed by the holder.
Executed this ____ day of ___________________ , 1996.
THERAPEUTIC ANTIBODIES INC.
By:
-------------------------------
Title:
----------------------------
3
<PAGE> 1
EXHIBIT 11.1
THERAPEUTIC ANTIBODIES INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
FOR THE CUMULATIVE
DEVELOPMENT STAGE
FOR THE SIX MONTHS ENDED FROM AUGUST 10, 1984
JUNE 30, (INCEPTION) THROUGH
1996 1995 JUNE 30, 1996
----------- ----------- -------------
<S> <C> <C> <C>
ACTUAL
Weighted average shares outstanding 17,001,819 14,838,432 8,401,805
=========== =========== ============
Net loss $(7,064,721) $(3,849,781) $(36,883,269)
=========== =========== ============
Net loss per share $ (0.42) $ (0.26) $ (4.39)
=========== =========== ============
PRIMARY
Weighted average shares outstanding 17,001,819 14,838,432 8,401,805
=========== =========== ============
Dilutive effect of stock options and warrants 2,188,800 1,515,572 2,188,800
----------- ----------- ------------
19,190,619 16,354,004 10,590,605
=========== =========== ============
Net loss $(7,064,721) $(3,849,781) $(36,883,269)
=========== =========== ============
Net loss per share $ (0.37) $ (0.24) $ (3.48)
=========== =========== ============
FULLY DILUTED
Weighted average shares outstanding 17,001,819 14,838,432 8,401,805
=========== =========== ============
Dilutive effect of stock options and warrants 2,555,367 1,515,572 2,555,367
----------- ----------- ------------
19,557,186 16,354,004 10,957,172
=========== =========== ============
Net loss $(7,064,721) $(3,849,781) $(36,883,269)
=========== =========== ============
Net loss per share $ (0.36) $ (0.24) $ (3.37)
=========== =========== ============
</TABLE>
The dilutive effect of stock options and warrants is determined under the
treasury stock method utilizing fair values per share of $6.38 and $8.14 for
primary and fully diluted earnings per share in the quarter ended June 30,
1996, and a fair value per share of $4.00 for primary and fully diluted
earnings per share in the quarter ended June 30, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THERAPEUTIC ANTIBODIES, INC., FOR THE SIX MONTHS ENDED
JUNE 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,167,935
<SECURITIES> 0
<RECEIVABLES> 175,942
<ALLOWANCES> 0
<INVENTORY> 398,750
<CURRENT-ASSETS> 3,249,735
<PP&E> 12,912,486
<DEPRECIATION> 2,680,370
<TOTAL-ASSETS> 14,169,296
<CURRENT-LIABILITIES> 7,976,806
<BONDS> 7,925,763
0
0
<COMMON> 17,167
<OTHER-SE> 2,235,440
<TOTAL-LIABILITY-AND-EQUITY> 14,169,296
<SALES> 222,995
<TOTAL-REVENUES> 390,860
<CGS> 56,182
<TOTAL-COSTS> 225,515
<OTHER-EXPENSES> 7,230,066
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 607,539
<INCOME-PRETAX> 0
<INCOME-TAX> 7,064,721
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,064,721
<EPS-PRIMARY> .37
<EPS-DILUTED> .36
</TABLE>
