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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - December 31, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________________.
Commission file number 0-26476
SAFESCIENCE, INC.
(Formerly, IGG International, Inc.)
(Exact name of registrant as specified in its charter)
Nevada 33-0231238
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Park Square Building
31 St. James Avenue, Suite 520
Boston, Massachusetts 02116
(Address of principal executive offices) Zip Code
(Registrant's telephone number, including area code) (617) 621-3133
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class Common Stock
Securities registered pursuant to Section 15(d) of the Act:
Title of each class
None
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
The number of shares outstanding each of the Registrant's classes
of Common Stock, as of December 31, 1997 was 11,991,778.
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PART I
ITEM 1. BUSINESS.
General
SafeScience, Inc. ("SafeScience"), formerly IGG International,
Inc., is a biotechnology company whose research efforts are directed
at products to improve plant health, the treatment of human cancer
and infectious diseases. The Company has two wholly-owned
subsidiaries, Agricultural Glycosystems, Inc. ("AGI"), which operates
an agrichemical and plant health business, and International Gene
Group, Inc. ("IGG"), which operates a human therapeutic business.
SafeScience, AGI and IGG are referred to collectively as the
"Company."
The Company is presently researching several products, nearly all
of which are derived from naturally occurring substances: AGI's
principal products are Greenleaf Plant Defense Booster ("Greenleaf
PDB", formerly ELEXA), an inhibitor of plant fungus [which was
recently granted approval by the Environmental Protection Agency
("EPA")]; SAF-711, a second fungicide product derived from natural
carbohydrates extracted from a plant ("SAF-711"); and Dentamet, a
third fungicide which has the potential of working as a fumigant; and
a line of non-toxic fertilizer products. IGG's principal products
are GBC 590, a complex carbohydrate glycoprotein which inhibits human
melanoma cancer cells; CAN-296, a natural antifungal agent which
inhibits infections such as Candida, and Microorganism Substance
(MMS-1). Patents for MMS-1, Dentamet and the fertilizers have been
issued and all other patents are currently pending for all products.
In addition in October 1997, the Company announced that AGI had
entered into an agreement with an Israeli biotechnology company,
Leket-Bar Ltd., to acquire a worldwide, exclusive license to all
Leket-Bar's products. These products consist of a series of patented
products, including several modified carbohydrate compounds for use
as fertilizers and fungicides. The products acquired in this
transaction have been approved and marketed for several years in
Israel and six other countries. Several of the products acquired are
carbohydrate-based fertilizers which do not require registration with
the EPA to be sold in the United States.
On April 1997, the Company announced that AGI had entered into an
exclusive, worldwide licensing agreement with Agrogene, Ltd., an
Israeli-based biotechnology company specializing in products for
agriculture. AGI acquired the rights to commercialize the compounds
derived from a collection of natural carbohydrates identified and
patented by Agrogene. The first compound which is under development,
a fungicide known as SAF-711, has shown in field and greenhouse
studies an ability to kill a broad range of fungi on plants such as
downy mildews, late blight, powdery mildews and rusts.
In December 1997, the Company entered into two agreements for the
distribution of the Company's agricultural products. The first
agreement provides for exclusive distribution rights in the United
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Arab Emirates, the Sultanate of Oman, Bahrain, Qatar and the Kingdom
of Saudi Arabia. The second agreement provides for exclusive
distribution rights in New Zealand and Australia. The Company
received payments of $10,000 from each distributor, to be credited
toward amounts subsequently payable under the agreements. In
addition, in March 1998, the Company entered into another agreement
providing for exclusive distribution rights in Argentina and Uruguay.
No advance payment was received in connection with such agreement.
The Company has also acquired the trademark rights to the name
"Greenleaf", which is the brand name that the Company has begun using
to market its non-toxic products, including the products acquired
from Leket-Bar. Greenleaf is a registered United States trademark.
Potential risks associated with the development of the Company's
products are: 1) some of the products referred to herein may never be
developed; 2) anticipated future losses due to the cost of research
and development; 3) the timing and cost associated with governmental
regulation and approval; 4) absence of patent protection; 5) the risk
of product liability claims; and 6) the uncertainty that the Company
will ever operate profitably. For all of the foregoing reasons, an
investment in the Company's securities is risky and purchasers should
be aware that they might lose their entire investment.
Prior to marketing certain of its products, the Company must
obtain regulatory approval from the United States Food and Drug
Administration ("FDA") and/or the EPA. The Company announced on
November 6, 1997, that it had received EPA approval of Greenleaf PDB.
The Company has financed itself during 1996 and 1997 by a series
of private placement financings. In the Company's estimation these
financings have sufficiently funded the Company to continue its
product development agenda, pursue regulatory approvals of products
and begin to market its existing products. However, the Company has
to obtain and will continue to seek additional financing through the
private sale of restricted securities to investors, and will attempt
to enter into joint venture, licensing or similar arrangements with
large chemical and/or pharmaceutical companies to provide additional
funding.
To date, the Company's activities have consisted primarily of
research, development and testing. Such activities have resulted in
accumulated losses through the end of the Company's most recent
fiscal year. The Company anticipates that it will also incur losses
in 1998 as a result of its continued research.
Business Objective
SafeScience has embarked on a mission to build a world brand. As
a starting position, the Company has developed carbohydrate based
products in both the areas of agriculture and human therapeutics.
The Company will market and distribute the SafeScience "Greenleaf"
brand of agricultural products in 1998. In addition, new products
and technologies will be developed that will bolster "SafeScience,
Inc." as a world standard for product safety.
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Glossary of Terms
Antigen A substance or entity, usually a protein, that
induces the production of antibodies. The
antigenicity of a compound depends on its
structure and molecular weight.
Auto-immune disease A disease in which auto-immunity is one of the
contributory factors. Such disease includes
Addison's disease and rheumatoid arthritis.
Cutaneous lesions Skin lesions.
Extravasate The process of passing out of a vessel into
tissue.
Glycopeptide A compound formed from a peptide covalently
linked to a carbohydrate.
Glycoprotein Compounds in which carbohydrate side chains are
covalently linked to a protein. Common side
chains include D-galactose, D-mannose and
N-acetyl-D-glucosamine. Cell surface
glycoproteins play a role in cell recognition.
Other biologically important glycoproteins
include enzymes, hormones and antigens.
Granulomas Nodular inflammatory lesions.
Homocytotropic
Antibodies Cells that have an affinity to like cells.
Humoral Relating to extra cellular fluids in the body.
Ig (immunoglobulin) A protein of globulin type (usually
gamma-globulin) that possesses antibody activity.
Immune response The events that occur in humans and other
vertebrate animals when the body is invaded by
foreign protein. It is characterized by the
production of antibodies and may be stimulated by
an infectious organism or parasite (bacteria,
yeast, fungi, protozoa, etc.), transplanted
material, vaccine, sperm or even the host's own
tissue.
Immunegenecity The study of genetic aspects of the type and
formation of immunoglobulins (antibodies).
Interferon-gammma Glycoprotein induced in different cell sites and
appropriate stimulus.
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Interleukin-12 A protein synthesized and secreted by activated
macrophages that stimulates both immune and
inflammatory responses.
Lymphocyte A white cell arising from tissue of the lymphoid
systems. There are two types of lymphocytes: B
cells and T cells. These cells are capable of
being stimulated by an antigen to produce a
specific antibody to that antigen and to
proliferate to produce a population of such
antibody-producing cells.
Lymphokine Any of a number of soluble physiologically active
factors produced by T lymphocyctes in response to
specific antigens. Important in cell mediated
immunity, lymphokins include interferon,
macrophage arming factor, lymphocyte inhibition
factor, macrophage inhibition factor, chemotactic
factor and various cytotoxic factors.
Macrophage A motile white cell type found in vertebrate
tissue, including connective tissue, the spleen,
lymph nodes, liver, adrenal glands and pituitary,
as well as, in the endothelial lining of blood
vessels and the sinusoids of bone marrow, and in
the monocytes. They display phagocytic activity
and process antigens for presentation to
lymphocytes, which then prepare antigen-specific
antibodies.
Malignant Cancerous tumor.
MAP Kinase protein An enzyme that breaks down Microtubule Associate
Protein (protein that is inside cells - building
material).
Microbes Members of one of the following classes:
bacteria, fungi, algae, protozoa or viruses.
Microbial Relates to microbes.
Neoplastic Pertains to neoplasm (new tumor growth).
Nucleic acids Either of two types of macromolecule (DNA or RNA)
formed by polymerization of neuleotides. Neuleic
acids are found in all living cells and contain
the information (genetic code) for transfer of
genetic information from one generation to the
next, as well as, for the expression of this
information through protein synthesis.
Nude mice Mice lacking an immune system.
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Pathogenic Descriptive of a substance or organism that
produces a disease.
Phosphate A chemical group containing atoms of phosphorus
and oxygen.
Placebo An indifferent substance in the form of a
medicine given for the suggestive effect.
Polyclonal antibody An antibody produced in the normal immune
response to an antigen consisting of a number of
closely related, but not identical, proteins.
The variation in Polyclonal antibodies reflects
the facts that they are formed by a number of
different lymphocytes, in contrast to monoclonal
antibodies which are formed by a clone of
identical cells. Compare monoclonal antibody.
T-Cell A type of lymphocyte that matures in the thymus
gland. These cells are responsible for the
cellular immunity processes, such as direct cell
binding to an antigen, thus destroying it. T
lymphocytes also act as regulators of the immune
response as helper T cells, or suppressor T
cells.
Tyrosine One of the 20 common amino acids that occur in
proteins. Tyrosine is a precursor of
noradrenaline, adrenaline, melanin, thyroid
hormone and various alkaloids.
International Gene Group, Inc.
Human Therapeutic Subsidiary
Technical Background
The following is a summary of certain theories related to the
Company's product development activities which are recognized in the
scientific community.
Cell Recognition and Adhesion
Cells recognize one another through pairs of complementary
structures on their surface. A structure on one cell carries encoded
biological information that a structure on another cell can decipher.
Previously, nucleic acids and proteins were recognized as the major
classes of biological materials involved in cell recognition.
Carbohydrates were not considered to be important in this
intercellular interaction. Recently, however, it has been theorized
that the majority of a cell's surface components contain carbohydrate
structures on the cell which change characteristics as the cell
develops, differentiates and sickens. While to the foregoing has
been theorized, it has not been scientifically established that the
foregoing is correct and there is no assurance that the foregoing
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will ever be scientifically established. The importance of
carbohydrates in cellular activity is underscored by studies showing
that lectins (a class of proteins found on cancer cells) can combine
with carbohydrates rapidly and selectively on the cell's surface
membrane.
The adhesive capabilities of carbohydrates and lectins to bind
together were proven in a microbial adhesion study which serves as a
model for other forms of carbohydrate mediated cell recognition.
Because bacterial adhesion is so crucial to infection, medical
researchers are studying carbohydrates that may selectively inhibit
adhesion and act as molecular decoys, intercepting and binding to
pathogenic bacteria before they reach their tissue target. In 1990,
M. Mouricout showed that injections of glycopeptides taken from the
blood plasma of cows can protect newborn calves from lethal doses of
E. coli. The glycopeptides contain carbohydrates for which the E.
coli bacteria have affinities. The E. coli bacteria attach
themselves to the injected glycopeptides. The adhesion capabilities
of the E. coli bacteria is greatly reduced once the adhesion
molecules on the E. coli cell surface attach to the glycopeptides.
This results in a measurable decrease in the ability of the bacteria
to attach to the intestines of treated animals.
IGG has incorporated the foregoing theory into its research on
cell adhesion molecules and believes that cell adhesion plays a key
role in other diseases as well, such as the spread of cancer cells
throughout the body beginning at the primary tumor. For example, the
carbohydrates recognized by a specific lectin appear on the cells of
diverse tumors. It is theorized that some malignant cells recruit
the adhesion molecules that are part of the body's natural defense
mechanism to promote their own metastasis. If so, anti-adhesive
drugs will also be anti-metastatic drugs. While the foregoing has
been theorized by IGG, it has not been scientifically established
that the foregoing is correct and there is no assurance that the
foregoing will ever be scientifically established.
Cancer Metastasis
Metastasis is the transfer of neoplastic disease from one organ to
another not directly connected with it. This is the process by which
cancer spreads. Metastasis is the main cause of death for cancer
patients. Surgical removal of the primary cancer tumor does not
eliminate the threat of metastasis or the formation of additional
cancer tumors. Surgical process may cause the release of metastatic
cells into the blood stream.
The process of metastasis is initiated by the detachment of tumor
cells from the primary growth cell and is followed by their invasion
of surrounding tissues via the blood vessels. Once in blood
circulation, the tumor cells can travel to any and all of the body's
distant organs where they can arrest, extravasate, and proliferate to
form new tumor colonies. It is accepted that the metastatic ability
of tumor cells is determined by unique cell properties and the
ability to interact with other tissue and blood cells.
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A single isolated cancer tumor can be surgically removed.
However, once the cancer spreads to various organs, removal becomes
difficult or impossible. IGG believes by preventing the ability of
the cancer to metastasize, aggregate and form new tumor colonies, the
number of cancer deaths can be reduced. The foregoing is based upon
theory and there is no scientific evidence to support such theory.
Moreover, since different types of cancer cells appear to share
common "markers" which facilitate adhesion of infected cells, it is
possible that a treatment which prevents cellular adhesion in one
type of cancer (such as highly metastatic melanoma) could prove
ineffective in other types of cancer.
Products
Complex Carbohydrate Substance (GBC 590)
Intracellular interactions play a key role in various steps of the
metastatic process. IGG has designed a natural complex carbohydrate
glycoprotein (GBC 590). The GBC 590 compound is designed to
recognize specific lectins which appear only on metastatic cells.
The substance acts as a molecular decoy, which attaches to the
metastatic cell and prevents the aggregation of the metastatic cells.
Following the elimination of the ability of the metastatic cells to
create an emboli, only single metastatic cells remain in the blood
circulation. These individual cells marked with the carbohydrate
molecule can then be destroyed by the body's immune system.
The GBC 590 substance was used in a controlled experiment, the
results of which were published in the Journal of the National Cancer
Institute. The experiment resulted in a complete inhibition of
metastatic mice melanoma cells in mice. Human melanoma cancer cells
can also be inhibited by the GBC 590. No/No nude mice, which lack an
immune system and can not reject human cells, were injected with
metastatic human melanoma cells. The mice were subsequently injected
with the GBC 590. One control group was injected with a placebo and
the other with only the human melanoma cells. The results from the
experiment showed no evidence of the presence of melanoma cancer or
metastasis in the mice injected with the GBC 590 and human melanoma
cells. The control mice injected only with the melanoma cells showed
significant metastasis and numerous tumor colonies in the lungs. The
tests were performed at the Michigan Department of Public Health in
Lansing, Michigan.
On January 13, 1997, the Company announced that IGG's lead
therapeutic compound, GBC-590, had been cleared by the Food and Drug
Administration to begin human testing in patients with cancer at the
M.D. Anderson Medical Center in Texas and the Graduate Hospital in
Philadelphia. The Company announced the commencement of such testing
on March 26, 1997. The study is continuing on schedule.
In February 1995, in independent research paper was published in
the JNCI. The study used a compound similar to IGG's GBC 590
substance. The study showed almost 100% elimination of prostate
cancer metastases in rats. These independent scientific results
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indicates that many forms of cancer may produce metastatic cells with
the same markers to which IGG's substance derived from the complex
carbohydrate attaches. As a result, while the substance has only
been tested on melanoma and prostate cancer in animals, the product
may or may not have an application in treating other cell lines as
well.
There are no assurances that injection with IGG's GBC 590
substance will prove effective in reducing or eliminating the spread
of cancer and that there have not been any studies or tests conducted
to support such intended effect.
Micro-organism (MMS-1)
MMS-1 has demonstrated the ability to inhibit metastasis in No/No
nude mice (Mice without an active immune system so they will not
reject human cells) injected with human melanoma cells. The test was
performed according to a research article in the International
Journal Cancer, 1992. Two groups of mice were injected intravenously
with melanoma human cancer cells. The test group was injected twice
a week with MMS-1. After 35 days group 1 was compared to test group
2 with respect to tumor growth using the Wilcoxon Rank Sum Text.
Multiple comparisons were made across 5 days using Bonferroni's rule.
The test was conducted at an overall significance level of 0.05.
MMS-1 significantly reduced the amount of cancer cells in the mice's
lungs.
IGG is studying the results of its laboratory experiments to
determine the reason for the unique immunological response triggered
in these animals studies. However, there are no assurances that
injection with IGG's GBC 590 substance will prove effective in
reducing or eliminating the spread of cancer and that there have not
been any studies or tests conducted to support such intended effect.
CAN-296
IGG has developed a new type of antifungal agent, derived from a
naturally occurring complex carbohydrate, which has been named "CAN-
296". CAN-296 demonstrates an excellent in vitro inhibitory
antifungal and fungicidal spectrum, including azole-resistant
Candida. Candida is a species of fungus which is a common infection.
Candida is divided into two types of disease: superficial and deep
seated. Superficial infections are characterized by common ailments
such as athlete's foot, superficial skin infections and vaginitis.
Deep seated infections with Candida often occur against the
background of immune suppression such as bone marrow transplantation,
leukemia or HIV infection. Current therapies for Candida are
confined to a series of agents, many of which have been in the market
place for some 20-30 years. Existing therapies have a limited
efficacy and, when administered systemically, have serious side
effects. Although recent advances in the adverse reaction profile
from some of these agents has occurred with the liposomal products,
no fundamental advances have occurred in terms of the efficacy of
agents against this disease. When it occurs in a deep seated
infection, Candida may be life threatening.
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IGG believes that the mechanism of action of its carbohydrate
product CAN-296 is fundamentally different from existing products
against fungal disease. IGG has developed data with CAN-296 to
suggest that it is efficacious in pre-clinical experiments in which
these other standard agents have failed. There is immediate and
dramatic killing of Candida in vitro in comparison to other
commercially available agents. IGG has developed one formulation for
study and plans to study additional formulations before entering the
clinic for further testing of the agent. IGG hopes that the broad
spectrum of anti-Candida activity together with the rapid fungicidal
effect may make CAN-296 a promising agent for clinical use.
Research
Research efforts will continue on all substances to establish
efficacy, and identify the processes involved in carbohydrate based
cellular interactions. Additional research needs include experiments
to complete the structural identification of IGG's products and to
gain a better understanding of the responses triggered by the
substances.
IGG is presently conducting research on a contract or
collaboration basis with many institutions throughout the world. IGG
intends to continue research in select areas on a contract basis. In
doing so, it will be able to consult with experts in particular
fields who have state of the art facilities and trained
personnel. All such research will continue to be conducted under
strict confidentiality agreements which prohibit use and disclosure
of IGG's products and prohibit publication of findings without the
consent of IGG.
Agricultural Glycosystems, Inc.
Plant Health Subsidiary
Technical Background
AGI is commercializing products designed to improve a plant's
natural ability to resist disease. This approach is innovative in
contrast with the traditional fungicide chemicals which are toxins
that function as agents to kill fungus directly. These new
carbohydrate compounds are favorable since they are known to have low
toxicity and have very little impact on the environment.
AGI's lead product, Greenleaf PDB, has been designed to inhibit
fungal infections in a variety of plant species. Greenleaf PDB is a
complex carbohydrate that has significantly reduced fungal infection
in greenhouse and field studies without adversely impacting the plant
under test. On November 6, 1997, the Company announced that
Greenleaf PDB had been approved by the EPA.
Results from greenhouse experiments demonstrate that Greenleaf PDB
is highly effective in controlling fungal diseases on cucumber, rice,
potato and tomato plants. AGI has also initiated multiple field
tests on grapes, strawberries, tomatoes, potatoes, rice and other
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vegetable crops to confirm Greenleaf PDB's efficacy under normal
growing conditions. Preliminary results demonstrated very
encouraging protection levels on grapes, strawberries and cucumbers.
The results of field trials on grapes in particular showed that
Greenleaf PDB can provide a level of protection against fungal
infestation equal to or greater than that provided by a commonly used
commercial fungicide. Approval of the fungicide registration for
Greenleaf PDB by the EPA was announced in November 1997. AGI's
second and third products, SAF-711 and Dentamet, will begin field
testing and EPA registration in 1998.
Fungicides are used to control fungi appearance and damage to
foliage, crops, plants, roots and in post-harvest storage of fruits
and vegetables. The world market for fungicides is estimated to be
approximately $5.4 billion.
Greenleaf PDB is the result of research conducted by AGI, together
with the Governmental of Israel (Volcani Institute), which identified
a specific carbohydrate compound that induces the natural response
that allows a plant to resist disease. This proprietary and patent
pending technology has significance for the following reasons:
* it is effective without toxic effects to the plant;
* many plants have developed resistance to current chemical
fungicides;
* because it stimulates the plant, resistance should be minimized;
* many existing chemical fungicides have potential toxic effects.
This proprietary technology induces the plants' defense responses,
which include:
* the synthesis and accumulation of anti-microbial phytoalexins;
* the production of enzymes capable of attacking surface polymers
of pathogens;
* the synthesis of proteins that inhibit degradative enzymes
produced by pathogens;
* the modification of plant cell walls.
The active components which induce defense responses in plants are
commonly referred to as "elicitors." Greenleaf PDB is a
"carbohydrate elicitor" capable of inducing one or more plant defense
responses.
The mechanisms by which Greenleaf PDB induces the various defense
responses in plant cells remain partially unknown. Recent research
has demonstrated that Greenleaf PDB induces several rapid responses
at the plant cell surface that may be part of the signal transduction
pathway.
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AGI has an agreement with the Volcani Institute to co-develop new
agricultural products such as naturally derived, non-toxic
insecticides, as well as, safe and effective products for the home
and garden. AGI believes that Greenleaf PDB has the potential to
achieve a strong position in both the post-harvest and home and
garden markets in the light of preliminary data which suggest that
the product controls fungal disease on post-harvest applications. In
addition, Greenleaf PDB will have appeal to consumers who are
demanding less toxic products for their home and garden use.
Greenleaf PDB (previously ELEXA)
AGI's lead product, Greenleaf PDB, which has been approved by the
EPA, is a complex carbohydrate which has been developed in
conjunction with the Israeli Government's Agricultural Research
Organization Volcani Institute to inhibit fungal infections in a
variety of plants, fruits and vegetables. A number of field studies
have been undertaken in which the compound has been shown to be
effective in controlling disease without adversely impacting the
plants.
The result of additional studies conducted by the Volcani
Institute were announced in September 1996. Undertaken in greenhouse
conditions, they demonstrated that Greenleaf PDB was highly effective
in controlling fungal diseases on cucumber, potato and tomato plants.
Seven days after treatment with a 0.1 per cent solution of Greenleaf
PDB, approximately 80 per cent of the crops were free of disease
compared with zero per cent for the non-treated control plants.
Greenleaf PDB was successfully tested against botrytis cinerea, downy
mildew, phytophthora infestans, coletotrichum spp. and pythium spp.
In January 1997, the Company announced results of several recently
completed independent field tests conducted on Greenleaf PDB. The
results suggested that Greenleaf PDB can control damaging fungal
diseases on several crops. The studies also demonstrated the
Greenleaf PDB can provide a level of protection against fungal
infestation comparable with the protection provided by a commonly
used commercial chemical fungicide.
The independent field test on grapes, the results of which were
published in October 1996, demonstrated Greenleaf PDB's efficacy in
preventing fungal attack on treated grape vines in a commercial
Californian vineyard. In this study, conducted under EPA Good
Laboratory Practice Standards, one-third of the grape vines were
treated with a 0.1 per cent concentration of Greenleaf PDB, one-third
were treated with a commercial fungicide frequently used to protect
grapes from fungal attack, and one-third remained untreated. After
treatment, about 10.4 per cent of the untreated grapes showed
botrytis infection, a serious fungal disease, compared with only 1.6
per cent of the vines treated with Greenleaf PDB. About 2.5 per cent
of the vines treated with the commercial chemical fungicide were
infected with botrytis. This study demonstrated that Greenleaf PDB
can provide a level of protection against fungal infestation equal to
the protection provided by a commonly used commercial chemical
fungicide.
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On April 18, 1997 the Company announced the results of two
recently completed studies of Greenleaf PDB. Greenleaf PDB
demonstrated efficacy in preventing fungal diseases equal to the
protection provided by two commonly used commercial chemical
fungicides on treated tomato fruit in a commercial field study
conducted in Chile. In the other study, a greenhouse study conducted
by a leading university apple research center in the United States,
Greenleaf PDB combined with a commercial adjuvant also provided a
four-fold reduction of apple powdery mildew on apple seedlings. On
July 24, 1997, the Company announced the result of independent
studies showing that Greenleaf PDB, in combination with commercial
adjuvant, was as successful at preventing fungal damage to chardonnay
grapes as the leading synthetic fungicides. The studies were
performed by independent researchers at U.C.-Davis and the U.C.
Cooperative Extension. The Company also announced the results of a
recent toxicology study showing that, even at the highest oral
concentrations, Greenleaf PDB has very low mammalian toxicity, does
not cause any eye or skin irritation and does not elicit any
allergenic reactions.
In January 1996, AGI entered into an exclusive worldwide licensing
agreement with the Volcani Institute to commercialize Greenleaf PDB.
Production procedures have been scaled-up to meet the demands
projected for the next few years.
Other products
In October 1997, the Company announced it had licensed from an
Israeli biotechnology company known as Leket-Bar, Ltd. of an
extensive line of fertilizers as well as Dentamet, an effective
fungicide which has the potential of working as a fumigant. The
Volcani Institute in Israel has conducted an evaluation of the anti-
fungal and anti-bacterial effectiveness of the fungicide product.
The fertilizers display no phytotoxity and convey nutrients with
specific adaptations to a variety of crops, environmental conditions
and cropping systems. These fertilizers have been successfully
introduced in several markets including Israel as well as South and
Latin America.
On April 29, 1997, the Company announced that AGI had entered into
an exclusive, worldwide licensing agreement with Agrogene, Ltd., an
Israeli-based biotechnology company specializing in products for
agriculture. AGI acquired the rights to commercialize the compounds
derived from a collection of natural carbohydrates identified and
patented by Agrogene. The carbohydrates have been extracted from a
Mediterranean plant that has unique resistance and defense
attributes. The first compound which is under development, a
fungicide known as SAF-711, has shown in field and greenhouse studies
an ability to kill a broad range of fungi on plants such as downy
mildews, late blight, powdery mildews and rusts. The plant grows
abundantly and is harvested twice a year, which should allow for the
preparation of the product on a commercial scale.
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Manufacturing
AGI intends to retain exclusive responsibility for product
manufacturing in order to protect the integrity of the products and
to generate additional revenue, regardless of whether the products
are licensed or distributed directly by AGI. AGI has identified
several contract manufacturers as having suitable facilities for
manufacturing large quantities of all its products.
The raw materials used to manufacture all products are naturally
occurring, inexpensive and commercially available in abundant supply,
both nationally and internationally. The manufacturing process used
to produce these products involves a series of processing steps and
separations.
AGI has not entered into any manufacturing agreement for any of
its compounds, and there is no assurance that any agreements will be
entered into in the future. The contract manufacturers schedule time
in their plant upon notice from AGI of needed production.
Government Regulation
The Company's activities are subject to extensive federal, state,
county and local laws and regulations controlling the development,
testing, manufacture and distribution of pesticide and pharmaceutical
products. Some of the Company's products will be subject to
regulation as therapeutics by the United States Food and Drug
Administration ("FDA"), as pesticides by the Environmental Protection
Agency ("EPA"), as well as varying degrees of regulation by a number
of foreign governmental agencies. To comply with the FDA and EPA
regulations regarding the manufacture and marketing of the Company's
products, the Company may incur substantial costs relating to laboratory
and clinical testing of new products and for the preparation and filing
of documents in the formats required by the FDA. There are no
assurances that the Company will receive FDA approval necessary to
commercially market its pharmaceutical products.
Food and Drug Administration Regulation
The FDA approved process consists of four steps that all new
drugs, antibiotics and biologicals must follow, they are:
1. investigational new drug application (IND)
2. clinical trials
3. new drug application (review and approval)
4. post-marketing surveys
On January 11, 1993, the FDA approved new procedures to accelerate
the approval of certain new drugs and biological products directed at
serious or life-threatening illnesses. These new procedures will
expedite the approvals for patients suffering from terminal illness
<PAGE> 15
when the drugs provide a therapeutic advantage over existing
treatment. The Company believes that its products will fall under
the FDA guidelines for accelerated approval for drugs and biological
products directed at serious and life threatening disease because the
Company's products are targeted as potential treatments for cancer
metastasis and primary tumors.
Clinical trials are conducted in three phases, normally involving
progressively larger numbers of patients. Phase I clinical
trials are concerned primarily with learning more about the safety of
the drug, though they may also provide some information about the
drugs effectiveness. The principal objective is to determine the
drugs' toxicity. Phase I trials generally involve 20-40 people at an
estimated cost of $10,000 per patient, taking one to two years to
complete.
Assuming the results of Phase I testing present no toxic or
unacceptable safety problems, Phase II trials may begin. In many
cases Phase II trials may commence before all the Phase I trials are
completely evaluated if the disease is life threatening and
preliminary toxicity data in Phase I shows no toxic side effects. In
life threatening disease, Phase I and Phase II trials are sometimes
combined to show initial toxicity and efficacy in a shorter period of
time. The primary objective of this stage of clinical testing is
designed to show whether the drug is effective in treating the
disease or condition for which it is intended. Phase II studies may
take several months or longer and involve a few hundred patients in
randomized controlled trials that also attempt to disclose short-term
side effects and risks in people whose health is impaired. A number
of patients with the disease or illness will receive the treatment
while a control group will receive a placebo. The cost per patient
is estimated at $10,000.
At the conclusion of Phase II trials, the FDA and the Company will
have a clear understanding of the short-term safety and effectiveness
of the drugs and their optimal dosage levels. Phase III clinical
trials will generally begin after the results of Phase II are
evaluated. The objective of Phase III is to develop information that
will allow the drug to be marketed and used safely. Phase III trials
will involve hundreds, and sometimes thousands, of people with the
objective of expanding on the research carried out in Phase II. An
objective would be to discover optimum dose rates and schedules, less
common or even rare side effects, adverse reactions, and generate
information that will be incorporated into the drugs' professional
labeling, as well as, the FDA-approved guidelines to physicians and
others about how to properly use the drug.
Patient estimates for each phase of the clinical trial process are
as follows:
<PAGE> 16
Application Phase I Phase II Phase III
Cancer
GBC 590 36 200 1,000
Fungal Disease
CAN-296 20 200 1,000
TOTAL 56 400 2,000
The third step that is necessary prior to marketing a new drug is
the New Drug Application (NDA) submittal and approval. In this step,
all the information generated by the clinical trials will be received
and if successful, the drug will be approved for marketing.
The final step is the random surveillance or surveys of patients
being treated with the drug to determine its long-term effects. This
has no effect on the marketing of the drug unless highly toxic
conditions arise. The time required to complete the above procedures
averages seven years, however, there is no assurance that the Company
will ever receive FDA approval of any of its products.
Environmental Protection Agency Approval
The Company, through its agricultural subsidiary, AGI, is required
to obtain the approval of the EPA before beginning to sell products
which constitute fungicides.
The EPA approval process begins with the design and initiation of
tests to determine the chemistry of the compound being submitted and
its toxicity in animals. In addition, the manufacturing procedures
must be clearly defined and submitted with the registration.
The regulatory process for Greenleaf PDB has been completed. The
testing and documentation required by the EPA to market this product
was submitted in December 1996 and marketing approval was granted in
November 1997.
The Company's other fungicide products, including those acquired
from Leket-Bar, Ltd. (Dentamet) and Agrogene (SAF-711), require EPA
approval. The process will commence in 1998. The Company's other
products are fertilizers and thus do not require EPA approval.
Competition
The Company will encounter significant competition from firms
currently engaged in the biotechnology and agrichemical industries.
The majority of these companies will be substantially larger than the
Company, and have substantially greater resources and operating
histories. The Company is aware of other competitors seeking
treatments for human and plant diseases, however, the Company is not
aware of any competitors seeking to produce the same products as the
Company.
<PAGE> 17
Product Liability Exposure
Because many of the Company's products may be used on food
products or human patients, the Company may be exposed to product
liability claims. The Company has purchased product liability
insurance for all its products. There can be no assurance that
available amounts of coverage will be sufficient to adequately
protect the Company in the event of a successful product liability
claim.
Patent Status and Protection of Proprietary Technology
The Company will own or license patent rights with respect to all
its products. With respect to MMS-1 and GBC-590, Dr. Platt has
granted an exclusive, world-wide, license to IGG to make, use, have
made, sell, lease or otherwise transfer products covered by the
patent or patent applications. Further, Dr. Platt granted to IGG the
right to issue sublicenses. Dr. Platt is entitled to a royalty of 2%
of the net selling price of GBC 590 and MMS-1. The license may be
terminated by Dr. Platt in the sixth year if total royalty payments,
in any calendar year are less than $50,000. However, the Company has
the right to pay Dr. Platt $50,000 to maintain the license in the
sixth year. Further, IGG is responsible for payment of all costs
connected with obtaining the patents.
Greenleaf PDB patents are owned by Volcani Institute, which
granted an exclusive license to AGI, a subsidiary of the Company.
Patents for all the Company's products, other than MMS-1, are
pending. In addition, the products which the Company acquired from
Leket-Bar and Agrogene are all covered by United States patent laws
which have been issued or are pending, as well as options to extend
the patent coverage to an international level. The Company will
continue to pursue these patents. There can be no assurance that the
technology of the Company will be granted patent protection, or will
not infringe on patents owned by others. To the extent that the
Company currently relies upon unpatented, proprietary technology,
processes and know-how and the protection of such intellectual
property by confidentially agreements, there can be no assurance that
others may not independently develop similar technology and know-how
or that confidentiality will not be breached. There is no assurance
that any patents will ever be granted.
Dependence Upon Key Personnel
The Company relies greatly in its efforts on the services and
expertise of its current senior officers: David Platt, Ph.D., CEO,
Secretary and Chairman of the Board of the Company; Bradley J.
Carver, President, Chief Financial Officer, Treasurer and a member of
the Board of Directors of the Company; Richard A. Salter, Senior Vice
President of the Company; and Robert Alvarez, Vice President - Sales.
The operation and future success of the Company would be adversely
affected in the event that Dr. Platt, Mr. Carver, Mr. Salter or Mr.
Alvarez were incapacitated or the Company were otherwise to lose
their services.
<PAGE> 18
Uncertainties Associated with Research and Development Activities
The Company intends to continue its research and development
activities on its products and begin marketing them in 1998.
Research and development activities, by their nature, preclude
definitive statements as to the time required and costs involved in
reaching certain objectives. If research and development requires more
funding than anticipated, the Company will have to achieve the necessary
levels of sales to continue to support research and development
expenses or will have to reduce product development efforts or seek
additional financing. There can be no assurance that the Company
would be able to secure any necessary additional financing or that
such financing would be available on favorable terms.
Marketing
SafeScience's marketing efforts are focused on entering the
consumer home and garden market and the commercial growers' markets
in the third quarter of 1998. The Company's product line will
include its "Plant Defense Booster", formerly called ELEXA, as well
as an extensive line of specialty fertilizers. All of these products
will be marketed under the brand name Greenleaf in the United
States. The packaging will introduce a unique double brand approach
using both the SafeScience and Greenleaf trademarks to communicate
the product's natural and environmentally friendly profile. The
company has had the phrase SafeScience cleared by Thompson and
Thompson as a world brand and has already begun formalizing trademark
application in every major market including China, Europe, South
America, Mexico, and Canada. The Company will be extending its line
of agricultural products for both home/garden and commercial use
through acquisitions, in-licensing, as well as continued research and
development. As of the date hereof, the Company has not sold any
products and there is no assurance that it will sell any products in
the future.
Distribution
The Company plans to distribute its agricultural products through
independent distributors throughout the world. In December 1997, the
Company entered into two distribution agreements for its agricultural
products. The first agreement provides for exclusive distribution
rights in the United Arab Emirates, the Sultanate of Oman, Bahrain,
Qatar and the Kingdom of Saudi Arabia. The second agreement provides
for exclusive distribution rights in New Zealand and Australia. At
the time of signing the agreements, the Company received payments of
$10,000 from each distributor, to be credited toward amounts
subsequently payable under the agreements. In March 1998, the
Company entered into a distribution agreement with Lanafil SA,
located in Montevideo, Uruguay. This agreement provides for
exclusive distribution rights for Uruguay and Argentina.
<PAGE> 19
Company's Offices
The Company's offices are located at the Park Square Building,
Suite 520, 31 St. James Avenue, Boston, Massachusetts 02116 and its
telephone number is (617) 621-3133. The Company leases 2,968 square
feet of space. The annual base rental is $76,600.00 and the
remaining term of the lease is five years. Research is being
conducted at various institutions. See "ITEM 1. Business." The
Company believes that the existing offices and research and
productive capacity of the facilities are suitable and adequate for
the Company's operations.
Employees
The Company is a development stage company and currently has six
employees including than its Officers and Directors. See
"Management." Management of the Company will continue to hire
employees, consultants, attorneys and accountants as necessary.
ITEM 2. PROPERTIES.
The Company owns no properties.
ITEM 3. LEGAL PROCEEDINGS.
No material legal proceedings are pending or threatened to which
the Registrant or any of its officers or directors is a party or of
which any of Registrant's property is the subject matter other than
as described below:
During the third quarter of 1997, the Company settled litigation
which had been initiated by E.R. Butts International, Inc. ("Butts").
E.R. BUTTS INTERNATIONAL, INC. V. IGGI INTERNATIONAL, INC. AND
AGRICULTURAL GLYCOSYSTEMS, INC., Civil Action No. 97-3121,
Commonwealth of Massachusetts, Middlesex Superior Court was initiated
in 1997 wherein Butts alleged that the Company breached the terms of
its professional service agreement. The settlement was as follows:
mutual releases were exchanged; no liability was admitted by either
party; the Company agreed to pay Butts approximately $1,000 in cash;
the Company agreed to issue Butts 8,587 "unrestricted" shares of
common stock at the time of signing of the settlement agreement; and
the Company agreed to issue an additional 10,000 in four installments
of 2,500 shares per month. The Company also agreed to grant Butts
3,500 "restricted" shares in the event the Company received EPA
registration of Greenleaf PDB (which registration was obtained and
which shares were issued in December 1997) and an additional 500
"restricted" shares in the event the Company entered into certain
distribution agreements in Chile. The discussion of such settlement
in the Company's previously filed Form 10-Q did not mention the first
8,587 shares, which had already been included in the Company's
financial statements as consulting expenses at the time they were
billed. The 3,500 shares which were to be granted upon registration
<PAGE> 20
were not included in such third quarter Form 10-Q because the right
to receive such shares did not accrue until registration was granted
in the fourth quarter.
A lawsuit was filed in the United States District Court for the
Southern District of Florida, Case No. 97-838 CIV-ZLOCH, captioned
RALPH I. FREUDENTHAL, PLAINTIFF VS. IGG INTERNATIONAL, INC. AND
AGRICULTURAL GLYCOSYSTEMS, INC., Defendants. The suit sets forth
causes of action for specific performance and breach of contract
alleging that the Company failed to perform the terms of certain
agreements between Freudenthal and the Company and as a result
thereof Freudenthal was entitled to receive 21,330 shares of the
Company's Common Stock. At the time of the transaction, Freudenthal
alleged the value of the stock was $133,312. Further, Freudenthal
prayed additional monetary damages based upon the diminution in value
of those shares, together with interest, court costs and attorney's
fees. The Company denied the foregoing and counterclaimed against
Freudenthal for breach of contract, negligence, breach of fiduciary
duty, rescission and libel. The foregoing case was settled in 1998.
The settlement agreed upon was as follows: mutual releases were
exchanged; no liability was admitted by either party; the Company
agreed to pay $25,000 in cash; and the Company agreed to issue a
number of shares of "unrestricted" common stock which comprise an
aggregate market value of $91,250. Such stock may be issued in one
or more installments, at the Company's option and at such times
during a 90-day period following the date of settlement as may be
determined by the Company; provided that all shares will be valued as
of the close of business on the day prior to that on which they are
issued; and also provided that the Company is required to issue at
least $15,000 worth of shares during the first thirty-day period
following the settlement, and $5,000 worth of shares during the next
two-week period, and $20,000 worth of shares during the succeeding
two weeks, until all the shares have been issued or against any of
the Company's officers or directors.
No legal proceedings are known to be contemplated by governmental
authorities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted during the fourth quarter of the
calendar year covered by this report to a vote of security holders.
<PAGE> 21
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS.
(a) Market Information
The Registrant's securities are traded over-the-counter on the
Bulletin Board operated by the National Association of Securities
Dealers, Inc. under the symbol IGGI. The table shows the high and
low bid of Registrant's Common Stock since August 14, 1995, when the
Registrant's securities began trading.
QUARTER ENDED BID
1996
March 31 4 7/8 3 1/2
June 30 4 2 1/2
September 30 3 1/2 1 3/4
December 31 3 7/8 2 3/4
1997
March 31 6 1/4 3 3/8
June 30 4 7/8 4 5/8
September 30 6 1/4 5 7/8
December 31 4 3 5/8
(b) Holders
As of December 31, 1997, the company has 326 holders of record of
its Common Stock. This number does not include those beneficial
owners whose securities are held in street name. The total number of
stockholders is estimated to be approximately 1,800.
(c) Dividends
The Registrant has never paid a cash dividend on its Common Stock
and has no present intention to declare or pay cash dividends on the
Common Stock in the foreseeable future. The Registrant intends to
retain any earnings which it may realize in the foreseeable future to
finance its operations. Future dividends, if any, will depend on
earnings, financing requirements and other factors.
ITEM 6. SELECTED FINANCIAL DATA
Selected Consolidated Financial Data
The selected financial data presented below has been derived from
the financial statements of the company. The following table
summarizes certain financial information and should be read in
conjunction with "Management's Discussion and Analysis of Results of
Operations and Financial condition" and the Financial Statements and
related notes included elsewhere in this Registration Statement. The
information shown below may not be indicative of the Company's future
results of operations.
<PAGE> 22
December 31,
1997 1996 1995 1994
[S] [C] [C] [C] [C]
Statement of Operations Data:
Revenue $ 0 $ 0 $ 0 $ 0
Operating Expenses $ 4,818,093 $ 2,213,152 $ 646,821 $ 168,139
Net Loss $(4,734,475) $(2,300,147) $(675,833) $(168,347)
Basic and Diluted
Net Loss per Share $ (0.43) $ (0.26) $ (0.09) $ (0.03)
Balance Sheet Data:
Working Capital $ 2,180,775 $ 272,315 $(289,948) $(102,338)
Total Assets $ 2,906,737 $ 488,839 $ 308,337 $ 23,278
Stockholders' Equity
(Deficit) $ 2,443,120 $ 298,091 $(270,941) $ (98,452)
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto appearing
elsewhere in this report.
Results of Operations: December 31, 1997 versus December 31, 1996
As a development stage enterprise from the date of its inception,
the Company has not commenced production of any products nor derived
any product sales or net income. The Company's business activities
through December 31, 1997 have consisted principally of research,
product development and testing and raising capital to sustain
business activities.
General and administrative expenses increased from $1,118,125 in
1996 to $2,428,072 in 1997, an increase of $2,309,947 or 117.2%.
This increase was principally attributable to a combination of
additional administrative compensation costs and related employee
benefits expenses resulting from the Company's increased research and
development activities, compensation payments to various consultants
and advisors of $1,141,750 resulting from the issuance of stock
grants, stock options and warrants to purchase common stock, and
additional costs associated with shareholder and public relations.
Research and development costs for consultants, supplies and
testing increased from $1,095,027 in 1996 to $2,390,021 in 1997, an
increase of $1,294,994 or 118.3%. This increase was principally
attributable to a combination of increasing and expanding research
efforts on complex carbohydrate and micro-organism substances,
conducted on both subcontracted and collaboration bases, regulatory
costs incurred in connection with obtaining approval for various of
the Company's planned products, initial research and testing costs
for new processes or development products introduced during 1997,
costs associated with the procurement of overseas distribution
agreements, and the issuance of stock for minority interest valued at
$719,142. Included in research and develoment costs is $240,710
resulting from the issuance of stock grants, and stock options and
warrants to purchase common stock.
<PAGE> 23
Interest income increased from $18,289 in 1996 to $83,618 in 1997,
an increase of $65,329. This increase was attributable to the
temporary investment of cash proceeds received from the two private
placements of the company's securities during 1997.
Other than the foregoing, the Company knows of no trends, demands,
commitments, events or uncertainties that will result in or are
reasonably likely to result in a change to the Company's operations.
Results of Operations: December 31, 1996 versus December 31, 1995
General and administrative expenses increased from $492,326 in
1995 to $1,118,125 in 1996, an increase of $625,799 or 127.1%. This
increase was principally attributable to a combination of additional
administrative compensation costs and administrative costs resulting
from the Company's increased research and development activities,
payments to various consultants and advisors and additional costs
associated with shareholder and public relations.
Research and development costs for consultants, supplies and
testing increased from $154,495 in 1995 to $1,095,027 in 1996, an
increase of $940,532 or 608.8%. This increase was principally
attributable to a combination of toxicity studies, clinical testing
and additional field testing on products under development.
Interest expense increased from $35,970 in 1995 to $103,517 in
1996, an increase of $67,547 or 187.8%. This increase was
attributable to 80,000 shares of stock which were issued to
noteholders as a condition of extending the maturity dates of their
notes. The shares were valued at $1.25 per share and treated as
additional interest expense.
Interest income increased from $6,958 in 1995 to $18,289 in 1996,
an increase of $11,331. This increase was attributable to the
temporary investment of cash proceeds received from a private
placement of the Company's securities during 1996.
Liquidity and Capital Resources
Since inception, the Company has funded its operations primarily
with the proceeds from debt and equity securities totaling
approximately $7,700,000. For the year ended December 31, 1997, the
Company's operations utilized cash of $2,376,000 primarily to fund
the operating loss and the Company loaned stockholders $90,000.
These uses of cash were offset by equity financings that resulted in
net proceeds of $4,778,000 to the Company.
The Company has no significant commitments for the purchase of
equipment, product manufacturing or marketing efforts at present.
The Company leases office facilities under an operating lease that
ends in May 2002. The space is necessary to meet current and future
expansion needs. Annual rent expense will be approximately $80,000.
<PAGE> 24
As discussed in Note 9, the Company has entered into various
licensing agreements that require future cash payments. Aggregate
future payments under licensing agreements are approximately
$1,764,000 of which approximately $564,000 is payable in 1998.
The Company's audited financial statements for the years ended
December 31, 1997 and 1996 indicated that there was an uncertainty as
to the Company's ability to continue as a going concern. As of
December 31, 1997, the Company's accumulated deficit was $7,916,884
and cash balances were $2,594,000. The Company has no bank lines of
credit or other commercial financing sources at present and does not
expect to obtain any. It is not known whether additional funds could
be borrowed from stockholders or other sources.
The Company's future is dependent upon its ability to obtain
financing to fund its operations. The Company expects to incur
substantial additional operating costs, including costs related to
ongoing research and development activities, preclinical studies and
clinical trials. The Company believes that its existing funds will
be sufficient to fund its operating expenses and capital requirements
as currently planned through mid-1998. The Company is currently
seeking to complete a private equity placement. There can be no
assurance that the Company will be able to obtain the additional
funding that it will require on acceptable terms, if at all.
Impact of Year 2000 Issue
The Company has reviewed its internal computer systems and
products and their capability of recognizing the year 2000 and years
thereafter. The Company expects that any costs relating to enuring
such systems to be a year 2000 compliant will not be material to the
financial condition or results of operations of the Company.
Inflation and Changing Prices
To date, the impacts of inflation and changing prices on the
Company's operations have been minimal. The Company is currently
testing its processes and products in the United States and Israel in
accordance with royalty and research agreements that are already in
effect. During the research, development and testing phases of
operations to satisfy regulatory requirements for the products under
development, the Company expects inflationary pressures in both
countries will be minimal and, hence, not have a material impact on
operations.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENT DATA.
Financial Statements and Supplementary Data begin on the following
page.
<PAGE> 25
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To SafeScience, Inc.
We have audited the accompanying balance sheets of SafeScience, Inc.
(formerly IGG International, Inc., a Nevada corporation in the
development stage) as of December 31, 1997, and the related
statements of operations, stockholders' equity and cash flows for the
year then ended and for the period from inception (December 8, 1992)
to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We did not audit the financial statements of SafeScience, Inc. for
the period from inception to December 31, 1996. Such statements are
included in the cumulative inception to December 31, 1997 totals of
the statements of operations and cash flows and reflect total net
loss of 40 percent of the related cumulative total. Those statements
were audited by other auditors whose reports have been furnished to
us and included herein and our opinion, insofar as it relates to
amounts for the period from inception to December 31, 1996, included
in the cumulative totals, is based solely upon the reports of the
other auditors.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
SafeScience, Inc. as of December 31, 1997, and the results of its
operations and its cash flows for the year then ended and for the
period from inception (December 8, 1992) to December 31, 1997, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, the Company has suffered
recurring losses from operations that raise substantial doubt about
its ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
Arthur Andersen LLP
Boston, Massachusetts
February 20, 1998
<PAGE> 26
Board of Directors
IGG International, Inc.
Cambridge, Massachusetts
Independent Auditor's Report
We have audited the accompanying consolidated balance sheet of IGG
International, Inc. (a development stage enterprise) as of December
31, 1996, and the related consolidated statements of operations,
shareholders' equity (deficit) and cash flows for the years ended
December 31, 1995 and 1996. We have also audited the consolidated
statement of operations shareholders equity and cash flows and for
the period from December 8, 1992 (inception) through December 31,
1996, not included herein. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of IGG International, Inc. as of December 31, 1996 and the
results of its operations and its cash flows for the years ended
December 31, 1995 and 1996, and for the period ended December 8, 1992
(inception) through December 31, 1996, in conformity with generally
accepted accounting principles.
The consolidated financial statements as of Decmeber 31, 1996 have
been prepared assuming that the Company will continue as a going
concern. As shown in the consolidated financial statements, the
Company incurred a net loss of $2,300,147 during the year ended
December 31, 1996. As discussed in Note 1, this condition raises
substantial doubt that the Company will be able to continue as a
going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
March 27, 1997
F-1
<PAGE> 27 SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
<S> <C> <C>
Current assets:
Cash and cash equivalents $2,594,312 $ 444,661
Prepaid expenses 31,680 6,134
Other 18,400 12,268
---------- ----------
Total current assets 2,644,392 463,063
---------- ----------
Property and equipment, net
of accumulated depreciation 47,646 23,987
---------- ----------
Other assets:
Notes receivable - stockholders 89,233 -
Deposits 6,328 1,789
Restricted cash 119,138 -
---------- ----------
Total other assets 214,699 1,789
---------- ----------
$2,906,737 $ 488,839
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 148,854 $ 62,648
Accrued liabilities 304,763 128,100
Deferred revenue 10,000 -
---------- ----------
Total current liabilities 463,617 190,748
---------- ----------
Stockholders' equity:
Preferred stock, $.01 par value,
5,000,000 shares authorized;
no shares issued and outstanding - -
Common stock, $.01 par value,
25,000,000 shares authorized;
12,098,576 shares and 9,462,641
shares issued and outstanding
at December 31, 1997 and
1996, respectively 120,986 94,626
Additional paid-in capital 10,239,018 3,385,874
Deficit accumulated during
development stage (7,916,884) (3,182,409)
---------- ----------
Total stockholders' equity 2,443,120 298,091
---------- ----------
Total liabilities and
stockholders' equity $2,906,737 $ 488,839
========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-2
<PAGE> 28
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Period from
December 8, 1992
(Inception)
through
Years Ended December 31, December 31,
1997 1996 1995 1997
<C> <C> <C> <C>
Revenues $ - $ - $ - $ -
General and administrative
expenses 2,428,072 1,118,125 492,326 4,231,056
Research and development
expenses 2,390,021 1,095,027 154,495 3,653,231
----------- ----------- ---------- -----------
Operating loss (4,818,093) (2,213,152) (646,821) (7,884,287)
----------- ----------- ---------- -----------
Other income (expense):
Interest expense - (103,517) (35,970) (139,712)
Interest income 83,618 18,289 6,958 108,882
Loss on disposal
of assets - (1,767) - (1,767)
----------- ----------- ----------- -----------
Total other income
(expense) 83,618 (86,995) (29,012) (32,597)
----------- ----------- ----------- -----------
Net loss $(4,734,475) $(2,300,147) $ (675,833) $(7,916,884)
=========== =========== =========== ===========
Basic and diluted
net loss per
common share $ (0.43) $ (0.26) $ (0.09)
========== =========== ===========
Weighted average number
of common shares
outstanding 11,022,577 8,700,146 7,290,615
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE> 29
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Stockholders' Equity has been formatted to fit across two pages. This
is page 1 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from Inception (December 8, 1992)
to December 31, 1997
<TABLE>
<CAPTION>
Common Stock
---------------- Additional
Number Paid-in
of Shares Amount Capital
<S> <C> <C> <C>
Balance - December 8, 1992 - $ - $ -
Issuance of shares to officers
in consideration of services
provided and additional cash
contributed during 1993, net
average cost of $.076 per share 578,165 5,782 37,905
Net loss - - -
--------- ------- --------
Balance - December 31, 1993 578,165 5,782 37,905
Common stock issued for cash
at $.244 per share 40,916 409 9,591
Common stock issued for
recruiting a director with
cash paid of $.0l per share 200,134 2,001 (1,801)
Cash paid by stockholders for
a minority interest in
International Gene Group,
Inc. prior to the reverse
acquisition of Alvarada, Inc. - - 52,500
Shares issued in 9-for-1 stock
dividend to stockholders
as of January 1, 1994 5,001,871 50,019 (50,019)
Additional paid-in capital
from original stockholders - - 1,590
Net loss - - -
--------- ------- --------
Balance - December 31, 1994 5,821,086 $58,211 $ 49,766
--------- ------- --------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4a
<PAGE> 30
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Stockholders' Equity has been formatted to fit across two pages. This
is page 2 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from Inception (December 8, 1992)
to December 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Stockholders'
Development Equity
Stage (Deficit)
<S> <C> <C>
Balance - December 8, 1992 $ - $ -
Issuance of shares to officers
in consideration of services
provided and additional cash
contributed during 1993, net
average cost of $.076 per share - 43,687
Net loss (38,082) (38,082)
---------- ---------
Balance - December 31, 1993 (38,082) 5,605
Common stock issued for cash
at $.244 per share - 10,000
Common stock issued for
recruiting a director with
cash paid of $.0l per share - 200
Cash paid by stockholders for
a minority interest in
International Gene Group,
Inc. prior to the reverse
acquisition of Alvarada, Inc. - 52,500
Shares issued in 9-for-1 stock
dividend to stockholders
as of January 1, 1994 - -
Additional paid-in capital
from original stockholders - 1,590
Net loss (168,347) (168,347)
---------- ---------
Balance - December 31, 1994 $ (206,429) $ (98,452)
---------- ---------
</TABLE>
F-4b
<PAGE> 31
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Stockholders' Equity has been formatted to fit across two pages. This
is page 1 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from Inception (December 8, 1992)
to December 31, 1997
<TABLE>
<CAPTION>
Common Stock
---------------- Additional
Number Paid-in
of Shares Amount Capital
<S> <C> <C> <C>
Recapitalization of the Company
through the reverse acquisition
of Alvarada, Inc. 1,349,914 $13,499 $ (17,321)
Common stock issued for cash at
$2.50 per share, net of costs
of $7,500 88,200 882 212,118
Common stock issued for cash at
$1.19 to $1.25 per share, net
of costs of $2,500 248,291 2,483 291,683
Net loss - - -
--------- ------- ----------
Balance - December 31, 1995 7,507,491 75,075 536,246
--------- ------- ----------
Common stock issued for the
conversion of notes payable
at $1.25 per share, including
accrued interest 272,596 2,726 338,020
Common stock issued to extend
notes payable at one share
per $5.00 of note, valued
at $1.25 per share 80,000 800 99,200
Common stock issued for services
valued at $2.00 per share 2,400 24 4,776
Common stock issued for cash at
$1.25 to $2.50 per share,
net of costs of $60,826 1,142,431 11,424 1,513,157
Common stock issued as part of
a Private Placement at $2.50 per
share with warrants attached 190,000 1,900 473,100
Common stock issued for common
stock of International Gene
Group, Inc. minority interests 173,449 1,734 (1,734)
Common stock issued for adjustment
in share prices 33,774 338 (338)
Stock options for 215,206 shares
of common stock issued for consulting
and professional services valued
at $1.50 to $2.69 per share - - 424,052
Stock options exercised 60,500 605 (605)
Net loss - - -
--------- ------- ----------
Balance - December 31, 1996 9,462,641 $94,626 $3,385,874
--------- ------- ----------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5a
<PAGE> 32
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Stockholders' Equity has been formatted to fit across two pages. This
is page 2 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from Inception (December 8, 1992)
to December 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Stockholders'
Development Equity
Stage (Deficit)
<S> <C> <C>
Recapitalization of the Company
through the reverse acquisition
of Alvarada, Inc. $ - $ (3,822)
Common stock issued for cash at
$2.50 per share, net of costs
of $7,500 - 213,000
Common stock issued for cash at
$1.19 to $1.25 per share, net
of costs of $2,500 - 294,166
Net loss (675,833) (675,833)
----------- ----------
Balance - December 31, 1995 (882,262) (270,941)
----------- ----------
Common stock issued for the
conversion of notes payable
at $1.25 per share, including
accrued interest - 340,746
Common stock issued to extend
notes payable at one share
per $5.00 of note, valued
at $1.25 per share - 100,000
Common stock issued for services
valued at $2.00 per share - 4,800
Common stock issued for cash at
$1.25 to $2.50 per share,
net of costs of $60,826 - 1,524,581
Common stock issued as part of
a Private Placement at $2.50
per share with warrants attached - 475,000
Common stock issued for common
stock of International Gene
Group, Inc. minority interests - -
Common stock issued for adjustment
in share prices - -
Stock options for 215,206 shares
of common stock issued for consulting
and professional services valued
at $1.50 to $2.69 per share - 424,052
Stock options exercised - -
Net loss (2,300,147) (2,300,147)
----------- ----------
Balance - December 31, 1996 $(3,182,409) $ 298,091
----------- ----------
</TABLE>
F-5b
<PAGE> 33
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Stockholders' Equity has been formatted to fit across two pages. This
is page 1 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from Inception (December 8, 1992)
<TABLE>
<CAPTION>
Common Stock
---------------- Additional
Number Paid-in
of Shares Amount Capital
<S> <C> <C> <C>
Common stock issued for cash at
$2.00 to $3.00 per share with
warrants attached, net of costs
of $175,000 750,000 $ 7,500 $ 1,567,500
Common stock issued as part of
a Private Placement at $2.50
per share with warrants attached,
net of costs of $63,375 463,000 4,630 1,076,995
Common stock issued as part of a
Private Placement at $3.00 per
share with warrants attached 533,867 5,339 1,596,478
Common stock issued for common
stock of International Gene
Group, Inc. minority interests 205,469 2,055 717,087
Common stock issued for consulting
services and wages valued at
$2.00 to $5.81 per share 195,800 1,958 822,300
Stock options for 141,426 shares
of common stock issued for
consulting and professional
services valued at $2.90 to
$5.83 per option - - 557,662
Stock options exercised 187,799 1,878 (1,878)
Warrants exercised 300,000 3,000 517,000
Net loss - - -
---------- -------- -----------
Balance - December 31, 1997 12,098,576 $120,986 $10,239,018
========== ======== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-6a
<PAGE> 34
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Stockholders' Equity has been formatted to fit across two pages. This
is page 2 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the Period from Inception (December 8, 1992)
to December 31, 1997
<TABLE>
<CAPTION>
Deficit
Accumulated Total
During the Stockholders'
Development Equity
Stage (Deficit)
<S> <C> <C>
Common stock issued for cash at
$2.00 to $3.00 per share with
warrants attached, net of costs
of $175,000 $ - $ 1,575,000
Common stock issued as part of
a Private Placement at $2.50
per share with warrants attached,
net of costs of $63,375 - 1,081,625
Common stock issued as part of a
Private Placement at $3.00 per
share with warrants attached - 1,601,817
Common stock issued for common
stock of International Gene
Group, Inc. minority interests - 719,142
Common stock issued for consulting
services and wages valued at
$2.00 to $5.81 per share - 824,258
Stock options for 141,426 shares
of common stock issued for
consulting and professional
services valued at $2.90 to
$5.83 per option - 557,662
Stock options exercised - -
Warrants exercised - 520,000
Net loss (4,734,475) (4,734,375)
------------ -----------
Balance - December 31, 1997 $ (7,916,884) $ 2,443,120
============ ===========
</TABLE>
F-6b
<PAGE> 35
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Statements of Cash Flows has been formatted to fit across two pages.
This is page 1 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
Years Ended December 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss $(4,734,475) $(2,300,147)
Adjustments to reconcile net loss to
net cash used in operating activities:
Operating expenses paid in common stock
and options 1,382,460 559,598
Issuance of stock for minority interest 719,142 -
Depreciation and amortization 15,545 10,740
Loss on disposal of assets - 1,767
Decrease (increase) in prepaid expenses (25,546) 21,918
Increase in other assets (6,132) (1,480)
Increase in accounts payable 86,206 45,440
Increase (decrease) in accrued liabilities 176,663 (33,970)
Increase in deferred revenue 10,000 -
----------- -----------
Net cash used in operating activities (2,376,137) (1,696,134)
----------- -----------
Cash flows from investing activities:
Purchase of equipment (39,744) (19,684)
Loans to stockholders (90,000) -
Repayment of stockholders' loans 767 -
Deposits paid, net (4,539) 408
Net cash used in acquisition - -
Increase in restricted cash (119,138) -
----------- -----------
Net cash used in investing activities (252,654) (19,276)
----------- -----------
Cash flows from financing activities:
Short-term borrowing - -
Payments on short-term borrowing - (90,000)
Proceeds from issuance of common stock 4,778,442 1,999,581
Capital contributed by stockholders - -
Debt issuance costs - -
----------- -----------
Net cash provided by financing activities 4,778,442 1,909,581
----------- -----------
Net increase in cash 2,149,651 194,171
Cash and cash equivalents, beginning balance 444,661 250,490
----------- -----------
Cash and cash equivalents, ending balance $ 2,594,312 $ 444,661
=========== ===========
Supplemental disclosure of non-cash
financing activities
Conversion of notes payable into equity $ - $ -
=========== ===========
Supplemental disclosure of cash
flow information
Cash paid for interest $ - $ 3,517
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-7a
<PAGE> 36
(In order to transmit these documents to the SEC via EDGAR,
SafeScience, Inc., a development stage enterprise, Consolidated
Statements of Cash Flows has been formatted to fit across two pages.
This is page 2 of 2.)
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period from
12/08/92
(Inception)
Years Ended through
12/31/95 12/31/97
<S> <C> <C>
Cash flows from operating activities:
Net loss $(675,833) $(7,916,884)
Adjustments to reconcile net loss to
net cash used in operating activities:
Operating expenses paid in common stock
and options - 1,941,060
Issuance of stock for minority interest - 719,142
Depreciation and amortization 36,898 66,686
Loss on disposal of assets - 1,767
Decrease (increase) in prepaid expenses (28,052) (31,680)
Increase in other assets (8,527) (17,139)
Increase in accounts payable 23,578 148,854
Increase (decrease) in accrued
liabilities 33,970 304,763
Increase in deferred revenue - 10,000
--------- -----------
Net cash used in operating activities (617,966) (4,773,431)
--------- -----------
Cash flows from investing activities:
Purchase of equipment (16,125) (82,404)
Loans to stockholders (40,000) (130,000)
Repayment of stockholders' loans 40,000 40,767
Deposits paid, net (2,197) (6,328)
Net cash used in acquisition (3,822) (3,822)
Increase in restricted cash - (119,138)
--------- -----------
Net cash used in investing activities (22,144) (300,925)
--------- -----------
Cash flows from financing activities:
Short-term borrowing 398,000 398,000
Payments on short-term borrowing - (90,000)
Proceeds from issuance of common stock 507,166 7,391,036
Capital contributed by stockholders - 1,329
Debt issuance costs (31,697) (31,697)
--------- -----------
Net cash provided by financing activities 873,469 7,668,668
--------- -----------
Net increase in cash 233,359 2,594,312
Cash and cash equivalents, beginning balance 17,131 -
--------- -----------
Cash and cash equivalents, ending balance $ 250,490 $ 2,594,312
========= ===========
Supplemental disclosure of non-cash
financing activities
Conversion of notes payable into equity $ 310,000 $ 310,000
========= ===========
Supplemental disclosure of cash flow
information
Cash paid for interest $ 2,000 $ 5,742
========= ===========
</TABLE>
<PAGE> 37 SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
SafeScience, Inc. (f/k/a IGG International, Inc., the Company,
formerly Alvarada, Inc., a Nevada corporation), is a successor by
reverse acquisition (Note 9) to International Gene Group, Inc., a
Michigan corporation. The Company is a development stage enterprise
formed for the research and development of pharmaceutical products
based on carbohydrate chemistry. The Company has two wholly-owned
subsidiaries, International Gene Group, Inc. and Agricultural
Glycosystems, Inc. Agricultural Glycosystems, Inc. is developing
agricultural applications for products that are also based upon
carbohydrate chemistry and these products will be either licensed
from or jointly developed with the Government of Israel's
Agricultural Research Organization. SafeScience, Inc., International
Gene Group, Inc., and Agricultural Glycosystems, Inc. maintain an
office in Boston, Massachusetts.
The Company is in the development stage and is devoting substantially
all of its efforts toward product research and development and
raising capital. Management anticipates that all future revenues
will be derived from products under development or those developed in
the future. Principal risks to the Company include the successful
development and marketing of products to obtain profitable
operations, dependence on collaborative partners, the ability to
obtain adequate financing to fund future operations, United States
Food and Drug Administration clearance and regulation, dependence on
key individuals and competition from substitute products and larger
companies.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
The consolidated financial statements of the Company have been
prepared assuming that the Company will continue as a going concern.
Given the uncertainty regarding the Company's ability to obtain
additional capital or adequate financing to fund operations, there is
substantial doubt about the Company's ability to continue as a going
concern. The Company is making presentations to various venture
capital sources to raise additional capital. The Company is also
pursuing possible strategic partnerships or collaborations with other
companies interested in its products under development. No
adjustments have been made to the financial statements as a result of
this uncertainty.
F-8
<PAGE> 38
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.continued
Principles of Consolidation
The Company's financial statements include the accounts of the
Company and its wholly-owned subsidiaries, International Gene
Group, Inc., and Agricultural Glycosystems, Inc. All material
intercompany transactions and accounts have been eliminated in the
consolidated financial statements.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents. Cash and cash equivalents at December 31, 1997
includes $230,000, which is held by a single bank and $2,450,000
held in an investment account, and could represent concentrations
of credit risk. Cash and cash equivalents at December 31, 1996
includes approximately $397,000 held by a single bank. The
Company's management believes such a risk is minimal since these
funds are in a "sweep" account which is reinvested daily in
government securities funds. Restricted cash represents funds
held under an irrevocable standby letter of credit. The letter of
credit serves as security for the Company's facility lease. The
funds are being held in an investment account.
Property and Equipment
Equipment is carried at cost. Depreciation is calculated on
straight line methods over estimated useful lives ranging from 5
to 7 years.
Research and Development
Research and development costs, which consist primarily of
expenses for consultants, supplies and testing, are charged to
operations as incurred.
Net Loss Per Share
In December 1997, the Company adopted Statement of Financial
Accounting Standards Statement (SFAS) No. 128, Earnings per Share.
Basic loss per share is computed using the weighted average number
of common shares outstanding. Diluted net loss per share is the
same as basic net loss per share as the inclusion of options and
warrants would be antidilutive.
F-9
<PAGE> 39
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.continued
Stock Split
In March 1995, the Company effected a 78.14-for-1 reverse
stock split for all shares outstanding at that date. The
stock split has been retroactively restated in the
accompanying financial statements.
Income Taxes
The Company accounts for income taxes in accordance with
SFAS No. 109, Accounting for Income Taxes. As of December
31, 1997, the Company had accumulated net operating losses
of approximately $4,500,000 and credit carryforwards of
approximately $274,000. These losses and credit
carryforwards are available to reduce taxable income and
future income taxes. These losses may be carried forward
for fifteen years, with expiration beginning in 2008.
The Company has recorded a full valuation allowance against
its deferred tax asset of $2,250,000 due to the uncertainty
surrounding the realizability of this asset. The Company's
deferred tax asset as of December 31, 1996 was approximately
$460,000. The principal components of the tax asset are net
operating loss and credit carryforwards.
Minority Interest
At December 31, 1996, minority stockholders held an
approximate three percent interest in International Gene
Group, Inc. During 1997, these minority stockholders
converted their shares in International Gene Group, Inc.
into 205,469 shares of common stock. The Company recorded
the fair value of the shares issued as research and
development expense in the year ended December 31, 1997.
2. NOTES RECEIVABLE - STOCKHOLDERS
Notes receivable from stockholders represents promissory
notes from two officers/ stockholders of the Company. The
loans are payable in monthly installments of $375 and $160,
including interest at 5.66% and 6.65%, with final payments
of $60,601 due on March 11, 2002, and $23,603 due on June
20, 2002.
F-10
<PAGE> 40
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. PROPERTY AND EQUIPMENT, NET
The Company's property and equipment at December 31, 1997
and 1996 consists of the following:
1997 1996
Computer, office equipment
and improvements $79,566 $39,822
Less: accumulated depreciation (31,920) (15,835)
------- -------
Total $47,646 $23,987
======= =======
4. NOTES PAYABLE
In March 1995, the Company raised $400,000 from a private
placement offering of eight "investment units" from
accredited investors. This offering was intended to provide
a "bridge" loan for the research and development activities
of the Company, and was contingent on the completion of the
reverse acquisition (Note 7). Each investment unit
consisted of a $50,000 promissory note and 25,000 shares of
common stock. The promissory notes, which paid ten percent
interest per annum, had a maturity date of January 1, 1996,
although this date was extended at the Company's option for
an additional year.
In January 1996, promissory noteholders converted $310,000
of the aforementioned promissory notes at the rate of $1.25
per common share into 248,000 shares of common stock. The note
holders also converted $30,746 in accrued interest at the rate
of $1.25 per common share into 24,507 shares. During 1996, the
Company repaid $90,000 of the remaining promissory notes
including interest.
As a condition of extending the notes, the Company issued an
additional 80,000 shares of common stock to the noteholders.
The 80,000 shares were valued at $1.25 per share for an
aggregate expense of $100,000. This expense was recorded as
additional interest expense during 1996.
Expenses associated with the private placement offering
totaled $31,697. These charges were capitalized and
amortized over the original period of the loans. These
expenses include legal and promotional costs associated with
the debt offering and related reverse acquisition of
Alvarada, Inc. As discussed in Note 7.
F-11
<PAGE> 41
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. STOCKHOLDERS' EQUITY
International Gene Group, Inc. was incorporated on December 8, 1992.
The Company did not begin its activities or issue stock until early
1993. In 1993, the original stockholders received common stock for
services provided and contributed $43,687 in cash. In 1994, these
stockholders contributed an additional $1,590 cash. During 1994, the
Company sold common stock by subscription agreements for a total of
$62,700.
In March 1995, the majority stockholders of International Gene Group,
Inc., controlling 19,633 shares of common stock, acquired eighty-one
percent control of Alvarada, Inc. through a reverse acquisition in
exchange for their stock. The investment of the remaining
stockholders, controlling 1,278 shares of International Gene Group,
Inc. was recorded as minority interest in this subsidiary.
The acquisition was accounted for as a reverse acquisition and the
subsequent capital structure of the continuing entity includes the
restated stock of Alvarada, Inc. at $.01 par value and a combination
of the Companies' paid-in capital. After the reverse stock split in
1995, the authorized capital stock of Alvarada, Inc., subsequently
known as IGG International, Inc. and SafeScience, Inc., was amended
to include 30,000,000 authorized shares of stock, consisting of
25,000,000 shares of common stock with a par value of $.01, and
5,000,000 shares of preferred stock with a par value of $.01.
Additional capital raised by the Company in 1995 includes a $271,666
payment on a subscription for 684,874 shares of common stock with a
total subscription price of $815,000. The balance of this agreement
amounting to $543,334 was paid during 1996.
Private Placement Offerings
In November 1996, the Company began a Private Placement Offering of
common stock. As of December 31, 1996, 190,000 shares had been sold
at $2.50 per share. In 1997, the Company sold an additional 457,850
shares at $2.50 per share. These shares included an attached warrant
to purchase one share of common stock for $3.50 for every four shares
of common stock purchased. As of December 31, 1997, 161,963 warrants
were outstanding.
F-12
<PAGE> 42
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. STOCKHOLDERS' EQUITY.continued
Private Placement Offerings.continued
In 1997, the Company completed a private placement offering of common
stock in which the Company sold 533,867 shares at $3.00 per share.
These shares included an attached warrant to purchase one share of
common stock for $4.75 per share for every four shares of common
stock purchased. As of December 31, 1997, warrants to purchase
133,467 shares of common stock at $4.75 per share were outstanding.
Regulation S Stock Sales
In January 1997, the Company completed a sale of 500,000 shares of
common stock for $900,000 under regulation S of the Securities and
Exchange Commission's regulations. These shares also included an
attached warrant to purchase one share of common stock for $3.50 for
every four shares of common stock purchased. As of December 31,
1997, warrants to purchase 125,000 shares of common stock at $3.50
per share were outstanding.
In September 1997, the Company completed an additional sale of
250,000 shares of common stock for $675,000 under regulation S of the
Securities and Exchange Commission's regulations. These shares also
include an attached warrant to purchase one share of common stock for
$4.75 for every four shares of common stock purchased. As of
December 31, 1997, warrants to purchase 62,500 shares of common stock
at $4.75 per share were outstanding.
Warrants and Options
The Company has a Nonqualified Stock Option Plan and has registered
500,000 shares of common stock with the Securities and Exchange
Commission for the issuance under option agreements. The exercise
price of each option will be determined by the Board of Directors and
must be exercised within ten years from May 1, 1996. The Company may
issue these options to its officers, directors, employees and
consultants. As of December 31, 1997, options to purchase 335,659
shares were available for future grant. The Company has entered into
agreements with various employees and consultants for the grant of
stock options, warrants and shares of common stock at $.01 per share.
During 1997 and 1996, the Company granted options, warrants and
shares totaling 337,226 and 215,206 shares and recorded charges to
operations of approximately $1,382,000 and $424,000 relating to these
grants. The charge to operations represented the fair market value
of the underlying common stock, option or warrant.
F-13
<PAGE> 43
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. STOCKHOLDERS' EQUITY.continued
Warrants and Options.continued
The following table summarizes stock option activity to
employees and consultants for services and all warrant
activity in connection with equity financings as of December
31, 1997:
<TABLE>
<CAPTION>
Stock Options Warrants
Weighted Weighted
Average Average
Exercise Exercise
Number of Price Per Number of Price Per
Shares Share Shares Share
<S> <C> <C> <C> <C>
Balance, January 1, 1995 - $ - - $ -
Granted - - 100,000 0.10
-------- ------ -------- -----
Balance, December 31, 1995 - - 100,000 0.10
Granted 215,206 0.01 647,500 4.13
Exercised (60,500) 0.01 - -
-------- ------ -------- -----
Balance, December 31, 1996 154,706 0.01 747,500 3.59
Granted 171,926 0.01 445,930 4.06
Exercised (218,299) 0.01 (300,000) 1.73
Canceled - - (400,000) 5.00
-------- ------ -------- -----
Balance, December 31, 1997 108,333 $ 0.01 493,430 $4.00
======== ====== ======== =====
</TABLE>
As of December 31, 1997, 108,333 options to purchase shares
were outstanding with an exercise price of $.01 per share,
290,463 warrants to purchase shares were outstanding with an
exercise price of $3.50 per share, and 195,967 warrants to
purchase shares were outstanding with an exercise price of
$4.75 per share. All options and warrants outstanding at
December 31, 1997 are exercisable.
As of December 31, 1997, the Company had committed to grant
options to purchase 290,500 shares of common stock at $.01
per share upon the attainment of future milestones.
F-14
<PAGE> 44
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. STOCKHOLDERS' EQUITY.continued
Warrants and Options.continued
In October 1995 the financial Accounting Standards Board
issued SFAS No. 123, Accounting for Stock-Based
Compensation. SFAS requires the measurement of the fair
value of stock options, warrants and stock grants to be
included in the financial statements or disclosed in the
notes to financial statements. The Company has determined
that it will continue to account for stock-based
compensation in accordance with Accounting Principles Board
Opinion No. 25 and will elect the disclosure-only provisions
under SFAS No. 123. The effect of valuing options, warrants
and stock grants under SFAS No. 123 is not different than under
APB No. 25 as options and warrants granted to employees and
consultants for services were granted at $.01 per share and were
recorded under APB No. 25 at the fair market value of the
underlying stock. All warrants issued in connection with equity
financings were not separately valued.
Acquisition of Minority Interest in Subsidiary
In 1997, the Company acquired the remaining minority
interest in its subsidiary, International Gene Group, Inc.
by issuing 205,469 shares of restricted stock in exchange
for the outstanding shares in the subsidiary. Research and
development costs have been charged for $719,142, which
represented the fair market value of the shares issued.
6. RELATED PARTY TRANSACTIONS
In January 1994, the Company agreed that its founder, Dr.
David Platt, would receive a royalty of two percent of net
sales, in exchange for the licensed patent rights on certain
products being developed. The Company has agreed to pay all
of the costs to procure and maintain any patents granted
under this agreement.
The agreement includes a requirement that the royalties paid
in the sixth year of this agreement and all subsequent years
meet a minimum requirement of $50,000. If this requirement
is not met, Dr. Platt may terminate the agreement and retain
the patent rights. The Company may terminate the agreement
on sixty days' notice. The Company has not made any royalty
payments under the agreement.
F-15
<PAGE> 45
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. ACQUISITION AND RECAPITALIZATION
On March 7, 1995, Alvarada, Inc. acquired International Gene
Group, Inc. by exchanging 5,821,086 shares of its issued and
outstanding common stock for 19,633 issued and outstanding
shares of International Gene Group, Inc. As a result of
this exchange, Alvarada, Inc. acquired approximately 94% of
the outstanding common stock of International Gene Group,
Inc. In the reverse acquisition, no adjustment of assets of
either company to "fair value" has been made, and goodwill
has not been recognized as a result of the acquisition.
Prior to the acquisition of International Gene Group, Inc.,
Alvarada, Inc. had approximately 1,349,860 shares of common
stock issued and outstanding. As shares were reissued from
the stock split and acquisition, any fractional shares were
rounded upward in accordance with the agreements. As of
March 28, 1995, Alvarada, Inc. changed its name to IGG
International, Inc.
8. LEASES
The Company leases office space in Boston, Massachusetts,
under an operating lease expiring in May 2002.
Minimum future rental payments under the non-cancelable
operating lease as of December 31, 1997 for each of the next
five calendar years are as follows:
Years ending December 31,
1998 $87,000
1999 79,000
2000 77,000
2001 77,000
2002 32,000
---------
$352,000
=========
Rent expense in the accompanying consolidated statements of
operations was $45,700, $54,500, and $21,000 in 1997, 1996,
and 1995, respectively.
F-16
<PAGE> 46
SAFESCIENCE, INC.
(f/k/a IGG INTERNATIONAL, INC.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
9. LICENSING AGREEMENTS
On December 29, 1995, the Company's subsidiary Agricultural
Glycosystems, Inc. (AGI) entered into a licensing agreement
with the Government of Israel's Agricultural Research
Organization concerning shared technology. The licensing
agreement requires that AGI pay a three percent (3%) royalty
on the net selling price of any licensed products developed
from the shared technology. As an additional condition of
this agreement, AGI will fund a research and development
program requiring payments over the next five years totaling
$1,573,000. In the first year of the licensing agreement,
AGI is obligated to pay $327,000 followed by successive
annual payments of $332,000, $314,000, $300,000 and
$300,000, respectively. This agreement will be effective
until the patents concerning the licensed technology have
expired or the agreement is terminated by the parties
involved. The Company paid $30,000 of the first year's
payment in 1995, and in 1996 the Company paid $297,000. The
Company paid $332,000 during 1997.
On April 29, 1997, Agricultural Glycosystems, Inc., signed
an exclusive, worldwide licensing agreement with Agrogene
Ltd. to commercialize carbohydrate compounds derived from a
collection of natural carbohydrates identified and patented
by Agrogene Ltd. Agrogene Ltd. is an Israeli based
biotechnology company specializing in products for
agriculture. AGI will fund the research and development of
this product and future generation products for 5 years at
$150,000 per year. The Company made three payments of
$25,000 during 1997. A fourth payment of $25,000 was due
and paid in January 1998.
In October 1997, the Company entered into an agreement to
license certain patented technology from Leket-Bar
Chemicals, Ltd. The Company is required to pay license fees
totaling $400,000 over the next four years and royalties on
future product sales.
F-17
<PAGE> 47
ITEM 9. CHANGE IN CERTIFYING ACCOUNTANT.
(a) At its board meeting on May 7, 1997, the Board of Directors
of the Registrant engaged Arthur Andersen, LLP, Certified Public
Accountants, as its independent auditor for 1997. The work of
Williams & Webster, P.S. was terminated after the Form 10-K report
for December 31, 1996 was filed with the SEC on April 4, 1997.
(b) The accounting firm of Williams & Webster, P.S. was replaced
as a result of the engagement of Arthur Anderson. There were no
disagreements with Williams & Webster, P.S. on any matter of
accounting principles or practices, financial disclosure, or auditing
scope or procedure or any reportable events.
(c) Since inception of the Registrant, Williams & Webster's
reports on the financial statements have contained no adverse opinion
or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles, except the
disclosure of substantial doubt that the Company would continue as a
going concern.
(d) Williams & Webster, P.S. has provided a letter addressed to
the Securities and Exchange Commission stating it agrees with the
statements contained in the Form 8-K\A. A copy of which is filed as
"Exhibit 16" to this Form 8-K\A.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The officers and directors of the Company are as follows:
Name Age Position
David Platt, Ph.D. 42 Chief Executive Officer, Secretary and
Chairman of the Board of Directors
Bradley J. Carver 36 President, Chief Financial Officer,
Treasurer and a member of the Board of
Directors
Richard A. Salter 54 Senior Vice President
Robert Alvarez 49 Vice President of Sales
All directors hold office until the next annual meeting of
shareholders and until their successors have been elected and
qualified. The Company's officers are elected by the Board of
Directors at the annual meeting after each annual meeting of the
Company's shareholders and hold office until their death, or until
they resign or have been removed from office.
<PAGE> 48
David Platt, Ph.D. - Chief Executive Officer, Secretary and Chairman
of the Board of Directors
Dr. Platt has been the Chief Executive Officer, Secretary and
Chairman of the Board of Directors of SafeScience since March 1995
and has been the Chief Executive Officer, Secretary and the Chairman
of the Board of Directors of IGG since December 1992. Dr. Platt has
been Chief Executive Officer, Secretary and Chairman of the Board of
Directors of AGI since its inception on June 23, 1995. From January
1991 to November 1992, Dr. Platt was a research scientist with the
Department of Internal Medicine at the University of Michigan, Ann
Arbor, Michigan. From October 1989 to November 1991, Dr. Platt was a
research fellow with Dr. A. Raz. at the Michigan Cancer Foundation,
Detroit Michigan. From January 1989 to August 1989, Dr. Platt was a
research fellow under Dr. M. Wilcheck, Weizmann Institute of Science,
Rehovot, Israel. Dr. Platt received a Doctor of Philosophy degree
(1989), Masters of Science degree (1983), and Bachelor of Science
degree (1978) from the Hebrew University of Jerusalem, Israel and a
Bachelor of Engineering degree (1980) from Technion, Haifa, Israel.
Bradley J. Carver - President, Chief Financial Officer, Treasurer and
a member of the Board of Directors
Mr. Carver has been President, Chief Financial Officer, Treasurer
and a member of the Board of Directors of SafeScience since March
1995 and has been the President, Chief Financial Officer, Treasurer
and a member of the Board of Directors of IGG since February 1993.
Mr. Carver has been President, Chief Financial Officer, Treasurer and
a member of the Board of Directors of AGI since its inception on June
23, 1995. In addition to his association with the Company beginning
in February 1993, from June 1992 to October 1994, Mr. Carver has been
a consultant with Cyrowski and Associates, which is engaged in the
business of commercial real estate. From March 1991 to October 1994,
Mr. Carver has been a consultant with Circuit Master, Inc., a
Michigan corporation, which is a electronics design and engineering
firm engaged in the production of audio power amplifiers. From June
1991 to September 1993, Mr. Carver was a consultant with EPI Medical
Products, a Michigan corporation, which is engaged in the production
and licensing of a patented device for disposal of hazardous medical
waste and surgical products. From January 1991 to March 1993, Mr.
Carver was a consultant with Capital Networks, Inc., a Michigan
corporation, which is a consulting firm for small business. From
January 1989 to March 1991, Mr. Carver was a consultant with Lincoln
Technical Services, Inc., a Michigan corporation, which is engaged in
the selection and management of engineers for automotive clients.
From December 1988 to December 1990, Mr. Carver was the founder of
Carver Nutritional Products, which was engaged in production and sale
of sports nutrition products sold to professional and college sports
teams. Mr. Carver received a Bachelor of Arts degree in management
from Michigan State University in 1983.
<PAGE> 49
Richard A. Salter - Senior Vice President
Mr. Salter has been Senior Vice President of SafeScience since
February 1997. Prior thereto, Mr. Salter was Vice President -
Corporate Development of the Company from July 1996 through January
1997 and served SafeScience as a consultant from June 1996 through
July 1997. Prior to joining the Company, Mr. Salter was an
independent business consultant.
Robert Alvarez - Vice President - Sales
Since January 1998, Mr. Alvarez has been Vice President of Sales.
Since February 1994, Mr. Alvarez has been Business Manager of Biosys,
Inc. of Columbus, Maryland which is engaged in the business of
biological and botanical insect control. From May 1992 to February
1994, Mr. Alvarez was National Director of Sales and Marketing of
Clinton Nursery Products of Clinton, Connecticut. From May 1989 to
May 1992, Mr. Alvarez was Director of Sales for Commerce Corporation
of Linthieum, Maryland, a national lawn and garden specialty
distributor. Mr. Alverez holds a BSBA from John Carroll University,
Cleveland, Ohio.
Indemnficiation
The Company's Bylaws provide that the Company's directors and
officers will be indemnified to the fullest extent permitted by the
Nevada Corporation Code, however, such indemnification shall not
apply to acts of intentional misconduct; a knowing violation of law;
or, any transaction where an officer or director personally received
a benefit in money, property, or services to which to the director
was not legally entitled.
The Company has been advised that in the opinion of the
Securities and Exchange Commission indemnification is against public
policy as expressed in the Securities Act of 1933, as amended, and
is, therefore, unenforceable.
Compliance with Section 16(a) of the Securities Exchange Act of 1934.
Section 16(a) of the Securities and Exchange Act of 1934 requires
certain defined persons to file reports of and changes in beneficial
ownership of a registered security with the Securities and Exchange
Commission in accordance with the rules and regulations promulgated
by the Commission to implement the provisions of Section 16. Under
the regulatory procedure, officers, directors and persons who own
more than ten percent of a registered class of a company's equity
securities are also required to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on review of the copies of Forms 3, 4 and 5 furnished
to the Company for transactions occurring between January 1, 1997 and
December 31, 1997, or with respect to transactions which occurred
between January 1, 1997 and December 31, 1997, all reports which were
required to be filed under Section 16(a) of the Exchange Act were in
fact so filed with the exception of the following:
<PAGE> 50
Robert Alvarez, the Company's Vice President, failed to file a
Form 3 with the Commission.
Richard Salter, the Company's Senior Vice President, failed to
file a Form 3 with the Commission upon becoming an affiliate of the
Company. Further, Mr. Salter has not filed any Form 4s or Form 5s
with respect to purchases and sales of the Company's securities.
ITEM 11. EXECUTIVE COMPENSATION.
(a) Cash Compensation.
The Company anticipates entering into employment agreements with
its officers in the near future. Directors do not receive
compensation for their services as directors and are not reimbursed
for expenses incurred in attending board meetings. The Company paid
the following salaries to its Officers:
1997 1996 1995
David Platt, Ph.D. $ 106,000 $96,000 $64,000
Bradley Carver $ 104,000 $80,000 $51,000
Richard Salter $ 139,781 [1] 0 0
[1] Mr. Salter's salary was paid in the form of 30,000 shares of
Common Stock of the Company valued at $139,781. Mr. Salter did
not receive any cash compensation from the Company. In
addition, prior to becoming an employee of the Company, he
received 30,000 shares of Common Stock as a consultant and
exercised options to purchase 57,500 shares of Common Stock at
$0.01 per share which were granted in 1996. The value of the
87,500 shares issued to Mr. Salter as a consultant during 1997
totaled $281,938.
and anticipates paying the following salaries in 1998:
David Platt, Ph.D. $ 120,000
Bradley Carver $ 120,000
Richard Salter $ 640,000 [2]
Robert Alvarez $ 85,000
[2] Mr. Salter's salary will be paid in the form of 60,000 shares of
Common Stock of the Company, plus an additional 100,000 shares
granted in January 1998. Mr. Salter does not receive any cash
compensation from the Company.
Further, Dr. Platt will receive a royalty of 2% of net sales of
GBC 590 and MMS-1 by the Company. Mr. Alvarez will receive options
to purchase 1,000 shares of Common Stock at the end of each quarter
that he remains employed with the Company.
Richard Salter, the Company's Senior Vice President, receives a
salary which is paid entirely in options to purchase Common Stock of
the Company. Mr. Salter receives options to purchase 5,000 shares
for each month of employment, of which 2,500 relate to so-called
"restricted" shares and the remaining 2,500 are registered on Form S-
<PAGE> 51
8. In addition in January 1998, the Company granted Mr. Salter
options to purchase 100,000 shares of "restricted" Common Stock for a
purchase price of $0.01 per share, for each of the three years 1998,
1999 and 2000 at the commencement of which Mr. Salter remains with
the Company.
(b) Compensation Pursuant to Plans.
The Registrant has no retirement, pension, profit sharing,
insurance and medical reimbursement plans covering its Officers or
Directors other than a non-qualified incentive stock option plan
filed on Form S-8 Registration Statement with the Commission. As of
December 31, 1997, options to purchase 164,341 shares have been
issued and 158,500 shares exercised.
(c) Other Compensation.
Officers and Directors of the Registrant did not receive any other
compensation during the fiscal year ended December 31, 1997.
(d) Compensation of Directors.
The Registrant's Directors receive no compensation for their
services; however, they are reimbursed for travel expenses incurred
in serving on the Board of Directors.
(e) Termination of Employment and Change of Control Arrangements.
No compensatory plan or arrangement exists between the Registrant
and any Executive Officer, except as discussed herein.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership, at
December 31, 1997 of each person known by the Company to be the
beneficial owner of five percent or more of the Company's Common
Stock, each director individually and all officers and directors of
the Company as a group. Each person has sole voting and investment
power with respect to the shares of Common Stock shown, and all
ownership is of record and beneficial.
<PAGE> 52
Name and address Number of Percent
of owner Shares Position of Class
David Platt, Ph.D. 2,964,950 Chief Executive Officer, 24.7%
Park Square Building Secretary and Chairman
Suite 520 of the Board of Directors
31 St. James Avenue
Boston, MA 02116
Bradley J. Carver 2,583,086 President, Chief Financial 21.5%
Park Square Building Officer, Treasurer and
Suite 520 member of the Board
31 St. James Avenue
Boston, MA 02116
Richard A. Salter 150,000 Senior Vice President 1.3%
Park Square Building
Suite 520
31 St. James Avenue
Boston, MA 02116
Robert Alvarez 0 Vice President of Sales 0.0%
Park Square Building
Suite 520
31 St. James Avenue
Boston, MA 02116
ALL OFFICERS AND 5,698,036 47.5%
DIRECTORS AS A
GROUP (4 persons)
Britannia Holdings
Limited. 750,000 6.3%
Kings House - The Grange
St. Peter Port
Guersey, Channel Island GY1 2QJ
George
Strawbridge, Jr. 684,873 5.7%
3801 Kenneth Pike
Building B-100
Wilmington, DE 19807
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On January 7, 1994, IGG entered into a licensing agreement with
Dr. Platt, the Company's Chief Executive Officer and a member of the
Board of Directors to pay Dr. Platt a royalty of two percent (2%) of
the net sales of the Company's products. See "Business - Patent
Status and Protection of Proprietary Technology."
<PAGE> 53
In June 1994, the Company issued 20,000,000 "restricted" shares of
Common Stock to Crosby Enterprises, Inc. in consideration of $20,000;
10,000,000 "restricted" shares of Common Stock to Howard Crosby in
consideration of services rendered; and, 10,000,000 "restricted"
shares of Common Stock to Robert Jorgensen for service rendered.
In March 1995, the Company effected a 1 for 78.14 reverse stock
split of its common shares. Reference hereinafter is to post-split
shares.
On March 7, 1995, the Company issued 5,821,086 "restricted" shares
of Common Stock in exchange for 19,633 shares of IGG, which
constituted 93.9% of the outstanding shares of IGG. There was no
relationship between Alvarada, Inc. and International Gene Group,
Inc. prior to this transaction. Included therein were 2,964,950
shares issued to David Platt and 2,583,096 shares issued to Brad
Carver.
On March 30, 1995, the Company entered into an agreement with Mr.
James C. Czirr, a former member of the Board of Directors of the
Company and Vice President, to pay Mr. Czirr a consulting fee of
$8,000 per month. The Company has paid a total of $15,000 to Mr.
Czirr and terminated the consulting agreement.
On June 23, 1995, the shareholders removed Mr. James Czirr as a
member of the Board of Directors and the Board of Directors voted not
to fill his vacancy. Further, on June 23, 1995, Mr. Czirr was
terminated as Vice President of the Company. The Company has since
retained Mr. Czirr as a consultant to the Company.
During 1997, the Company issued 1,283,867 shares of Common Stock
for cash consideration of $3,351,817 less associated expenses of
$175,000. These shares include 750,000 shares issued pursuant to two
Regulation S offerings: 500,000 shares issued in the first quarter
for a total of $1,000,000, and 250,000 shares issued in the third
quarter for a total of $750,000. Also included in this amount is
533,867 shares issued as part of a private placement which commenced
in August 1997 of up to 500,000 shares of "restricted" stock, which
private placement was subsequently extended to up to 1,000,000
shares. The Company received $1,601,817 for these 533,867 shares.
An additional 457,850 shares were sold in the first quarter of 1997,
for an aggregate purchase price of $1,145,000, in a private placement
commenced in the fall of 1996, which private placement resulted in
the issuance of a total (during 1996 and early 1997) of 647,850
shares of Common Stock for total consideration of $1,556,250, net of
expenses. The stock offered in each private placement has warrants
attached allowing the purchaser to purchase one additional share, for
a purchase price $3.50 in the case of the first private placement,
and a purchase price of $4.75 in the case of the second private
placement, for every four shares purchased. All such warrants expire
five years from the date of issue.
<PAGE> 54
In 1996, the Company adopted a Nonqualifying Stock Option Plan and
registered, pursuant to a Form S-8 Registration Statement 500,000
shares of stock for the compensation of directors, consultants and
employees as per the agreement. During 1997, the Company issued
86,841 shares qualifying as these S-8 shares. The Company had other
stock for services agreements which resulted in restricted shares
being issued. The Company issued 250,385 other shares for services
in 1997. The value of stock options and stock grants was
approximately $1,382,000 for the year ended December 31, 1997.
The Company also issued 205,469 shares in 1997 to the minority
shareholders of its subsidiary International Gene Group, Inc.,
thereby increasing its ownership of this subsidiary to 100%. The
Company valued the purchase of the remaining minority interest at
approximately $719,000. The value of the purchase was recorded as a
charge to operations for the year ended December 31, 1997.
In April 1996, the Company granted to Trinity American Corporation
warrants for up to a year (or 100 days after the Securities and
Exchange Commission declares the registration effective) to subscribe
for 500,000 new shares of Common Stock at $5.00 per share. 100,000
of these warrants were exercised in 1997, resulting in aggregate
proceeds to the Company of $500,000, and the remainder of the
warrants have expired.
Effective July 7, 1997, the Company hired Richard Salter as its
Vice President for Business Development, for a period of two years.
Mr. Salter had served the Company as a consultant from June 1996
through July 7, 1997, during which period he received options to
purchase a total of approximately 110,000 shares of Common Stock. In
exchange for his services beginning in July 1997, Mr. Salter receives
options to purchase 5,000 shares of Common Stock (of which 2,500
shares will be issued under Form S-8 and the remaining 2,500 shares
will either be restricted shares or, at the Company's option, will be
issued under Form S-8), for each month that he serves the Company.
In January 1998, the Company granted Mr. Salter options to purchase
100,000 shares of "restricted" Common Stock for a purchase price of
$0.01 per share, for each of the three years 1998, 1999 and 2000 at
the commencement of which Mr. Salter remains with the Company.
Keith Greenfield has also rendered consulting services in
corporate strategy to the Company. In exchange for his services, the
Company granted Mr. Greenfield options to purchase 58,000 shares of
Common Stock during 1996, all of which were exercised during 1997.
Both Mr. Salter and Mr. Greenfield are reimbursed for their
reasonable expenses but do receive any cash compensation; each will
only receive Common Stock, or options to purchase Common Stock, of
the Company, as described above. All options will be exercisable for
a term of ten years from the date of grant and will bear an exercise
price of $0.01 per share. During the period ended December 31, 1997,
warrants were similarly granted to Mr. David Sandberg, exercisable at
$0.01 per share, for an aggregate of 15,585 shares, in consideration
of legal services.
<PAGE> 55
On September 30, 1996, warrants granted by the Company to James C.
Czirr, a former director, to subscribe for up to 200,000 shares of
Common Stock at $0.01 per share. As of December 31, 1997, all
warrants were exercised.
In May 1997, the Company and Enrico Petrillo, trading as
Michaelangelo executed an agreement pursuant to which Michaelangelo
will receive options to purchase 120,000 shares of Common Stock at
$0.01 per share, exercisable immediately, and options to purchase up
to an additional 40,000 shares, vesting upon the achievement by the
Company of certain milestones.
John Pool was formerly the Company's director of European
operations. The Company notified Mr. Pool in March 1998 that it was
terminating its agreement with him pursuant to its terms. Prior to
this termination, Mr. Pool had received options to purchase 20,000
shares of Common Stock in exchange for his services rendered to the
Company, which options have not been exercised. The Company has no
further obligations to issue additional options or shares to Mr.
Pool.
On December 6, 1996, David Platt, Ph.D., the Company's Chairman of
the Board of Directors, signed a Confidentiality and Invention
Agreement with the Company. The Agreement provides that Dr. Platt
assigns all his rights, title and interest in any invention, data or
idea, made or conceived or reduced to practice either alone or
jointly with other to the Company. Further, that all rights thereto
shall remain the sole property of the Company and Dr. Platt agreed
not to disclose any information about the Company's confidential
information.
In connection with the Company's private placement of Common Stock
during late 1996 and early 1997, Dr. David Platt, the Company's Chief
Executive Officer, Secretary and Chairman of the Board of Directors,
and Bradley Carver, the Company's President, Chief Financial Officer,
Treasurer and Director, entered into an agreement with the purchasers
of Common Stock in such offering pursuant to which Mr. Carver and Dr.
Platt each agreed that he will not, without the consent of the
holders of 50% of the shares of Common Stock purchased in the private
placement, sell during any fiscal quarter prior to the Transfer Date
(as defined below) a number of shares of Common Stock held by him in
excess of (a) 25,000 shares in the case of public sales or (b)
100,000 shares in the case of private sales. "Transfer Date" is
defined as the first to occur of (i) January 1, 1998, (ii) the
effective date of a Registration Statement filed by the Company with
respect to its Common Stock or (iii) the date upon which the average
bid price for the Common Stock has been not less than $7.50 per share
for any thirty consecutive trading days.
<PAGE> 56
In November 1996, the Company began a Private Placement Offering
of common stock. As of December 31, 1996, 190,000 shares had been
sold at $2.50 per share. In 1997, the Company sold an additional
457,850 shares at $2.50 per share. These shares included an attached
warrant to purchase one share of common stock for $3.50 for every
four shares of common stock purchased. As of December 31, 1997,
161,963 warrants were outstanding.
In 1997, the Company completed a private placement offering of
common stock in which the Company sold 533,867 shares at $3.00 per
share. These shares included an attached warrant to purchase one
share of common stock for $4.75 per share for every four shares of
common stock purchased. As of December 31, 1997, warrants to
purchase 133,467 shares of common stock at $4.75 per share were
outstanding.
In January 1997, the Company completed a sale of 500,000 shares of
common stock for $900,000 under regulation S of the Securities and
Exchange Commission's regulations. These shares also included an
attached warrant to purchase one share of common stock for $3.50 for
every four shares of common stock purchased. As of December 31,
1997, warrants to purchase 125,000 shares of common stock at $3.50
per share were outstanding.
In September 1997, the Company completed an additional sale of
250,000 shares of common stock for $675,000 under regulation S of the
Securities and Exchange Commission's regulations. These shares also
include an attached warrant to purchase one share of common stock for
$4.75 for every four shares of common stock purchased. As of
December 31, 1997, warrants to purchase 62,500 shares of common stock
at $4.75 per share were outstanding.
In January 1998, the Company changed its name from IGG
International, Inc. to SafeScience, Inc.
It is currently contemplated that all the Company's employees and
consultants who receive all or a portion of their compensation in
Common Stock will enter into agreements with the Company which
restrict their ability to transfer more than a fixed number of shares
during each calendar quarter.
The foregoing agreements and transactions were as favorable as
could have been obtained from an unaffiliated third party in a
similar transaction.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K.
(a) Financial Statements are contained in Item 8 of this Form 10.
<PAGE> 57
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter of
the year ended in regard to this report.
(c) Exhibits.
The following documents are incorporated herein by reference from
the Registrant's Form 10, as filed with the Securities and Exchange
Commission, SEC File No. 0-26476.
Exhibit
No. Description
3.1 Articles of Incorporation of Alvarada, Inc.
3.2 Amendment to the Articles of Incorporation dated March 1,
1995.
3.3 Amendment to the Articles of Incorporation dated March 3,
1995.
3.4 Amendment to the Articles of Incorporation dated May 23,
1995.
3.5 Bylaws of Alvarada, Inc.
3.6 Articles of Incorporation of International Gene Group.
3.7 Bylaws of the Company of International Gene Group.
3.8 Articles of Incorporation of Agricultural Glycosystems, Inc.
3.9 Bylaws of the Company of Agricultural Glycosystems, Inc.
4.1 Specimen Stock Certificate.
10.1 Agreement and Plan of Reorganization.
10.2 Licensing Agreement with Dr. Platt.
10.4 Licensing Agreement with The Government of Israel.
The following documents are incorporated herein by reference from
the Registrant's Form S-8 Registration Statement filed with the
Commission on May 14, 1996, SEC file No. 333-04764:
10.1 Nonqualifying Stock Option Plan.
<PAGE> 58
The following documents are incorporated herein by reference from
the Registrant's Form SB-2 Registration Statement filed with the
Commission on November 20, 1997, SEC file No. 333-16087:
10.6 Warrant Agreement with Trinity American Corporation.
10.7 Consulting Agreement with Richard Salter and Amendment
thereto.
10.8 Consulting Agreement with Keith Greenfield.
10.9 Consulting Agreement with James C. Czirr.
10.10 Warrant Agreement with James C. Czirr.
The following documents are an exhibit hereto:
10.11 Amendment to Consulting Agreement with Keith Greenfield,
dated May 1997.
10.12 Licensing Agreement with Agrogene Ltd.
10.13 Trademark Sales and License Agreement with Elk Mound Feed and
Farm Supply, Inc.
10.14 Consulting Agreement with Michelangelo, LLC., dated May 1997.
10.15 Consulting Agreement with Michelangelo, LLC., dated September
1997.
10.16 Agreement with Leket-Bar Chemicals, Ltd., dated October 1997.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of William & Webster, P.S.
27 Financial Data Schedule.
99.1 Office Lease.
All other schedule and exhibit are omitted, as the required
information is not applicable or is not present in an amount
sufficient to require submission of the schedule or because the
information required is included in the financial statements and
notes thereto.
<PAGE> 59
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934, the registrant has duly caused this Form 10-K to
be signed on its behalf by the undersigned, thereunto duly authorized,
in Cambridge, Massachusetts, on this 27th day of March, 1998.
SAFESCIENCE, INC.
(Formerly, IGG International, Inc.
BY: /s/ Bradley J. Carver, President and Chief
Financial Officer
KNOW ALL MEN BY THESE PRESENT, that each person whose signature
appears below constitutes and appoints Bradley J. Carver, as true and
lawful attorney-in-fact and agent, with full power of substitution, for
his and in his name, place and stead, in any and all capacities, to
sign any and all amendments to this registration statement, and to file
the same, therewith, with the Securities and Exchange Commission, and
to make any and all state securities law or blue sky filings, granting
unto said attorney-in-fact and agent, full power and authority to do
and perform each and every act and thing requisite or necessary to be
done in about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying the confirming all that
said attorney-in-fact and agent, or any substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this Form 10-K has been signed by the following persons in the
capacities and on the dates indicated:
Signatures Title Date
/s/ David Platt Chief Executive Officer, March 27, 1998
David Platt, Ph.D Secretary and Chairman of
the Board of Directors
/s/ Bradley J. Carver President, Chief Financial March 27, 1998
Bradley J. Carver Officer, Treasurer and a member
of the Board of Directors
/s/ Richard A. Salter Senior Vice President March 27, 1998
Richard A. Salter
/s/ Robert Alvarez Vice President - Sales March 27, 1998
Robert Alvarez
<PAGE> 60
EXHIBIT INDEX
The following documents are incorporate herein:
10.11 Amendment to Consulting Agreement with Keith Greenfield, dated
May 1997.
10.12 Licensing Agreement with Agrogene Ltd.
10.13 Trademark Sales and License Agreement with Elk Mound Feed and
Farm Supply, Inc.
10.14 Licensing Agreement with Michelangelo, LLC., dated May 1997.
10.15 Licensing Agreement with Michelangelo, LLC., dated September
1997.
10.16 Agreement with Leket-Bar Chemicals, Ltd., dated October 1997.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of William & Webster, P.S.
27 Financial Data Schedule.
99.1 Office Lease.
All other schedule and exhibit are omitted, as the required
information is not applicable or is not present in an amount sufficient
to require submission of the schedule or because the information
required is included in the financial statements and notes thereto.
<PAGE> 60
AGREEMENT
AGREEMENT made as of this 6th day of May, 1997 by and
between IGG International, Inc., ("IGG") of One Kendall Square,
Building 300, Cambridge, MA 02139 ("IGGI") and Keith Greenfield
of 12 Cedarhill Road, Dover, MA 02030 ("Greenfield").
WHEREAS, Greenfield has rendered services to IGGI in the
areas of strategic consulting and assistance with certain
negotiations; and
WHEREAS, IGGI has agreed to compensate Greenfield for his
services in the issuance of stock;
NOW, THEREFORE, in consideration of the foregoing, the
parties hereby agree as follows:
1. IGGI hereby agrees to issue to Greenfield, in
consideration of and as full compensation for all services
rendered by Greenfield to IGGI as of the date hereof (which shall
be in addition to compensation granted to Greenfield pursuant to
that certain agreement between Greenfield and IGGI dated
September 13, 1996 (the "September Agreement")):
a total of 45,500 shares of IGGI's Common Stock. Of such
shares, 30,500 shall be so-called "restricted" stock
under Rule 144, and the remaining 15,000 shares shall
be registered on Form S-8. The parties acknowledge
that pursuant to the September Agreement Greenfield was
to receive 15,000 unrestricted shares, but such
unrestricted shares were not in fact issued by the
Company and the 15,000 unrestricted shares provided for
herein will be in lieu of, and not in addition to, the
15,000 unrestricted shares that were to be granted
under the September Agreement; and
warrants to purchase 7,000 shares of IGGI's Common Stock.
Such warrants shall be dated the date hereof and shall
be identical to those warrants issued to investors in
connection with IGGI's equity financing in late 1996
and early 1997.
2. Greenfield shall not be entitled to any cash
compensation.
3. This agreement shall not be construed to constitute a
contract of employment, to create any continuing rights or
obligations beyond the term hereof, or to constitute the parties
as principal and agent, joint venturers or partners.
4. This agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
<PAGE> 61
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals as of the date first above written.
IGG International, Inc.
By:____________________________
Bradley J. Carver, President
_______________________________
Keith Greenfield
<PAGE> 62
AGREEMENT
AGREEMENT made as of this 6th day of May, 1997 by and
between IGG International, Inc., ("IGG") of One Kendall Square,
Building 300, Cambridge, MA 02139 ("IGGI") and Keith Greenfield
of 12 Cedarhill Road, Dover, MA 02030 ("Greenfield").
WHEREAS, Greenfield and IGGI have this date executed an
agreement relating to the provision of services by Greenfield to
IGGI (the "Consulting Agreement"); and
WHEREAS, IGGI has agreed to grant Greenfield additional
compensation for his services which will be earned upon the
achievement by IGGI of certain predetermined milestones;
NOW, THEREFORE, in consideration of the foregoing, the
parties hereby agree as follows:
1. IGGI hereby agrees to issue to Greenfield, in
consideration of services to be rendered by Greenfield to IGGI
(which shall be in addition to compensation granted to Greenfield
pursuant to that certain agreement between Greenfield and IGGI
dated of even date herewith, a total of up to 30,000 of IGGI's
Common Stock. Such stock will vest and be issuable upon the
occurrence of the following events: (a) 10,000 shares will vest
upon the completion by IGGI of a "major financing", defined as a
debt or equity financing the gross proceeds to IGGI of which are
at least $5,000,000; (b) an additional 10,000 shares will vest
upon the consummation by IGGI of a "major corporate partnering
transaction", defined as a joint venture or other corporate
partnership transaction with a corporate partner, which
transaction is projected in good faith by IGGI's Board of
Directors to result in gross revenues (including any related
revenues such as equity, research and development grants, etc.)
to IGGI of at least $5,000,000 during a period of not more than
three years from the date of consummation thereof; and (c) an
additional 10,000 shares will vest upon the closing by IGGI of an
underwritten public offering resulting in proceeds to IGGI of not
less than $20,000,000.
2. Except as specifically supplemented by this Agreement,
the Consulting Agreement will remain in all respects in full
force and effect.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals as of the date first above written.
IGG International, Inc.
By:____________________________
Bradley J. Carver, President
_______________________________
Keith Greenfield
<PAGE> 63
LICENSE AGREEMENT
THIS AGREEMENT entered into in Israel 27th day of March, 1997,
by and between AGRICULTURAL GLYCOSYSTEMS, INC., a Michigan
corporation having a place of business at One Kendall Square,
Building 300, Cambridge, Massachusetts 02139-9645 ("AGI") and
Agrogene Ltd., a corporation doing business in Israel, with a
business address at 27 Hatzfeld Street, Kiryat-Ono 55600
(collectively "Agrogene").
WHEREAS, Agrogene is the owner of particular, patent
applications and Licensed Technologies as set forth hereinbelow;
WHEREAS, AGI is desirous of obtaining a license under the
Licensed Technology (as defined hereinbelow);
WHEREAS, the parties wish to enter into a program of Work as
detailed hereinbelow; and
WHEREAS, Agrogene agrees to grant AGI a license to
commercialize the Licensed Products;
NOW THEREFORE, in consideration of the mutual covenants set
forth hereinbelow and other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties do agree as
follows:
I. Definitions.
A. "Licensed Technology shall mean the technology disclosed
in pending U.S. Patent Applications Serial No. 08/690,423 filed
July 27, 1996; and Serial No. 08/739,699 filed October 29, 1996
both of which are entitled "Preparation and Use of Inula Extracts
as a Fungicide for the Control of Plant Disease," as well as any
patents issuing from said applications, and any division,
continuation, continuations-in-part, or re-issues of said patents
and patent applications, as well as all equivalents of the
foregoing anywhere in the world. Licensed Technologies shall also
include all Improvements to the technology disclosed in the
aforementioned patent applications. As used herein "Improvements"
shall mean all improvements, modifications or changes made, during
the term of this Agreement, to the materials or methods, and
therapies described in the patents and patent applications, whether
patented, unpatented or unpatentable.
B. "Licensed Products" shall mean all products whose
manufacture, use or operation is covered by an unexpired claim of
a patent included within the Licensed Technology.
<PAGE> 64
C. "Net Selling Price" shall mean the price at which
Licensed Products are sold, by AGI to third parties ex factory, and
shall be exclusive of costs of shipping, insurance, taxes directly
related to the sale of Licensed Products, exported or import
duties, discounts and rebates. If a Licensed Product is
incorporated into another product, the Net Selling Price of the
other product which is attributable to the incorporated Licensed
Product, and the proportion of each component shall be agreed to by
the parties, in writing, and shall by annexed to this Agreement.
D. "Sale" shall mean the sale, lease or other transfer of
Licensed Products.
II. The Grant
A. Agrogene hereby grants to AGI an exclusive, worldwide,
royalty-bearing license under the Licensed Technology, to use the
Licensed Technology; and to make, use, have made, and sell Licensed
Products.
B. AGI shall have the right to grant one or more sub-license
hereunder provided Agrogene first gives its written consent to any
said sublicense, and provided AGI shall be responsible for payment
of Sublicense Royalties to Agrogene in accord with section III-B
below.
C. AGI shall notify Agrogene, in writing, of each sublicense
which it grants.
D. AGI shall be responsible for assuring that its
sublicensees shall comply with all obligations of this Agreement.
III. Royalty.
A. Royalties shall be calculated on the basis of 3% of the
Net Selling Price of Licensed Products and shall attach quarterly,
each year.
B. Sublicense Royalties shall comprise 20% of the amount of
any licensing fee or royalty payment received by AGI pursuant to
any sublicense granted by AGI hereunder. Sublicense Royalties
shall attach when payment is received by AGI, and paid to Agrogene
in accord with section IV-A hereinbelow.
IV. Record and Reports.
A. AGI will make written royalty reports to Agrogene
quarterly, within 30 days after the first day of each January,
April, July and October during which the Agreement is in force and
30 days after termination of this Agreement, setting forth the
total income received from the sale, lease or other transfer of
Licensed Products by AGI and its sublicensee during the previous
<PAGE> 65
quarter and the amount of royalties due thereupon. Each report
shall be accompanied by a check for any royalties then due and
owing. Should no Licensed Products have been sold and/or royalties
due, the report shall so state.
B. During the terms of this Agreement, and for five years
after the termination thereof, AGI shall keep records of income
received from Licensed Products sold, leased or otherwise
transferred under this Agreement and any sublicenses, said records
being of sufficient detail to enable Agrogene to verify all
royalties payable and paid under this Agreement. Agrogene shall
have the right to appoint a Certified Public Accountant to inspect
such records, upon reasonable notice to AGI, during regular
business hours and no more often than once each year; provided that
the cost of said inspection shall by borne by Agrogene and said
Certified Public Accountant shall report to Agrogene only the
amount of royalty payable for the period under audit.
V. Joint Inventions.
Any invention made through the joint efforts of Agrogene and
AGI during the term of this Agreement, and to the extent that said
invention relates to Licensed Technology, shall be deemed to be
jointly owned by Agrogene and AGI, and any products incorporating
said invention in their manufacture, use or operation shall be
Licensed Products which are subject the royalties as set forth
herein.
VI. Research and Development.
A. During the first five (5) years this Agreement is in
force, AGI shall in accord with the schedule in section B
hereinbelow, fund a program of work to be carried out by Agrogene
and directed to making Improvements in the Licensed Technology (the
"Program").
B. AGI shall contribute $150,000 per year, during each of
the first five years this agreement is in force, to fund the
Program. The yearly periods shall be calculated on the basis of
Program Years, with the first Program Year commencing on the
effective date of this Agreement. In the first Program Year, AGI
shall contribute funding according to the following schedule:
$25,000 - on the effective date of the Agreement.
$25,000 - within 3 months of the effective date of this
Agreement.
$25,000 - within 6 months of the effective date of this
Agreement.
$25,000 - within 9 months of the effective date of this
Agreement.
$50,000 - within 12 months of the effective date of this
Agreement.
<PAGE> 66
During each of the four (4) subsequent Program Years, AGI shall
make said payment of $150,000 to Agrogene in one to five
installments. Should this Agreement terminate in a year in which
a payment is due in accord with this section, the amount of said
payment shall be prorated, based upon the fraction of the Program
Year which has transpired.
C. Agrogene shall provide AGI with a written Research Plan
and Budget on an annual basis, for each Program Year in which AGI
is to fund the Program of Work. The first Research Plan and Budget
shall be submitted by the effective date of this Agreement, and
subsequent Research Plans and Budgets shall be submitted prior to
the start of subsequent Program Years. AGI's obligation to fund
the Program of Work shall be conditional upon its receipt of the
Research Plans and Budgets; and AGI shall have the right to discuss
the Research Plan and Budget with Agrogene and to make
modifications or revisions thereto.
D. Agrogene shall open and maintain a special account which
shall receive all monies which AGI is obligated to pay Agrogene for
funding the program of work, and funds for carrying out the Program
shall be expended from said account,
E. Agrogene shall keep and maintain the records and books of
said account during the Program of work and for (5) years
thereafter. AGI shall have the right, during the term of the
program of work, and for (5) years thereafter, to appoint a
Certified Public Accountant to inspect such records and books, upon
reasonable notice to Agrogene during regular business hours and no
more often than once each year; provided that the cost of said
inspection shall be borne by AGI.
F. In carrying out the Program and expending the funds
Agrogene shall act reasonable and to carry out the goals of the
Program and to maximize the value of the license granted herein.
G. Agrogene and AGI shall mutually disclose the results of
the Program to one another on a regular basis and no less
frequently than once per quarter.
VII. Procurement and Maintenance of Patents.
A. During the term of this Agreement AGI shall pay all
filing fees, maintenance fees, and costs of patent application
preparation and prosecution to perfect and maintain all necessary
patents covering the Licensed Technology.
B. Agrogene shall provide AGI with all information and
assistance which is reasonably necessary to enable AGI to secure,
maintain and enforce worldwide patent protection for the Licensed
Technology.
<PAGE> 67
C. Should AGI elect to abandon, or to not file, refile,
reissue or take any other steps necessary to perfect any patent,
patent application or right licensed hereunder, it shall so inform
Agrogene at least 60 days in advance of any deadline for taking
action in connection with said patent, patent application or right;
and Agrogene shall have the right, but not the obligation to assume
responsibility for maintaining or perfecting said patent, patent
application or right, and if Agrogene elects to do so, it may at
its sole option, and immediately upon written notice to AGI, remove
that patent, patent application or right from the body of Licensed
Technology, and such patent, patent application or right shall
become the property of Agrogene by operation of this agreement.
VIII. Enforcement.
A. During the term of this License, AGI shall have the
right, but not the obligation, to take all actions necessary to
enforce the rights transferred hereunder, including the right to
bring suit at its own expense and in its own name, or if required
by law jointly with, or in the name of, Agrogene.
B. Should AGI institute any enforcement action, it shall
have the sole right to direct and control said enforcement action,
including the right to settle said action. Agrogene shall be
entitled to 3% of any recovery, award or settlement resultant from
said enforcement, after recovery of all of AGI's expenses and costs
associated with said enforcement action, AGI shall be entitled to
retain the remainder of said recovery award or settlement.
C. Agrogene shall extend all reasonable and necessary
cooperation to AGI in connection with its efforts to enforce any of
the rights licensed hereunder including giving testimony, executing
documents and providing technical assistance, providing that
reasonable costs thereof are borne by AGI.
D. Agrogene may agree to share in the costs of any such
enforcement action, in which case Agrogene's share in any recovery,
award or settlement resultant therefrom shall be in proportion to
its respective contribution to the costs of said enforcement.
IX. Confidentiality.
A. During the term of this Agreement, and for three (3)
years thereafter, the parties agree to maintain confidentiality
with regard to data, documents, know-how, marketing information and
other information relating to the Licensed Technology of the
Program (collectively "Confidential Information"). This obligation
shall apply to Confidential Information which either party
generates itself and to Confidential Information either party
receives from the other party as well as to Confidential
Information generated on behalf of either of the parties by a third
party. This obligation shall not apply to any information which:
is in, or enters into, the public domain through no breach of this
<PAGE> 68
Agreement; is communicated to either of the parties hereto by a
third party who has not improperly obtained such information; or
which was developed by AGI independently of Agrogene and prior to
this Agreement.
B. The parties recognize that Confidential Information may
have to be disclosed to third parties in connection with
sublicensing negotiations, regulatory approval, marketing and the
securing of intellectual property protection; and the parties agree
that in order to maximize the value of this license, neither will
unreasonably deny or delay approval of such disclosure.
C. Neither party shall be entitled to publish the fact of
the performance of the Program and the result thereof, without
receiving the consent of the other party. Where one of the parties
is interested in publishing the fact of performance of the Program
and/or the results thereof, it shall request the other party's
consent. Should the other party's objection not be received within
thirty (30) days of such request, the party interested in
publishing shall be entitled to publish the information which was
the subject of said request. A party shall not be entitled to
object to publication unless it might reasonably cause it any
damage.
D. The parties shall assure that their employees, persons
working on their behalf and sub-contractors comply with all
provisions of this Section.
X. Transferability.
A. AGI shall have the right to transfer the rights granted
hereunder to a third party provided Agrogene first gives its
written consent, and said third party agrees, in writing, to be
bound by all terms and conditions of this Agreement. Any profit
realized by AGI for the transfer of said rights shall be shared
with Agrogene. Agrogene's share of said profits, computed after
deduction of AGI's reasonable costs associated with said transfer,
shall be 15%, but in no instance shall Agrogene's share by less
than 10% of the sale price attributed to said license.
B. Section X-A notwithstanding, AGI shall be free to
transfer the rights granted under this Agreement to a party which
is purchasing substantially all of the business assets of AGI,
without prior approval of Agrogene and without further payment to
Agrogene; provided that the purchasing party agree, in writing, to
by bound by all of the terms and conditions of this Agreement.
XI. Term and Termination.
A. This Agreement shall by effective as of the date set
forth above when signed by both of the parties hereto, and with
regard to patents licensed hereunder, shall, unless earlier
<PAGE> 69
terminated in accord with paragraphs B-D hereinbelow, run until the
last of the patents covering the Licensed Technology expires. With
regard to any unpatented technology licensed hereunder, the
Agreement shall run until terminated in accord with paragraphs B-D
hereinbelow.
B. During the first five (5) Program Years, AGI may
terminate this Agreement upon sixty (60) days written notice given
to Agrogene, given prior to the end of any said year. In
subsequent years, AGI may terminate this Agreement upon sixty (60)
days written notice to Agrogene.
C. Should either party breach any material provision of this
Agreement, the other party shall have the right to terminate this
Agreement upon (60) days written notice to the breaching party
setting forth the nature of said breach; however, should the
breaching party cure said breach within the 60-day notice period
this Agreement shall continue in effect as if said notice had not
been given.
D. This Agreement shall terminate automatically if AGI is
unable to pay its debts in the normal course of business, or it
enters into a compulsory or voluntary bankruptcy proceeding or
liquidation, or if it has a trustee or receiver or manger appointed
to oversee its assets, or if it ceases, for any reason to carry on
its business.
E. Upon termination of this Agreement for any reason, all
rights and obligations established hereunder shall terminate,
including any sublicenses granted hereunder, except that; (1)
Agrogene shall still be obligated to maintain and permit access to
records as set forth in section VI-E above; (2) AGI shall still be
obligated to make a final report and royalty payment, and maintain,
and permit access, to records as set forth in Section IV
hereinabove; (3) AGI's rights to Enforcement as established in
section VIII above, including Agrogene's duty to cooperate shall
continue, by only with regard to causes of action which arose prior
to termination; and (4) in the event that the Agreement is
terminated in accord with section XI-C because of an uncured
material breach on the part of Agrogene, the license granted herein
to AGI, under Licensed Technology, shall be considered paid up and
shall continue in force. Termination for any reason shall not
relieve either party of its obligation with regard to Confidential
Information.
F. Upon termination of this agreement for any reason,
Agrogene shall not be required to return to AGI, any royalty
payments, or sublicensing royalty payments, nor shall Agrogene by
required to return to AGI any payments made in accord with section
VI for funding the Program of Work; however, Agrogene shall be
required to refund any overpayments or prepayments made by AGI
prior to said termination.
<PAGE> 70
G. Beginning in the sixth Program Year, the minimum annual
royalty payable hereunder shall be $15,000.00. If sales of
licensed products in any year are insufficient to generate
$15,000.00 in royalty payments, AGI shall have the right, at its
sole option, to make supplemental royalty payments to meet said
minimum royalty obligations. Should the aforementioned minimum
royalty payment of $15,000.00 not be made in any year, Agrogene
shall have the right, but not the obligation, to terminate this
Agreement upon written notice to AGI, given within 60 days of the
end of the Program Year in which said minimum royalty payment is
not made.
XII. Marking.
AGI agrees to mark all Licensed Products sold or otherwise
disposed of (or containers for said Licensed Products if marking of
said Licensed Products is impractical), with the word "patent" or
"patents" and the number of the Licensed Product or Licensed
Patents applicable thereto, and to require it sublicensees to do
likewise.
XIII. Warranty.
Agrogene warrants that it has the right to grant and hereby
transfers, to AGI all intellectual property rights in its
possession, including know-how, data and information necessary for
AGI to practice fully the Licensed Technology; and that it is not
aware to any intellectual property rights of any party which would
prevent, or limit, AGI's practice of the Licensed Technology.
XIV. Miscellaneous.
A. During the term of this Agreement, both parties shall use
their best efforts to maximize the value of this Agreement and the
rights granted hereunder.
B. If any provision in the License Agreement is, for any
reason whatsoever, held to be void or of no effect, it shall not
affect the validity of the remaining provisions of this License
Agreement, except in the case such void provision make the License
Agreement unworkable.
C. Any notice required or permitted to be given under this
License Agreement shall be deemed sufficiently given if mailed by
registered mail, postage prepaid, addressed to the party to be
notified at its address listed above, or at such other address as
may have been previously furnished in writing to the notifying
party.
<PAGE> 71
D. This Agreement is a complete statement of the entire
understanding of the parties with respect to the subject matter
thereof, and no prior representation, promises or understanding
related to this subject matter, which are not incorporated herein,
shall be binding upon the parties hereto.
E. This Agreement may only be modified by a writing signed
by both of the parties hereto.
F. No association, combination or relation is created
between the parties, except as provided herein.
G. This Agreement shall be binding upon the successors,
heirs and assigns of the parties hereto.
AGROGENE, LTD.
By: /s/ Yigal Cohen
Its: President
AGI INTERNATIONAL, INC.
By: /s/ Bradley J. Carver
Its: President
<PAGE> 72
TRADEMARK SALE AND LICENSE AGREEMENT
This Agreement is effective as of October 10, 1997, by and
between AGRICULTURAL GLYCOSYSTEMS, INC. (AGT), a corporation
organized and existing under the laws of the State of Michigan,
whose principal place of business is located in Boston,
Massachusetts, hereafter referred to as "Licensor" and "Vendee,"
and ELK MOUND FEED AND FARM SUPPLY, INC. (ELK MOUND), a
corporation organized and existing under the laws of the State of
Wisconsin, whose principal place of business is located in Elk
Mound, Wisconsin, hereinafter referred to as "Licensee" and
"Vendor";
WHEREAS, Vendor has adopted and is using the mark GREENLEAF
(hereinafter the "Trademark") as a trademark for blends of
Canadian alfalfa seeds in the State of Wisconsin and elsewhere
throughout the United States and has obtained U.S. Trademark
Registration No. 1,948,921, dated January 16, 1996, covering the
mark from the United States Patent and Trademark Office, a copy
of which is attached hereto as Exhibit A and hereinafter referred
to as the "Registration";
WHEREAS, Vendor is desirous of selling said Trademark to
Vendee and of assigning said registration to Vendee;
WHEREAS, Licensee is desirous of using said Trademark in
connection with the sale of alfalfa seeds;
NOW, THEREFORE, the parties hereby agree as follows:
1. Sale. Vendor hereby grants to Vendee its entire right,
title and interest in the Trademark and associated good will, and
contemporaneously herewith shall execute an assignment of
Trademark Registration No. 1,948,921, a copy of which assignment
is attached hereto as Exhibit A.
2. Payment Schedule. As consideration for the above grant
and assignment, AGT shall pay to ELK MOUND the total sum of
$15,000.00, to be paid in installments as follows:
The first payment shall be for $5,000.00 and shall be
made at the time the ELK MOUND assigns the Trademark to
AGT;
The second payment shall be for $4,000.00 and shall be
made within sixty days of the first anniversary of the
assignment date;
The third payment shall be for $3,000.00 and shall be
made within sixty days of the second anniversary of the
assignment date;
<PAGE> 73
The forth payment shall be for $2,000.00 and shall be
made within sixty days of the third anniversary of the
assignment date; and
The fifth payment shall be for $1,000.00 and shall be
made within sixty days of the fourth anniversary of the
assignment date.
3. Reversion. However, should AGT fail to make any of the
payments set forth in Paragraph 2 on a timely basis, the
registration shall automatically revert back to ELK MOUND.
4. License. AGT hereby licenses the GREENLEAF trademark
back to ELK MOUND for use in connection with the sale of alfalfa
seeds. This license is paid up license, and no further
compensation shall be due to AGT from ELK MOUND for the use of
the trademark.
5. Quality of Goods. Licensee shall use the trademark
GREENLEAF only in connection with the sale of alfalfa seeds. The
quality of the goods shall be satisfactory to the Licensor or as
specified by it. The Licensor shall be the sole judge of whether
or not the Licensee has met or is meeting the standard of quality
so established. See attached.
[Attachment:] The quality of Alfalfa seed sold under the
Trademark Greenleaf are specified to meet the minimum
requirements of 90% pure seed, 85% germ and 10% hard seed.
6. Inspection. Licensee will permit duly authorized
representatives of the Licensor to inspect the premises of
Licensee at all reasonable times, for the purpose of ascertaining
or determining compliance with Paragraph 5 hereof.
7. Use of Trademark. Licensee shall provide Licensor with
samples of all literature, brochures, signs and advertising
materials prepared by the Licensee, and Licensee shall obtain the
approval of Licensor with respect to all such brochures, signs
and advertising material bearing the Trademark prior to the use
thereof. When using the Trademark under this Agreement, Licensee
undertakes to comply substantially with all laws pertaining to
trademarks at force at any time within the United States. This
provision includes compliance with marketing requirements.
8. Extent of License. The right granted in Paragraph 4
hereof shall be nonexclusive and shall not be assigned,
transferred or sublicensed without Licensor's prior written
consent, and Licensor shall have the right to use the Trademark
and to license its use to any other designee within the United
States.
<PAGE> 74
9. Indemnity. Licensor assumes no liability to Licensee
or to third parties with respect to the performance
characteristics of the goods sold by the Licensee under the
Trademark, and the License shall indemnify Licensor against
losses incurred to claim of third parties against Licensor
involving sale of the Licensee's goods.
10. Termination.
a. Except as otherwise provided herein, this
Agreement shall remain in full force and effect
for the duration of the rights transferred and
licensed hereunder.
b. If Licensee makes any assignments of assets or
business for the benefit of creditors, or a
trustee or receiver is appointed to conduct its
business or affairs, or its adjudged in any legal
proceeding to be either a voluntary or involuntary
bankruptcy, then the license granted herein shall
forthwith cease and terminate without prior notice
or legal action by the Licensor.
11. Ownership of Trademarks. The Licensee and all parties
to this Agreement acknowledge Licensor's exclusive right, title
and interest in and to the Trademark and the registration
attached as Exhibit A, and will not at nay time do or cause to be
done any act or anything contesting or in any way impairing or
intending to impair part of such right, title and interest. In
connection with the use of the Trademark, neither Licensee not
any other party hereto shall in any manner represent that it has
any ownership in the Trademark or registration thereof, and all
parties of this Agreement in any manner provided herein the
Licensee will cease and desist from all use of the Trademark in
any way and will deliver up to Licensor, or its duly authorized
representatives, all material and papers upon which the Trademark
appears, and furthermore, Licensee will not at nay time adopt or
use without the Licensor's prior written consent, any word or
mark which is likely to be similar to or confusing with the
Trademark.
12. Notice. Any notice required or committed to be given
under this Agreement shall be deemed sufficiently given if mailed
by registered mail, postage prepaid, addressed to the party to be
notified at its address shown above, or at such other address as
may be furnished in writing to the notifying party.
13. Controlling Law. This Agreement is to be construed
under the laws of the State of Michigan.
<PAGE> 75
14. This Agreement is effective as of the date set forth
above, when signed by both of the parties hereto, provided that
the assignment of Exhibit A has been executed.
AGRICULTURAL GLYCOSYSTEMS, INC.
By: /s/ Bradley J. Carver
Its: President
ELK MOUND FEED AND FARM
SUPPLY, INC.
By: /s/ Bernard Zutter
Its: Vice President
<PAGE> 76
EXHIBIT A
CONFIRMATION OF ASSIGNMENT
WHEREAS, ELK MOUND FEED AND FARM SUPPLY, INC. a corporation
of the State of Wisconsin, having an address of 308 Railroad
Avenue, Elk Mound, Wisconsin 54739 ("Elk Mound"), is the owner of
the following trademark now registered in the United States
Patent and Trademark Office.
TRADEMARK REGISTRATION NO. DATE OF REGISTRATION
GREENLEAF 1,948,921 January 16, 1996
WHEREAS, Agricultural Glycosystems, Inc., a corporation of
the State of Michigan, having its principal offices at 31 St.
James Avenue, Boston, Massachusetts 02116 ("AGT"), has acquired
said registered trademark.
NOW, THEREFORE, in consideration of the sum of One Dollar
($1.00) and other good and valuable consideration, ELK MOUND
hereby assigns to AGT, all rights, title and interest in the
United States in and to said trademark together with the goodwill
of the business symbolized by said trademark and registration
thereof.
Signed at Elk Mound, Wisconsin, this 7th day of November,
1997.
ELK MOUND FEED AND FARM SUPPLY, INC.
By: /s/ BERNARD ZUTTER
Signed before me, by Bernard Zutter - Vice President known
personally by me.
11-7-97 /s/ Carol K. O'Mara
Dunn County, Wisconsin
<PAGE> 77
AGREEMENT
AGREEMENT made as of this 6th day of May, 1997 by and
between IGG International, Inc., a Nevada corporation with its
address at One Kendall Square, Building 300, Cambridge, MA 02139
("IGGI") and Michelangelo, LLC, a Massachusetts limited liability
company with its address at c/o James Whitney, Esq., 11 Dudley-
Oxford Road, Dudley, MA ("Michelangelo").
WHEREAS, Michelangelo is a consulting firm with expertise in
strategic planning, corporate finance and partnering which has
rendered consulting services to IGGI; and
WHEREAS, IGGI is willing to compensate Michelangelo for past
services by the issuance of stock options, and to grant
Michelangelo additional stock options contingent upon the
achievement of certain milestones as set forth herein;
NOW, THEREFORE, in consideration of the foregoing, the
parties hereby agree as follows:
1. IGGI hereby agrees to issue to Michelangelo, in
consideration of and as full compensation for all services
rendered and to be rendered by Michelangelo to IGGI hereunder
(provided that Michelangelo shall not be obligated to render any
such future services), options (the "Options") to purchase a
total of up to 160,000 shares of IGGI's Common Stock (the
"Shares"). Such shares shall be so-called "restricted" stock
under Rule 144 pursuant to the Securities Act of 1933, as
amended. The exercise price of the Options shall be $0.01 per
share. The Options shall expire ten years from the date hereof,
and shall contain such other standard terms and conditions as may
be contained in IGGI's other option agreements, a sample of which
is attached hereto.
Michelangelo agrees that the Shares issuable upon the
exercise of the Options will be restricted such that no more than
10,000 Shares may be sold during any thirty-day period; provided,
that approximately 29,000 Shares which are being granted by
Michelangelo to certain third parties, which are described on
Exhibit A, will be exempt from such restriction. Any
certificates evidencing Shares may bear a legend describing the
foregoing restrictions. IGGI will provide Michelangelo a
separate agreement which incorporates the foregoing provisions of
this Paragraph 2 and Michelangelo and IGGI agree to execute such
agreement.
3. Options to purchase a total of up to 120,000 Shares
shall be issued to Michelangelo upon the execution and delivery
of this Agreement. Such options are fully vested and
irrevocable. The remainder of the Options (40,000 Shares) will
vest and become exercisable upon the occurrence of the following
conditions:
<PAGE> 78
(a) Financing. Options to purchase a total of up to
10,000 Shares shall be issued to Michelangelo upon the closing of
a major financing by IGGI or any of its wholly-owned
subsidiaries. As used herein, a "major financing" shall be
defined as a debt or equity financing the gross proceeds to IGGI
of which are at least $5,000,000. In addition to the foregoing,
in the event that such major financing occurs as a result of the
involvement of John Pool, Michelangelo will receive options to
purchase up to an additional 10,000 Shares (or a total of 20,000
Shares under this clause (a)).
(b) Partnering. Options to purchase 10,000 Shares
shall be issued to Michelangelo upon the consummation by IGGI of
a major corporate partnering transaction. As used herein, a
"major corporate partnering transaction" shall be defined as a
joint venture or other corporate partnership transaction with a
corporate partner, which transaction is projected in good faith
by IGGI's Board of Directors to result in gross revenues
(including any related revenues such as equity, research and
development grants, etc.) to IGGI of at least $5,000,000 during a
period of not more than three years from the date of consummation
thereof.
(c) Public Offering. Options to purchase 10,000 Shares
shall be issued to Michelangelo upon the closing by IGGI of an
underwritten public offering resulting in proceeds to IGGI of not
less than $20,000,000.
4. No adjustment shall be made in the number of options
issuable to Michelangelo because of dilution resulting from the
additional Shares in connection with employment or consulting
contracts, raising capital, or any other reasons other than stock
splits or stock dividends. All options are irrevocable when
vested.
5. Michelangelo shall not be entitled to any cash
compensation. Michelangelo also expressly agrees that the
Options provided for in Paragraphs 1 through 3 shall constitute
Michelangelo's sole compensation for all services rendered by it
to IGGI, unless IGGI and Michelangelo shall have separately
agreed in writing that any additional services shall be
separately and additionally compensated.
6. This agreement shall not be construed to constitute a
contract of employment, to create any continuing rights or
obligations beyond the term hereof, or to constitute the parties
as principal and agent, joint venturers or partners.
7. This agreement represents the entire agreement of the
parties with respect to the subject matter hereof, and supersedes
all prior or contemporaneous agreements or understandings,
written or oral.
<PAGE> 79
8. Each party fully and completely releases the other party
from and against any and all claims it may have as a result of
any claimed breaches of written or oral agreements or failure of
performance thereunder.
9. This agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals as of the date first above written.
IGG International, Inc.
By:____________________________
Bradley J. Carver, President
Michelangelo, LLC
By:____________________________
Enrico Petrillo, Manager
<PAGE> 80
AGREEMENT
AGREEMENT made as of this ___th day of September, 1997 by
and between IGG International, Inc., a Nevada corporation with
its address at One Kendall Square, Building 300, Cambridge, MA
02139 ("IGGI") and Michelangelo, LLC, a Massachusetts limited
liability company with its address at c/o James Whitney, Esq., 11
Dudley-Oxford Road, Dudley, MA ("Michelangelo").
WHEREAS, Michelangelo is a consulting firm with expertise in
strategic planning, corporate finance and partnering which has
rendered consulting services to IGGI; and
WHEREAS, IGGI is willing to retain Michelangelo to render
consulting services and to compensate Michelangelo by the
issuance of stock options, contingent upon the achievement by
Michelangelo of certain milestones as set forth herein;
WHEREAS, the parties have entered into an agreement, dated
as of May 6, 1997, whereby IGGI agreed to compensate Michelangelo
for services which Michelangelo had previously rendered to IGGI
(the "May 6 Agreement"); and
WHEREAS, the parties intend that their rights and
obligations hereunder shall be in addition to, and not in lieu
of, their respective rights and obligations under the May 6
Agreement;
NOW, THEREFORE, in consideration of the foregoing, the
parties hereby agree as follows:
1. Michelangelo hereby agrees to perform the following
services for IGGI: Michelangelo will use its best efforts to
facilitate and cause the occurrence of the various milestone
events described in Paragraphs 4(a) through (d) below. In
connection therewith, Michelangelo shall take such actions as it
may reasonably determine, and as IGGI may reasonably request, as
being necessary or desirable in connection with the achievement
of such milestones. In connection therewith, but without
limitation, Michelangelo will consult with and update management
and the Board of Directors of IGGI on the progress of such
milestones; attend meetings with potential investors, strategic
partners and others; and prepare or assist in the preparation of
presentations where appropriate. While there is not a specified
amount of time that Michelangelo will be required to spend in the
performance of its responsibilities hereunder, Michelangelo
agrees to devote such time to the performance of its duties
hereunder as are reasonably necessary to accomplish the
performance of such duties.
<PAGE> 81
2. IGGI hereby agrees to issue to Michelangelo, in
consideration of and as full compensation for all services to be
rendered by Michelangelo to IGGI hereunder (without, however,
affecting IGGI's obligations under the May 6 Agreement), options
(the "Options") to purchase a total of up to 160,000 shares of
IGGI's Common Stock (the "Shares"), vesting in accordance with
the provisions of Paragraph 4. Such shares shall be so-called
"restricted" stock under Rule 144 pursuant to the Securities Act
of 1933, as amended. The exercise price of the Options shall be
$0.01 per share. The Options shall expire ten years from the
date hereof, and shall contain such other standard terms and
conditions as may be contained in IGGI's other option agreements.
3. Michelangelo agrees that the Shares issuable upon the
exercise of the Options will be restricted such that no more than
10,000 Shares may be sold during any thirty-day period. Any
certificates evidencing Shares may bear a legend describing the
foregoing restriction. IGGI may provide Michelangelo a separate
agreement which incorporates the foregoing provisions of this
Paragraph 3 and Michelangelo and IGGI agree to execute such
agreement.
4. The Options will vest and become exercisable upon the
occurrence of the following conditions:
(a) Financing. Options to purchase 40,000 Shares shall
be issued to Michelangelo upon the closing of a major financing
by IGGI or any of its wholly-owned subsidiaries. As used herein,
a "major financing" shall be defined as a debt or equity
financing the gross proceeds to IGGI of which are at least
$5,000,000; provided, however, that the amount of Options granted
under this paragraph (a) shall be reduced to 30,000 in the event
that Michelangelo is entitled to receive 20,000 (rather than
10,000) Options under Paragraph 3(a) of the May 6 Agreement such
that the total of the number of Options to which Michelangelo may
become entitled under this Paragraph 4(a) and Paragraph 3(a) of
the May 6 Agreement shall not exceed 50,000.
(b) Partnering. Options to purchase 40,000 Shares
shall be issued to Michelangelo upon the consummation by IGGI of
a major corporate partnering transaction. As used herein, a
"major corporate partnering transaction" shall be defined as a
joint venture or other corporate partnership transaction with a
corporate partner, which transaction is projected in good faith
by IGGI's Board of Directors to result in gross revenues
(including any related revenues such as equity, research and
development grants, etc.) to IGGI of at least $5,000,000 during a
period of not more than three years from the date of consummation
thereof.
(c) Merger Transaction. Options to purchase 40,000
shares shall be issued to Michelangelo upon the consummation of a
<PAGE> 82
merger, consolidation or similar transaction in which IGGI is
valued at not less than $75,000,000.
(d) Public Offering. Options to purchase 40,000 Shares
shall be issued to Michelangelo upon the closing by IGGI of an
underwritten public offering resulting in proceeds to IGGI of not
less than $20,000,000.
5. Notwithstanding any other provision of this Agreement,
Michelangelo will not be entitled to receive any Options pursuant
to Paragraph 4 unless it shall have been directly and materially
involved in the transaction as a result of which the Options are
being issued. Direct involvement shall include, at a minimum:
locating or identifying a potential transaction partner; setting
up and attending meetings with such partner; assisting IGGI with
structuring the transaction and negotiating the terms of the
transaction with such partner; and other similar
responsibilities.
6. No adjustment shall be made in the number of options
issuable to Michelangelo because of dilution resulting from the
additional Shares in connection with employment or consulting
contracts, raising capital, or any other reasons other than stock
splits or stock dividends. All options are irrevocable when
vested.
7. Michelangelo shall not be entitled to any cash
compensation. Michelangelo also expressly agrees that the
Options provided for in Paragraphs 2 and 4 shall constitute
Michelangelo's sole compensation for all services rendered by it
to IGGI (other than any compensation to which Michelangelo may be
entitled by virtue of the May 6 Agreement), unless IGGI and
Michelangelo shall have separately agreed in writing that any
additional services shall be separately and additionally
compensated. Notwithstanding the foregoing provisions of this
Paragraph 7, in any transaction described in Paragraphs 4(a)
through (d) above in which IGGI receives an amount of cash equal
to at least $2,500,000, Michelangelo may, at its option, elect to
receive up to 50% of the compensation to which it may become
entitled with respect to such transaction in cash. The amount of
such cash compensation shall be determined as follows: the number
of Options which Michelangelo elects to receive in cash shall be
multiplied by the average of the closing bid price of IGGI's
Common Stock during the ten trading days preceding the date on
which Michelangelo is entitled to receive its compensation. Such
amount shall be multiplied by 80%, which product shall be the
amount of cash which Michelangelo shall be entitled to receive in
lieu of such Options. The foregoing right to receive cash shall
not apply to any Options to which Michelangelo is entitled by
virtue of the May 6 Agreement.
<PAGE> 83
8. The term of this Agreement shall be two years from the
date hereof. Thereafter, this Agreement may be renewed for
successive six-month terms unless prior to the commencement of
any renewal term either party notifies the other of its intent
not to renew this Agreement. In the event IGGI is in the process
of negotiating, at the date of any termination of this Agreement,
any transaction as a result of which Michelangelo would be
entitled to compensation hereunder, and such transaction is in
fact consummated within six months of the date of termination,
then Michelangelo shall be entitled to be compensated with
respect to such transaction notwithstanding such termination;
provided, however, that as a condition of receiving such
compensation Michelangelo shall continue, following such
termination, to render such assistance with respect to such
transaction (but not with respect to any other transaction or any
other matters) as IGGI may request.
9. This agreement shall not be construed to constitute a
contract of employment, to create any continuing rights or
obligations beyond the term hereof, or to constitute the parties
as principal and agent, joint venturers or partners.
10. This agreement represents the entire agreement of the
parties with respect to the subject matter hereof, and supersedes
all prior or contemporaneous agreements or understandings,
written or oral.
11. This agreement shall be governed by the laws of the
Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have hereunto set their
hands and seals as of the date first above written.
IGG International, Inc. Michelangelo, LLC
By:____________________________ By:____________________________
Bradley J. Carver, President Enrico Petrillo, Manager
<PAGE> 84
AGREEMENT
This Agreement is entered into and effective this 19th day
of October by and between LEKET-BAR CHEMICALS, LTD., Corporation
of the State of Israel, having a place of business at 20 Pinsker
Street, Netanya 42411 Israel, 9 (LEKET-BAR) and Agricultural
Glycosystems, Inc., a corporation of the State of Michigan,
having a place of business at One Kendall Square, Building 300,
Cambridge Massachusetts 02139 (AGI).
Whereas Leket-Bar is possessed of a particular body of
technology, and
Whereas AGI is wishes to obtain tights under this
technology,
Now therefore, the parties agree as follows:
I. Definitions
A. Agreement Technology, shall mean that technology
embodied in the patients listed on Appendix A which attached
hereto and made part of this Agreement.
B. Licensed territory shall mean the world, except for the
Excluded Territory.
C. Excluded Territory shall mean Israel, Korea, Argentina,
Bolivia, Egypt, Turkey, Venezuela, Columbia, Peru, Ecuador,
Uruguay, Costa Rica, Guatemala, and Paraguay.
D. Licensed Products shall mean these products which are
sold in a country included in the Licensed Territory, and which
are covered therein by one or more of patents comprising the
Agreement Technology.
E. Agreement Year shall mean the twelve-month period
commencing on the effective date of this Agreement, as well as
succeeding twelve month periods commencing on succeeding
anniversary dates of the effective date of this Agreement.
II. The Transfer of Technology
A. Leket-Bar hereby grants to AGI the exclusive right, in
the Licensed Territory, to make, have made, use, lease, sell and
otherwise dispose of Licensed Products, as well as the right to
grant one or more sub-licenses under the Licensed Technology.
B. Leket-Bar hereby assigns to AGI all rights and title in
and to the Agreement Technology in the Licensed Territory.
<PAGE> 85
III. Payments
A. In exchange for the license and assignment granted
herein, AGI shall pay Leket-Bar in accord with the following
schedule:
1. AGI shall pay Leket-Bar $100,000 during each of
the first and second agreement years, said payment to be made in
the form of eight quarterly installments of $25,000 each, with
the first payment of $25,000 to be made upon execution of this
Agreement.
2. AGI shall pay Leket-Bar $100,000 during each of
the third and forth agreement years, said payment to be made in
the form of eight quarterly payments of $25,000 each; however, if
at the end of each of said third and forth agreement years, the
royalty payments as defined in section III B hereinbelow, would
have exceeded $100,000, Leket-Bar shall be entitled to a
supplemental payment which is equal to any such royalty excess.
3. In the fifth agreement year, and each succeeding
agreement year, AGI shall pay Leket-Bar royalties in accord with
section IIIB hereinbelow.
B. Royalty payments shall comprise three (3%) percent of
the net selling price of Licensed Products sold hereunder by AGI
in a country included in the Licensed Territory. Said net selling
price shall be exclusive of discounts, credits for returned
merchandise, taxes and other governmental levies. Royalties
shall attach when Licensed Products are sold, and payment is
received thereof by AGI.
C. In the first agreement year, sub-license royalty
payments shall comprise fifty (50%) percent of royalty received
by AGI from sub-licensing the Licensed Technology to third
parties; in the second agreement year, sublicensing royalty
payments shall comprise forty (40%) percent of royalties received
by AGI from sub-licensing the Licensed Technology to third
parties; in the third agreement year, sub-licensing royalty
payments shall comprise thirty (30%) percent and royalty payments
received by AGI for sub-licensing the Licensed Technology to
third parties; in the fourth and succeeding agreement years,
sub-license royalty payments shall comprise twenty (20%) percent
and royalties received by AGI for sub-licensing the Licensed
Technology and third parties; said sub-license royalties
shall attach when payment therefor is received by AGI; and shall
be independent from, and in addition to the payments made in
accordance with Section III-A hereinabove.
D. During the term of this Agreement, on a quarterly
basis, and ninety days following the termination of this
Agreement AGI shall submit royalty reports to Leket-Bar. Said
royalty reports shall specify the revenues received by AGI from
<PAGE> 86
the sale of Licensed Products in the previous quarter as well as
the revenues received by AGI from the sub-licensing of the
Licensed Technology, and said reports shall include a check in
payment of any royalties and sub-license royalties then owed.
E. During the term of this Agreement, and for two years
thereafter, AGI shall keep records in sufficient detail to enable
Leket-Bar to verify royalty reports made hereunder, and Leket-Bar
shall have the right to appoint an auditor to review said records
to verify the accuracy of said reports and payments, provided
that the review shall place no more than once per year, and upon
reasonable notice to AGI, and during normal business hours. The
cost of any such audit shall borne by Leket-Bar.
IV. Term and Termination
A. Unless earlier terminated, this Agreement shall run for
the life of the last to expire of the patents licensed hereunder.
B. During the first and second agreement year, AGI may
terminate this agreement at will, upon thirty days written notice
to Leket-Bar.
C. In the event that either of the parties breaches a
material provision of this Agreement, the other party any
terminate this agreement upon sixty days written notice to the
breaching party; however if, during the sixty day notice period,
the breaching party shall fully cure the breach, this agreement
shall continue on in force as if said notice had not been given.
D. If this Agreement is terminated for nay reason, AGI
shall reassign the Agreement Technology to Leket-Bar and AGI
shall also by obligated to make final royalty report and payment,
and keep and maintain records as set forth in section III.
V. Preservation of the Licensed Technology
A. During the term of this Agreement AGI shall by
responsible for preserving, protecting, and maintaining the
Agreement Technology, in the Licensed Territory and toward that
end, shall pay all maintenance fees, filing fees, renewal fees,
annuities and other governmental fees, and shall execute and file
all documents necessary to preserve, obtain and maintain patents
constituting the Agreement Technology, and Leket-Bar shall extend
AGI all cooperation necessary for AGI to do so, including
providing documentation and testimony, provided that the
responsible cost thereof is borne by AGI. If AGI shall elect to
not make any such payments or take any other steps to preserve
Agreement Technology, in any one or more countries comprising the
Licensed Territory (non-elected countries) it shall promptly
inform Leket-Bar thereof, prior to any final deadline for making
said payments or filing said documents, and Leket-Bar shall have
<PAGE> 87
the rigth, at its sole option, to make said payments and/or file
said documents, in which instance, any parents or patent
applications, for which Leket-Bar has done so shall automatically
be removed from the body of Agreement Technology, and in such
instance, AGI shall reassign said technology to Leket-Bar in said
non-elected countries.
VI. Disclosure of Agreement Technology
A. Upon execution of this Agreement, Leket-Bar shall, as
soon as is reasonably practicable, fully identify, disclose and
make available to AGI all documentation, data, patents, patent
applications and the like in its possession or control relating
to the Agreement Technology.
B. Leket-Bar shall, during the term of this Agreement,
promptly and fully disclose to AGI all improvements to the
Agreement Technology, and AGI shall have the option, but not the
obligation, to include said improvements in the Agreement
Technology.
C. During the term of this Agreement, Leket-Bar shall
extend to AGI all cooperation reasonably necessary for AGI to
obtain and avail itself of the technology transferred hereunder.
VII. Enforcement
A. During the term of this license, AGI shall have the
right, but not the obligation, to take all actions necessary to
enforce the rights transferred hereunder, including the right to
bring suit at its own expense, and in its own name, or if
required by law, jointly with, or in the name of Leket-Bar.
B. Should AGI institute any enforcement action hereunder,
it shall have the sole right to direct and control said
enforcement action, including the right to settle said action.
AGI shall have the right to retain any recovery, award or
settlement result from said enforcement.
C. Leket-Bar shall extend all reasonable and necessary
cooperation to AGI in connection with its efforts to enforce any
of the rights licensed hereunder, including giving testimony,
executing documents, and providing technical assistance, provided
that the reasonable costs thereof are borne by AGI.
VIII. Confidentiality
A. It is contemplated that in the course of this
Agreement, that each of the parties may disclose to the other,
information which it regards as confidential. During the terms
of this Agreement, and for three (3) years thereafter, the
parties agree to maintain confidentiality with regard to
products, documents know-how, marketing information, and other
<PAGE> 88
information relating to the Licensed Technology, or to any other
information which the parties designate as confidential
("collectively confidential information"). This obligation shall
apply to confidential information which either party generates
itself, and to confidential information either party receives
from the other party, as well as confidential information
generated on behalf of either of the parties by a third party.
This obligation shall not apply to information which is in, or
enters into the public domain through no breach of this
Agreement, or to information which is communicated to either of
the parties hereto by a third party who has not improperly
obtained such information.
IX. Regulatory Approval
A. Included in the body of Agreement Technology is a novel
fungicide material, and upon execution of this Agreement, AGI
shall proceed to obtain necessary approval for this material.
X. Miscellaneous
A. AGI shall have the right to transfer or assign the
rights granted hereunder to a third party provided that third
party agrees, in writing, to be bound by all terms and conditions
of this Agreement.
B. During the term of this Agreement, both parties shall
use their best efforts to maximize the value of this Agreement
and the rights granted hereunder.
C. If any provision in this Agreement is, for any reason
whatsoever, held to be void or of no effect, it shall not effect
the validity of the remaining provisions of this Agreement,
except in the case where such void provisions would make the
entire Agreement unworkable.
D. Any notices required or permitted to by given under
this Agreement shall by deemed sufficiently given if mailed by
registered mail, postage prepaid, addressed to the party to by
notified at its address listed above, or at such other address as
may have been previously furnished in writing to the notifying
party.
E. This Agreement is a complete statement of the entire
understanding of the parties with respect to the subject matter
thereof, and no prior representations, promises or understandings
relating to the subject matter, which are not incorporated
herein, shall be binding upon the parties hereto.
F. This Agreement may only be modified by a writing signed
by both of the parties hereto.
<PAGE> 89
G. Should any dispute under this Agreement give rise to
litigation between the parties, it is agreed that said litigation
may be brought in the courts of the jurisdiction in which the
plaintiff therein is resident.
H. No association, combination or relation is created by
the parties except as provided herein.
IN WITNESS WHEREOF, parties have caused this Agreement to be
executed as of the date first set forth hereinabove.
LEKET-BAR CHEMICALS, LTD.
By:__________________________
Its:__________________________
AGRICULTURAL GLYCOSYSTEMS, INC.
By: /s/ Bradley J. Carver
Its: President
<PAGE> 90
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-K, into the
Company's previously filed Registration Statement File No.
333-04764.
/s/ Arthur Andersen LLP
Boston, Massachusetts
March 27, 1998
<PAGE> 91
WILLIAMS & WEBSTER, P.S.
Certified Public Accountants
601 West Riverside
Suite 1970
Spokane, Washington 99201-0611
(509) 838-8111
FAX (509) 624-5001
CONSENT OF CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
SafeScience, Inc.
Boston, Massachusetts
We consent to the use of our audit report dated March 27,
1997, on the consolidated financial statements of IGG
International, Inc. as (now known as SafeScience, Inc.)
as of December 31, 1996, for the filing with and attachment to
the Form 10-K for the year ending December 31, 1997, and the
inclusion in the Company's previously filed Registration
Statement File Nos. 333-04764.
/s/ Williams & Webster P.S.
Williams & Webster, P.S.
Spokane, Washington
March 30, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Financial Statements at December 31, 1997 Audited and is
qualified its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 2,594,312
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,644,392
<PP&E> 79,566
<DEPRECIATION> 31,920
<TOTAL-ASSETS> 2,906,737
<CURRENT-LIABILITIES> 463,617
<BONDS> 0
0
0
<COMMON> 120,986
<OTHER-SE> 2,322,134
<TOTAL-LIABILITY-AND-EQUITY> 2,906,737
<SALES> 0
<TOTAL-REVENUES> 83,618
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,818,093
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,734,475)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,734,475)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,734,475)
<EPS-PRIMARY> (0.43)
<EPS-DILUTED> (0.43)
</TABLE>
<PAGE> 93
OFFICE LEASE
THIS OFFICE LEASE ("Lease") is entered into by Landlord and
Tenant as described in the following basic lease information on
the date that is set forth for reference only in the following
basic lease information. Landlord and Tenant agree:
ARTICLE 1. BASIC LEASE INFORMATION.
1.1 Basic Lease Information. In addition to the terms that
are defined elsewhere in this Lease, these terms are used in this
Lease:
(a) LEASE DATE: _____________________
(b) LANDLORD: MBL Life Assurance Corporation
(c) LANDLORD'S ADDRESS:
Property Management Office
Park Square Building
31 St. James Ave.
Boston, MA 02116
with a copy at the same time to: MBL Life Assurance Corporation,
Vice President - Real Estate Investment Division, 520 Broad St,
Newark, NJ 07102-3111.
(d) TENANT: IGG International, Inc.
(e) TENANT'S ADDRESS:
The Premises as defined in this Lease.
(f) BUILDING ADDRESS:
31 St. James Avenue
Boston, Massachusetts 02116
(g) PREMISES: The premises shown on Exhibit A to this Lease
on the fifth (5th) floor of the Building.
(h) RENTABLE AREA OF THE PREMISES: For purposes of this
Lease, the rentable square footage of the Premisses shall be
deemed to be 2,968 square feet.
(I) RENTABLE AREA OF THE BUILDING: For purposes of this
Lease, the rentable square footage of the Building shall be
deemed to be 445,765 square feet.
(j) TERM: Beginning on the Commencement Date and expiring on
the Expiration Date.
(k) COMMENCEMENT DATE: October 1, 1997, or as extended
pursuant to Paragraph 2 of the Addendum hereto.
<PAGE> 94
(l) EXPIRATION DATE: May 31, 2002
(m) SECURITY DEPOSIT: $ N/A
Amount Per Month: $6,383.67
Commencing On:
Ending On:
Commencement Date
Expiration Date
(o) BASE YEAR: 1997.
(p) TENANT'S SHARE: .666 percent (determined by dividing the
Rentable Area of the Premises by the Rentable Area of the
Building, multiplying the resulting quotient by 100, and rounding
to the 3rd decimal place).
(q) PARKING SPACES: N/A spaces according to Article 26.
(r) PARKING CHARGE: $ N/A per parking space per month,
subject to adjustments specified in Article 26.
(s) BROKER:
Spaulding & Slye Cushman & Wakefield
125 High Street 101 Arch Street
Boston, MA 02110 Boston, MA 02110
(t) BUSINESS HOURS: 8:00 a.m. to 6:00 p.m. on Monday through
Friday, except holidays (as that term is defined below), and 9:00
a.m. to 1:00 p.m. on Saturdays, except holidays. The term
"holidays" means New Year's Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving Day, and Christmas Day.
1.2 Definitions.
(a) ADDITIONAL RENT: Any amounts that this Lease requires
Tenant to pay in addition to Monthly Rent.
(b) BUILDING: The building located on the Land and of which
the Premises are a part.
(c) LAND: The land on which the Project is located and which
is described on Exhibit B.
(d) PRIME RATE: The rate of interest from time to time
announced by The Wall Street Journal as the "prime rate." If The
Wall Street Journal or any reasonable successor to it ceases to
announce the prime rate, the prime Rate will be a comparable
interest rate designated by Landlord to replace the Prime Rate.
<PAGE> 95
(e) PROJECT: The development consisting of the Land and all
improvements built on the Land including without limitation the
Building, parking lot, parking structure, if any, walkways,
driveways, fences, and landscaping.
(f) RENT: The Monthly Rent and Additional Rent.
(g) WORKLETTER: The workletter attached to this Lease as
Exhibit C (if any).
If any other provision of this Lease contradicts any definition
of this Article 1, the other provision will prevail.
1.3 Exhibits. The following exhibits and addenda are attached to
this Lease and are made part of this Lease:
EXHIBIT A - The Premises
EXHIBIT B - Legal Description of the Land
EXHIBIT C - Plans (if any) and specifications
EXHIBIT D - Rules and Regulations
EXHIBIT E - Commencement Date and Estoppel Certificate
EXHIBIT F - Form of Letter of Credit
ADDENDUM: An Addendum containing additional paragraphs numbered 1
through ___ is attached hereto and incorporated herein.
ARTICLE 2. AGREEMENT
In consideration for the Rent and other covenants and
agreements made by Tenant, Landlord leases the Premises to
Tenant, and Tenant leases the Premises from Landlord, according
to this Lease. The duration of this Lease will be the Term. The
Term will commence on the Commencement Date and will expire on
the Expiration Date unless terminated earlier pursuant to the
terms of this Lease.
ARTICLE 3. TERM, DELIVERY, AND ACCEPTANCE OF PREMISES
3.1 Delivery of Possession. Landlord will be deemed to have
delivered possession of the Premises to Tenant on the
Commencement Date, as it may be adjusted pursuant to the
Workletter. Landlord will construct or install in the Premises
the Improvements as defined in the Workletter to be constructed
or installed by Landlord according to the Workletter. Except as
expressly set forth in the Workletter, Landlord shall deliver to
Tenant possession of the Premises AS IS in its present condition
on the Commencement Date. Tenant acknowledges that neither
Landlord nor its agents or employees have made any
representations or warranties as to the suitability or fitness of
the Premises for the conduct of Tenant's business or for any
other purpose, nor has Landlord or its agents or employees agreed
to undertake any alterations or construct any Tenant improvements
<PAGE> 96
to the Premises except as expressly provided in this Lease and
the Workletter. If for any reason Landlord cannot deliver
possession of the Premises to Tenant on the Commencement Date,
this Lease will not be void or voidable, and Landlord will not be
liable to Tenant for any resultant loss or damage. Tenant will
execute and deliver to Landlord the Commencement Date and
Estoppel Certificate attached to this Lease as Exhibit E within 3
days of Landlord's request.
3.2 Early Entry. If Tenant is permitted entry to the
Premises prior to the Commencement Date for the purpose of
installing fixtures or any other purpose permitted by Landlord,
the early entry will be at Tenant's sole risk and subject to all
the terms and provisions of this Lease as though the Commencement
Date had occurred, except for the payment of Rent, which will
commence on the Commencement Date. Tenant, its agents, or
employees will not interfere with or delay Landlord's completion
of construction of the improvements. Tenant hereby agrees to
indemnify Landlord against any injury, and loss or damage which
may occur to any person or to any of the Tenant's work or
installations made in such Premises, Building or Project, or to
any personal property placed therein, the same being at Tenant's
sole risk, and, prior to any early entry by Tenant, provide
Landlord with proof of insurance coverages described in this
Lease. Landlord has the right to impose additional conditions on
Tenant's early entry that Landlord, in its reasonable discretion,
deems appropriate and Landlord will further have the right to
require that Tenant execute an early entry agreement containing
those conditions prior to Tenant's early entry.
ARTICLE 4. MONTHLY RENT.
Throughout the Term of this Lease, Tenant will pay Monthly
Rent to Landlord as rent for the Premises. Monthly Rent will be
paid in advance on or before the first day of each calendar month
of the Term. If the Term commences on a day other than the first
day of a calendar month or ends on a day other than the last day
of a calendar month, then Monthly Rent will be appropriately
prorated by Landlord based on the actual number of calendar days
in such month. If the Term Commences on a day other than the
first day of a calendar month, then the prorated Monthly Rent for
such month will be paid on or before the first day of the Term.
Monthly Rent will be paid to Landlord, without written notice or
demand, and without deduction or offset in lawful money of the
United States of America at Landlord's address, or to such other
address as Landlord may from time to time designate in writing.
ARTICLE 5. INCREASES IN TAXES AND OPERATING EXPENSES
5.1 General During each calendar year of the original ant
any additional term hereof (pro-rated for any period less than a
year) tenant shall pay to Landlord as additional rent, "Tenant's
<PAGE> 97
Share of Taxes" (as hereinafter defined) and "Tenant's Share of
Operating Expenses" (as hereinafter defined) for each such
calendar year which is in excess of Tenant's Share of Taxes or
Tenant's Share of Operating Expenses (either or both, as the case
may be) for the Base Year as more fully described in this Article
5.
5.2 Definitions. As used in this Article 5, or elsewhere in
this Lease, the following terms shall be defined as hereinafter
set forth:
(a) "Taxes" shall mean all real estate taxes and
assessments, general or special, ordinary or
extraordinary, foreseen or unforeseen, imposed upon the
Project, and any existing or future improvement of
whatever kind thereto or thereon. Taxes shall include,
without limitation, any assessment imposed by any
public or private entity by reason of the Project being
located in a special services district or similar
designation. If, due to a future change in the method
of taxation, any franchise, income, profit or other
tax, however designated, shall be levied or imposed in
substitution, in whole or in part, for (or in lieu of)
any tax which would otherwise be included within the
definition of Taxes, such other tax shall be deemed to
be included within Taxes as defined herein.
(b)(1) "Operating Expenses" shall mean the actual expenses
paid or incurred by Landlord in the operation,
maintenance and management of the Project (after
deducting any reimbursement, discount, credit,
insurance proceeds, reduction or other allowance
received by Landlord) and shall include, without
limitation: (A) service, repair, replacement and other
maintenance to the Building and components thereof; (B)
wages and salaries (and taxes and other charges imposed
upon employers with respect to such wages and salaries)
and fringe benefits paid to persons employed by
Landlord for rendering service in the operation,
maintenance, and repair of the Building and related
facilities and amenities; (C) costs of independent
contractors hired for the operation, maintenance and
repair of the Building and related facilities and
amenities; (D) costs of electricity, steam, water,
fuel, heating, lighting, air conditioning, sewer and
other utilities chargeable to the operation and
maintenance of the Building; (E) cost of insurance for
and relating to the Project, including fire and
extended coverage (or such greater coverages as
Landlord may elect to carry), elevator, boiler,
sprinkler leakage, water damage, public liability and
property damage, plate glass, and rent protection, but
<PAGE> 98
excluding any charge for increased premiums due to acts
or omissions of other occupants of the Building because
of extra risk which are reimbursed to Landlord by such
other occupants (or if Landlord self insures the
Project or any part thereof, a sum in lieu thereof
which is not in excess of the then prevailing rates for
such insurance for comparable projects); (F) costs of
supplies;. (G) costs of window cleaning, janitorial
services, security services, landscaping, snow and ice
removal and painting; (H) sales or use taxes on
supplies and services; (I) consulting, accounting fees,
legal, tax appeal, engineering and other professional
fees and expenses; (J) commercially reasonable
management fees, or if no managing agent is employed by
Landlord a sum in lieu thereof which is not in excess
of the then prevailing rates for management fees for
comparable projects; (K) alterations and improvements
to the Project which are not capital in nature made by
reason of any requirement of any insurance underwriters
or any federal, state, or local statutes, regulations,
ordinances, or other any duly constituted public
authorities having jurisdiction over the Premises
(hereinafter a Governmental Requirement); and (L)
without limiting any of the foregoing, any other
expense or charge which, in accordance with sound
accounting and management principal generally accepted,
would be construed as an operating expense. The term
"Operating Expenses" shall not include: (A) the cost of
redecorating or repairing, or special cleaning or other
services, not provided on a regular basis to office
tenants of the Building; (B) wages, salaries or fees
paid to executive personnel of Landlord; (C) the cost
of any replacement item which, by standard accounting
practice, should be capitalized (except as otherwise
provided in Section (3) below; (D) any charge for
depreciation or interest paid or incurred by Landlord
(E) any charge for Landlord's income tax, excess profit
taxes, franchise taxes or similar taxes on Landlord's
business; (F) leasing commissions; (G) real estate
taxes; or (H) legal fee for the negotiation or
enforcement of lease. If Landlord is not furnishing any
particular work or service (the cost of which, if
performed by Landlord, would constitute an operating
Expense) to a tenant who has undertaken to perform such
worn or service in lieu of performance by Landlord,
Operating Expenses shall nevertheless be deemed to
include the amount Landlord would reasonably have
incurred if Landlord had in fact performed the work or
service at its expense.
(2) Tenant's Expense Share is a fixed percentage and does
not vary with changing occupancy levels of the
Building. Operating Expenses are computed for the
<PAGE> 99
Building as a whole. Accordingly, in order to stabilize
the calculation of increase in Operating Expenses on a
square foot basis for the Demised Premises, a further
adjustment is to be made as follows: In determining
Operating Expenses for any year, if the Building was
less than 95% occupied during such entire year, or was
not in operation during such entire year, then
Operating Expenses shall be analyzed by Landlord
(taking into account seasonal variations) and adjusted
to reflect the amount that such expenses would normally
be expected to have been, in the reasonable estimate of
Landlord, had the Building been 95% occupied and
operational throughout such Year, except that in no
event shall such adjustment result in an amount less
than the actual Operating Expenses.
(3) In the event Landlord shall make a capital expenditure
for an "Essential Capital Improvement", as hereinafter
defined in this subsection (3), during any year, the
annual amortization of such expenditure (determined by
dividing the amount of the expenditure by the useful
life of the improvements, as determined by the
Landlord), together with interest at the greater of the
Prime Rate prevailing or Landlord's actual borrowing
rate for such Essential Capital Improvement, shell be
deemed an Operating Expense for each year of such
useful life. As used herein, an "Essential Capital
Improvement" means any of the following:
(A) a labor saving device, energy saving device or
other installation, improvement or replacement which
reduces Operating Expenses as referred to above,
whether or not voluntary or required by governmental
mandate; or
(B) an installation, change, improvement, addition,
alteration or removal of any architectural barriers,
whether or not the foregoing are structural in nature,
made by reason of any Governmental Requirements whether
or not such Governmental Requirement existed on the
date of execution of this Lease if such Governmental
Requirement is or will be applicable generally to
similar office buildings; or
(C) an installation or improvement which directly
enhances the health or safety of tenants in the
Building generally, whether or not voluntary or
required by governmental mandate (as, for example, but
without limitation, for fire safety or security).
<PAGE> 100
5.3 Share of Taxes
(a) Increases in Taxes. For and with respect to each
calendar year within which the Term of this Lease (and
any renewal or extension thereof) falls, there shall
accrue, as additional rent, the amount, if any, by
which Tenant's Share of Taxes for such calendar year
(annualized for any partial year) exceeds the Tenant's
Share of Taxes for the Base Year. Such additional rent
shall be prorated on a per-diem basis for any partial
calendar year included within the term. Such additional
rent for any calendar year is hereinafter referred to
as an "Increase in Taxes", and one-twelfth (1/12) of
such amount is hereinafter referred to as a "Monthly
Tax Increase".
(b) Payment of Increase In Taxes. At Landlord's option,
each Increase in Taxes shall be paid with respect to
each calendar year in either or both of the following
manners:
(1) Within thirty (30) days after receipt by
Landlord of a Statement of Taxes (defined
below) containing the amount due from Tenant
on account of the Increase in Taxes, but in
any event at least thirty (30) days prior to
the last date the tax in question is payable
by Landlord to the taxing authority with
discount; or
(2) At any tune during the term of this Lease, or
any extension or renewal hereof, Landlord may
decide that in lieu of a one time payment of
the Increase in Taxes provided in
Subparagraph (5.3)(1) above, Landlord may
require Tenant to pay any Increase in Taxes
in accordance with Subparagraph (5.3)(d)
below.
(c) Statement of Tax Increases. On or before sixty (60)
days after Landlord receives any statement of Taxes due
from the applicable governmental agency (or as soon
thereafter as practicable), Landlord shall furnish to
Tenant a "Statement of Taxes" setting forth, in
reasonable detail:
(1) The Amount of Taxes for the calendar Year for
which Taxes are payable to the taxing
authority;
(2) The Increase in Taxes for such calendar Year;
<PAGE> 101
(3) The amount, if any, previously paid by Tenant
to Landlord on account of any Increase in
Taxes for such calendar year;
(4) The amount due from Tenant on account of any
Increase in Taxes; and
(5) If applicable, the Monthly Tax Increase
payable during the calendar year.
(d) Payment of Increase in Taxes on a Monthly Basis. At
Landlord's option, payment of additional rent due on
account of an Increase in Taxes for any given calendar
year shall be made in advance as follows:
(1) On the first day of the first month following
either receipt by Tenant of the Statement of
Taxes or, if later, notice of Landlord's
election to have an Increase in Taxes paid on
a monthly basis, Tenant shall pay to Landlord
an amount equal to the monthly Tax Increase
multiplied by the number of Months fully or
partially elapsed in the calendar year
(including the month in which the payment is
made); and
(2) Commencing on the first day of the second
month following either receipt by Tenant of
the Statement of Taxes or, if later, notice
of Landlord's election, and continuing until
the receipt by Tenant of the next Statement
of Taxes, the minimum monthly installments of
rent due hereunder shall be increased by an
amount equal to the Monthly Tax Increase,
subject to the provisions set forth in
Subparagraph S.3(e) below; and
(3) Any overpayment by Tenant of additional rent
due on account of the Increase in Taxes shall
be adjusted by a credit to Tenant given
contemporaneously with the furnishing of the
next Statement of Taxes (provided, if the
credit exceeds one (1) months rent, Tenant
shall be entitled to receive the amount due
Tenant by check).
(e) Optional Billing for Taxes. At Landlord's option,
exercisable with respect to any one or more calendar
years during the term of this Lease, Landlord may
include, within the Statement of Taxes furnished to
Tenant pursuant to Subparagraphs 5.3(c) and 5.3(d)
above, Landlord's good faith estimate of Taxes for the
<PAGE> 102
following calendar year, and the estimated Annual
Increase in Taxes based thereon. In such case, the
"Monthly Tax Increase" as used in Subparagraph 5.3(d)
above, for the computation of Tenant's payments to
Landlord during the calendar year on account of the
Increase in Taxes payable to the taxing authority for
the following calendar year shall be equal to one-
twelfth (1/12) of the aforesaid estimated Increase in
Taxes.
5.4 Final Determinations. For purposes of Section 5.3
above, any assessment upon which Tenant's Share of Taxes is based
shall be deemed to be the amount initially assessed until such
time as an abatement, refund, rebate or increase, if any
(retroactive or otherwise), shall be finally determined to be
due, and upon such final determination Landlord shall promptly
notify Tenant of the amount if any due to Tenant or Landlord, as
the case may be, as a result of the adjustment and appropriate
payment to Landlord or Tenant, as the case may be, shall
thereafter be promptly made. Landlord shall have no duty to
Tenant to contest, appeal or otherwise challenge any Taxes. In
the event of any reduction in Taxes by reason of legal or other
action taken by Landlord in contest of same, there shall be added
to and be deemed a part of the Taxes in question the amount of
Landlord's legal and other costs and expenses in obtaining the
reduction (but not an amount in excess of the tax savings).
5.5 Operating Expenses.
(a) Share of Operating Expenses. For and with respect to
each calendar year of the term of this Lease (and any
renewals or extensions thereof) there shall accrue, as
additional rent, the amount, if any, by which Tenant's
Share of Operating Expenses for such calendar year
exceeds Tenant's Share of Operating Expenses for the
Base Year. Such additional rent shall be prorated on a
per-diem basis for any partial calendar year. Such
additional rent for any calendar year is hereinafter
referred to as the "Operating Expense Increase," and
one-twelfth of such amount is hereinafter referred to
as the "Monthly Increase."
(b) Comparative Statements: Payments. On or before April 30
(or as soon thereafter as practicable) of each calendar
year during the term hereof, and any renewals and
extensions thereof, Landlord shall furnish to Tenant a
statement of Operating Expenses prepared by Landlord
setting forth, in reasonable detail: (1) Operating
Expenses for the preceding calendar year, (2) the
Operating Expense Increase for the-preceding calendar
year, (3) the amount, if any paid by Tenant to Landlord
during the preceding calendar year on account of said
<PAGE> 103
Operating Expense Increase, (4) the amount due by
Tenant on account of The Operating Expense Increase,
and (5) the Monthly Increase. Payment of the additional
rent due on account of the Operating Expense Increase
for the preceding calendar year shall be made by Tenant
within fifteen (15) days after receipt by Tenant of
such statement. Tenant shall also make payments to
Landlord, on account of the Operating Expense Increase
for the then current calendar year, as follows:
(1) On the first day of the first month following
receipt by Tenant of the annual statement,
Tenant shall pay to Landlord an amount equal
to the Monthly Increase multiplied by the
number of months fully or partially elapsed
in the current calendar year (including the
month in which the payment is made), less any
payments which may have been made for such
elapsed months pursuant to Subparagraph
5.5(c) below;
(2) Commencing on the first day of the second
month following receipt by Tenant of the
annual comparative statement, and continuing
until the receipt by Tenant of the next
annual statement, the minimum monthly
installments of rent due hereunder shall be
increased by an amount equal to the Monthly
Increase, subject to the provisions set forth
in Subparagraph 5.5 (c) below. Any
overpayment by Tenant of additional rent due
on account of the Operating Expense Increase
shall be adjusted by a credit to Tenant given
contemporaneously with the furnishing of the
next comparative statement.
(c) Optional Billing for Operating Expenses. At Landlord's
option, exercisable with respect to any one or more
calendar years during the term of this Lease, Landlord
may include, within the comparative statement furnished
to Tenant pursuant to Subparagraph 5.5(b) above,
Landlord's good faith estimate of Operating Expenses
for the then current calendar year, and the estimated
annual Operating Expense Increase based thereon. In
such case, the "Monthly Increase" as used in
Subparagraph 5.5(b) above for the computation of
Tenant's payments on account of the Operating Expense
Increase for the current year, shall be equal to one-
twelfth of the aforesaid estimated Operating Expense
Increase.
<PAGE> 104
5.6 Disputes. The information set forth on each Comparative
Statement of Operating Expenses and on each Statement of Taxes
furnished to Tenant as provided hereinabove shall be deemed
approved by Tenant unless, within thirty (30) days after
submission to Tenant, Tenant shall notify Landlord that it
disputes the correctness thereof, specifying in detail the basis
for such assertion. Pending the resolution of any dispute,
however, Tenant shall continue to make payments in accordance
with the information contained in the comparative statement.
Landlord agrees to promptly provide to Tenant, upon request,
extracts from Landlord's books and records which are relevant to
any items in dispute.
5.7 Audit. In the event Tenant elects to audit Landlord's
Comparative Statement of Operating Expenses or Statement of Taxes
in accordance with this clause, such audit must be (i) conducted
by an independent nationally recognized accounting firm that is
not being compensated by Tenant on a contingency fee basis, and
(ii) completed within sixty (60) days following Tenant's notice
disputing the correctness of the Comparative Statement of
Operating Expenses pursuant to section 5.6 above. Furthermore,
all of the information obtained through the Tenant's audit with
respect to financial matters (including, without limitation,
costs, expenses, income) and any other matters pertaining to the
Landlord and/or the Project as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant
relative to the results of the audit shall be held in strict
confidence by the Tenant and its officers, agents, and employees;
and Tenant shall cause its auditor and any of its officers,
agents, and employees to be similarly bound. As a condition
precedent to Tenant's exercise of its right to audit, Tenant must
deliver to Landlord a signed confidentiality agreement from the
auditor (in form acceptable to Landlord) acknowledging that all
of the results of such audit as well as any compromise,
settlement, or adjustment reached between Landlord and Tenant
shall be held in strict confidence and shall not be revealed in
any manner to any person except upon the prior written consent of
the Landlord. Tenant understands and agrees that this provision
is of material importance to the Landlord and that any violation
of the teens of this provision shall result in immediate and
irreparable harm to the Landlord. Landlord shall have all rights
allowed by law or equity if Tenant its officers, agents, or
employees and/or the auditor violate the terms of this provision,
including, without limitation, the right to terminate this Lease
or the right to terminate Tenant's right to audit.
5.8 Survival After Termination. If, upon termination of
this Lease for any cause, the amount of any additional rent due
pursuant to Article 5 has not yet been determined, an appropriate
payment from Tenant to Landlord, or refund from Landlord to
Tenant, shall be made within thirty (30) days after Tenant's
receipt of such determination from Landlord.
<PAGE> 105
5.9 Other Taxes.
(a) Tenant will reimburse Landlord upon demand for any and
all taxes payable by Landlord (other than as set forth
in sub-paragraph (b) below), whether or not now
customary or within the contemplation of Landlord and
Tenant:
(1) upon or measured by rent, including without
limitation, any gross revenue tax, sales tax
use tax, excuse tax, or value added tax
levied by the federal government or any other
governmental body with respect to the receipt
of rent; and
(2) upon this transaction or any document to
which Tenant is a party creating or
transferring an interest or an estate in the
Premises.
(b) Tenant will not be obligated to pay any inheritance
tax, gift tax, franchise tax, income tax (based on net
income), profit tax, or capital levy imposed upon
Landlord.
(c) Tenant will pay promptly when due all personal property
taxes of Tenant's personal property in the Premises and
any other taxes payable by Tenant that if not paid
might give rise to a lien on the Premises or Tenant's
interest in the Premises.
ARTICLE 6. INSURANCE.
6.1 Landlord's Insurance. At all times during the Term,
Landlord will carry and maintain:
(a) Fire and extended coverage insurance covering the
Project, its equipment, common area furnishings, and
leasehold improvements in the Premises to the extent of
the Tenant Finish Allowance (as that term is defined in
the Workletter);
(b) Bodily injury and property damage liability insurance;
and
(c) Such other insurance as Landlord reasonably determines
from time to time.
The insurance coverages and amounts in this Section 6.1 will
be reasonably determined by Landlord taking into account the
class, type, size and location of the Building.
<PAGE> 106
6.2 Tenant's Insurance. At all times during the Term,
Tenant will carry and maintain at Tenant's expense, the following
insurance, in the amounts specified below or such other amounts
as Landlord may from time to time reasonably request, with
insurance companies and on forms satisfactory to Landlord:
(a) Bodily injury and property damage liability insurance,
with a combined single limit of not less than
$1,000,000 per occupance. All such insurance will be
equivalent to coverage offered by a commercial
comprehensive general liability form, including without
limitation personal injury, products and completed
operations, broad form property damage, and contractual
liability coverage for the performance by Tenant of the
indemnity agreements set forth in Article 21 of this
Lease;
(b) Insurance covering all of Tenant's furniture and
fixtures, machinery, equipment, stock, and any other
personal property owned and used in Tenant's business
and found in, on, or about the Project, and any
leasehold improvements to the Premises other than those
provided by Landlord at the beginning of the Term, if
any, provided pursuant to the Workletter an amount not
less than the full replacement cost. Property forms
will provide coverage on a broad form basis insuring
against "all risks of direct physical loss." All
policy proceeds will be used for the repair or
replacement of the property damaged or destroyed;
however, if this Lease ceases under the provisions of
Article 18, Tenant will be entitled to any proceeds
resulting from damage to Tenant's furniture and
fixtures, machinery, equipment, stock, and any other
personal property; and
(c) Worker's compensation insurance insuring against and
satisfying Tenant's obligations and liabilities under
the worker's compensation laws of the state in which
the Project is located, including employer's liability
insurance in the limits required by the laws of the
state in which the Project is located.
If Tenant fails to obtain or maintain any insurance required
hereunder, Landlord shall have the option, without assuming
any obligation in connection therewith, to effect such
insurance at the sole cost of the Tenant and all delays by
Landlord shall be reimbursed by Tenant to Landlord as
Additional Rent.
<PAGE> 107
6.3 Forms of Policies. Certificates of insurance, together
with copies of the endorsements, when applicable, naming Landlord
and any others specified by Landlord as additional insurers, will
be delivered to Landlord prior to Tenant's occupancy of the
Premises and from time to time at least 10 days prior to the
expiration of the term of each such policy. All commercial
general liability or comparable policies maintained by Tenant
will name Landlord and such other persons or firms as Landlord
specifies from time to time as additional insurers, entitling
them to recover under such policies for any loss sustained by
them, their agents, and employees, including those losses
sustained as a result of the negligent acts or omissions of
Tenant. All such policies maintained by Tenant will provide that
they may not be terminated nor may coverage be reduced except
after 30 days' prior written notice to Landlord. All commercial
general liability, automobile, and property policies by Tenant
will be written as primary policies, not contributing with and
not supplemental to the coverage that Landlord may carry.
6.4 Waiver of Subrogation. Landlord and Tenant each waive
any and all rights to recover against the other or against any
other tenant or occupant of the Project, or against the officers,
directors, shareholders, partners, joint venturers, employees,
agents, customers, invitees, or business visitors of such other
company or of such other tenant or occupant of the Project, for
any loss or damage to such waiving company arising from any cause
covered by any property insurance required to be carried by such
company pursuant to this Article 6 or any other property
insurance actually carried by such company to the extent of the
limits of such policy. Landlord and Tenant from time to time will
cause their respective insurers to issue appropriate waiver of
subrogation rights endorsements to all property insurance policy
carried in connection with the Project or the Premises or the
contents of the Project or the Premises. Tenant agrees to cause
all other occupants of the Premises claiming by, under, or
through Tenant to execute and deliver to Landlord such a waiver
of claims and to obtain such waiver of subrogation rights
endorsements.
6.5 Adequacy of Coverage. Landlord, its agents and
employees make no representation that the limits of liability
specified to be carried by Tenant pursuant to this Article 6 are
adequate to protect Tenant. If Tenant believes that any of such
insurance coverage is inadequate, Tenant shall obtain such
additional insurance coverage as Tenant deems adequate, at
Tenant's sole expense.
<PAGE> 108
ARTICLE 7. USE.
Tenant covenants that the Premises will be used only for
general business office purpose and purposes incidental to each
use, and for no other purpose. Tenant will use the Premises in a
careful, safe, and proper manner. Tenant will not use or Permit
the Premises to be used or occupied for any purpose or in any
manner prohibited by any applicable laws. Tenant will not commit
waste or suffer or permit waste to be committed in, on, or about
the Premises. Tenant will conduct its business and control its
employees, agents, and invitees in such a manner as not to create
any nuisance or interfere with, annoy, or disturb any other
Tenant or occupant of the Project or Landlord in its operation of
the Project. Tenant agrees to take possession of and occupy the
entire Premises no later than 60 days after the Commencement
Date, and Tenant further agrees to continue to occupy the
Premises throughout the remainder of the Term of this Lease until
90 days prior to the Expiration Date.
ARTICLE 8. REQUIREMENTS OF LAW; FIRE INSURANCE.
8.1 General. At its sole cost and expense, Tenant will
promptly comply with all laws, statutes, ordinances, codes, and
governmental rules, regulations, or requirements of federal,
state, county, and local governmental authorities now in force or
in force at any given time after the Lease Date, with the
requirements of any board of fire underwriters or other similar
body constituted now or after the Lease Date, with any direction
or occupancy certificate issued pursuant to any law by any public
officer or officers, as well as with the provisions of all
recorded documents affecting the Premises, insofar as they relate
to the condition, use, or occupancy of the Premises, excluding
requirements of structural changes to the Building, unless
required by the unique nature of Tenant's use or occupancy of the
Premises.
8.2 Hazardous Materials.
(a) For purposes of this Lease, "hazardous materials" means
any explosives, radioactive materials, hazardous
wastes, or hazardous substances, including without
limitation asbestos containing materials, PCB's, CFC's,
or substances defined as "hazardous substances" in the
Comprehensive Environmental Response, Compensation and
liability Act of 1980, as amended, 42 U.S.C. subsection
9601-9657; the Hazardous Materials Transportation Act of
1975, 49 U.S.C. subsection 1801-1812; the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. subsection 6901-6987; or
any other applicable federal, state, or local stature,
law, ordinance, code, rule, regulation, order, or
decree regulating, relating to, or imposing liability
or standards of conduct concerning hazardous materials,
<PAGE> 109
waste, or substances now or at any time hereafter in
effect (collectively, "hazardous materials laws").
(b) Tenant will not cause or permit the storage, use,
generation, release, or disposition of any hazardous
material in, on, or about the Premises or the Project
by Tenant. its agents, employees, or contractors.
Tenant will not permit the Premises to be used or
operated in a manner that may cause the Premises or the
Project to be contaminated by any hazardous materials
in violation of any hazardous materials laws. Tenant
will immediately advise Landlord in writing of (1) any
and all enforcement, cleanup, remedial, removal, or
other government or regulatory actions instituted,
contemplated, or threatened pursuant to any hazardous
material laws relating to any hazardous materials
affecting the Premises; and (2) all claims made or
threatened by any third company against Tenant,
Landlord, the Premises or the Project relating to
damage, contribution, cost recovery, compensation,
loss, or injury resulting from any hazardous materials
on or about the Premises. Without Landlord's prior
written consent, Tenant will not take any remedial
action or enter into any agreements or settlements in
response to the presence of any hazardous materials in,
on, or about the Premises.
(c) Tenant will be solely responsible for and will defend,
indemnify and hold Landlord its agents, and employees
harmless from and against all claims, costs, expenses,
damages, and liabilities, including attorney's fees and
costs, arising out of or in connection with Tenant's
breach of its obligations in this Article 8. Tenant
will be solely responsible for and will defend,
indemnify, and hold Landlord, its agents, and employees
harmless from and against any and all claims, costs,
and liabilities, including attorneys' fees and costs,
arising out of or in connection with the removal,
cleanup, and restoration work and materials necessary
to return the Premises and any other property of
whatever nature located on the Project to their
condition existing prior to the appearance of Tenant's
hazardous materials on the Premises. Tenant's
obligations under this Article 8 will survive the
expiration or other termination of this Lease.
8.3 Certain insurance Risks. Tenant will not do or permit to be
done any act or thing upon the Premises or the Project which
would (a) jeopardize or be in conflict with fire insurance
policies covering the Project and fixtures and property in
the Project; (b) increase the rate of fire insurance
applicable to the Project to an amount higher than it
otherwise would be for general office use of the Project; or
<PAGE> 110
(c) subject Landlord to any liability or responsibility for
injury to any person or persons or to property by reason of
any business or operation being carried on upon the
Premises. If the conduct of the Tenant or any acts or
omissions of the Tenant shall cause or result in any
increase in premiums for insurance carried by the Landlord,
whether or not Landlord allows such act or omission to
continue, Tenant shall pay any increase in premium as
Additional Rent.
ARTICLE 9. ASSIGNMENT AND SUBLETTING.
9.1 General. Tenant for itself, its heirs, distributees,
executors, administrators, legal representatives, successors, and
assigns, covenants and agrees that it will not assign, mortgage,
or encumber this Lease, or sublease, nor otherwise permit the
Premises or any part of the Premises to be used or occupied by
others, without the prior written consent of Landlord in each
instance, which consent may not be unreasonably withheld.
Landlord may condition its consent upon among other things,
execution by the subtenant or assignee, as the case may be, of an
instrument confirming the restrictions on further subleasing or
assignment confined herein and joining in the waivers and
indemnities made by Tenant hereunder. Any assignment or sublease
in violation of this Article 9 will be void. If this Lease is
assigned, or if the Premises or any part of the Premises are
subleased or occupied by anyone other than Tenant, Landlord may,
after any default by Tenant, collect rent from the assignee,
subtenant or occupant, and apply the net amount collected to
Rent. No assignment' sublease, occupancy, or collection will be
deemed (a) a waiver of the provisions of this Section 9.1; (b)
the acceptance of the assignee, subtenant, or occupant as Tenant;
or (c) a release of Tenant from the further performance by Tenant
of covenants on the part of Tenant contained in this ! Lease. The
consent by Landlord to an assignment or sublease will not be
construed to relieve Tenant from obtaining Landlord's prior
written consent to any further assignment or sublease. No
permitted subtenant may assign or encumber its sublease or
further sublease all or any portion of its subleased space, or
otherwise permit the subleased space or any part of its subleased
space to be used or occupied by others, without Landlord's prior
written consent in each instance. Any assignee approved by
Landlord must assume all of the obligations and duties of Tenant
under this Lease pursuant to an assumption agreement satisfactory
to Landlord of which Landlord is the beneficiary.
9.2 Submission of Information. If Tenant requests
Landlord's consent to a specific assignment or subletting, Tenant
will submit in writing to Landlord (a) the name and address of
the proposed assignee or subtenant; (b) the business terms of the
proposed assignment or sublease; (c) reasonably satisfactory
information as to the nature and character of the business of the
proposed assignee or subtenant and as to the name of its proposed
<PAGE> 111
use of the space; (d) banking, financial, or other credit
information sufficient to enable Landlord to determine the
financial responsibility and character of the proposed assignee
or subtenant; (e) the proposed form of assignment (including
lease assumption provisions) or sublease for Landlord's approval;
and (f) any other information reasonably required by Landlord.
9.3 Payments to Landlord If Landlord consents to a proposed
assignment or sublease, then Landlord will have the right to
require Tenant to pay to Landlord a sum equal to (a) any rent or
other consideration paid to Tenant by any proposed transferee
that (after deducting the costs of Tenant, if any, in effecting
the assignment or sublease, including reasonable alterations
costs, commissions and legal fees) is in excess of the Rent
allocable to the transferred space then being paid by Tenant to
Landlord pursuant to this Lease; (b) any other profit or gain
(after deducting any necessary expenses incurred) realized by
Tenant from any such sublease or assignment; and (c) Landlord's
reasonable attorneys' fees and costs incurred in connection with
negotiation, review, and processing of the transfer. All such
sums owed to Landlord under 9.3(c), above, will be payable to
Landlord at the time the next payment of Monthly Rent is due.
9.4 Prohibited Transfers. The transfer of a majority of the
issued and outstanding capital stock of any corporate Tenant or
subtenant of this Lease, or a majority of the total interest in
any partnership Tenant or subtenant, however accomplished, and
whether in a single transaction or in a series of related or
unrelated transactions, will be deemed an assignment of this
lease or of such sublease requiring Landlord's consent in each
instance. For purposes of this Article 9, the transfer of
outstanding capital stock of any corporate Tenant will not
include any sale of such stock by persons other than those deemed
"insiders" within the meaning of the Securities Exchange Act of
1934, as amended, effected through the "over-the-counter market"
or through any recognized stock exchange.
9.5 Landlord's Options. In the event Tenant requests
Landlord's consent to a proposed transfer of this Lease or all
more than 50% of the premises, Landlord in addition to any rights
contained herein, shall have the following options at its
discretion:
(a) to give Tenant written notice of Landlord's intention
to terminate this Lease as to all or any portion of the
Premises on the date such notice is given or on any
later date specified therein, whereupon, on the date
specified in such notice, Tenant's right to possession
of the Premises or such portion of the Premises shall
cease and this Lease shall thereupon be terminated,
except as to any uncompleted obligations of Tenant; or
<PAGE> 112
(b) to re-enter and take possession of the Premises or the
part thereof subject to such transfer, and to enforce
all rights of Tenant, in accordance with such sublet or
assignment of the Premises, or any part thereof, as if
Landlord was the sublessor or assignor, and to do
whatever Tenant is permitted to do pursuant to the
terms of such sublease or assignment.
9.6 Permitted Transfer. Landlord consents to an assignment
of this Lease or sublease of all or part of the Premises to a
wholly-owned subsidiary of Tenant or the parent of Tenant or to
any corporation into or with which Tenant may be merged or
consolidated; provided that (a) Tenant promptly provides Landlord
with a fully executed copy of such assignment or sublease; (b)
Tenant is not released from liability under this Lease and (c)
the assignee assumes in writing all of the obligations of Tenant
under this Lease.
ARTICLE 10. RULES AND REGULATIONS.
Tenant and its employees, agents, licensees, and visitors
will at all times observe faithfully, and comply strictly with,
the rules and regulations set forth in Exhibit D. Landlord may
from time to time reasonably amend, delete, or modify existing
rules and regulations, or adopt reasonable new rules and
regulations for the use, safety, cleanliness and care of the
Premises, the Building, and the Project, and the comfort, quiet,
and convenience of occupants of the Project. Modifications or
additions to the rules and regulations will be effective upon 30
days' prior written notice to Tenant from Landlord. In the event
of any breach of any rules or regulations or any amendments or
additions to such rules and regulations, Landlord will have all
remedies that this Lease provides for default by Tenant
(following applicable notice provisions, if any), and will in
addition have any remedies available at law or in equity,
including the right to enjoin any breach of such rules and
regulations. Landlord will not be liable to Tenant for violation
of such rules and regulations by any other tenant, its employees,
agents, visitors, or Licensees or any other person. In the event
of any conflict between the provisions of this Lease and the
rules and regulations, the provisions of this Lease will govern.
ARTICLE 11. COMMON AREAS.
As used in this Lease, the term "common areas" means,
without limitation, the hallways, entryways, stairs, elevators,
driveways, roadways, parking areas, walkways, terraces, docks,
loading areas, restrooms, trash facilities, and all other areas
and facilities in the Project that are provided and designated
from time to time by Landlord for the general nonexclusive use
and convenience of Tenant with Landlord and other tenants of the
Project and their respective employees, invitees, licensees, or
other visitors. Landlord grants Tenant, its employees, invitees,
<PAGE> 113
licensees, and other visitors a nonexclusive license for the Term
to use the common areas in common with others entitled to use the
common areas, subject to the teens and conditions of this Lease.
Without advance written notice to Tenant, except with respect to
matters covered by subsection (a) below, and without any
liability to Tenant in any respect, Landlord will have the right
to:
(a) Close off any of the common areas to whatever extent
required in the opinion of Landlord and its counsel to
prevent a dedication of any of the common areas or the
accrual of any rights by any person or the public to
the common areas;
(b) Temporarily close any of the common areas for
maintenance alteration, or improvement purposes; and
(c) Change the size, use, shape, or nature of any such
common areas, including erecting additional buildings
on the common areas, expanding the existing building or
other buildings to cover a portion of the common areas,
converting common areas to a portion of the Building or
other buildings, or converting any portion of the
Building (excluding the Premises) or other buildings to
common areas. Upon erection of any additional buildings
or change in common areas, the portion of the Project
upon which buildings or structures have been erected
will no longer be deemed to be a part of the common
areas. In the event of any such changes in the size or
use of the Building or common areas of the Building or
Project, Landlord will make an appropriate adjustment
in the Rentable Area of the Building or the Building's
pro rata share of exterior common areas of the Project,
as appropriate, and a corresponding adjustment to
Tenant's Share of the operating expenses payable
pursuant to Article 5 of this Lease.
ARTICLE 12. LANDLORD'S SERVICES.
12.1 Landlord 's Repair and Maintenance. Subject to the
condemnation and casualty provisions contained in this Lease and
except as otherwise expressly provided herein, Landlord will
maintain and repair the common areas of the Project, including
lobbies, stairs, elevators, corridors, and restrooms, the windows
in the Building, the mechanical, plumbing and electrical
equipment serving the Building, and the structure and the roof of
the Building in reasonably good order and condition.
<PAGE> 114
12.2 Landlord's Other Services.
(a) Landlord will furnish the Premises with services,
including without limitation (1) electricity for
lighting and the operation of low-wattage office
machines (such as desktop microcomputers, desktop
calculators, and typewriters) during Business Hours,
although Landlord will not be obligated to furnish more
power to the Premises than is proportionally allocated
to the Premises under the Building design; (2) heat and
air conditioning seasonably required for the comfortable
occupation of the Premises during Business Hours; (3)
access and elevator service; (4) lighting replacement
during Business Hours (for building standard lights, but
not for any special Tenant lights, which will be
replaced at Tenant's sole cost and expense); (5)
restroom supplies; (6) window washing with reasonable
frequency, as determined by Landlord; and (7) daily
cleaning service on weekdays. Landlord may provide, but
will not be obligated to provide, any such services
(except access and elevator service) on holidays or
weekends.
(b) Tenant will have the right to purchase for use during
Business Hours and non-Business Hours the services
described in clauses (a)(1) and (2) in excess of the
amounts Landlord has agreed to furnish so long as (1)
Tenant gives Landlord reasonable prior written notice of
its desire to do so; (2) the excess Services are
reasonably available to Landlord and to the Premises;
(3) Tenant pays as Additional Rent (at the time the next
payment of Monthly Rent is due) the cost of such excess
service from time to time charged by Landlord; subject
to the procedures established by Landlord from time to
time for providing such additional or excess services.
12.3 Tenant's Costs. Whenever equipment or lighting (other
than building standard lighting) is used in the Premises by
Tenant and such equipment or lighting affects the temperature
otherwise normally maintained by the design of the Building's air
conditioning system, Landlord will have the right, after prior
written notice to Tenant, to install supplementary air
conditioning facilities in the Premises or otherwise modify the
ventilating and air conditioning system serving the Premises; and
the cost of such facilities, modifications, and additional
service will be paid by Tenant as Additional Rent. If Landlord
reasonably believes that Tenant is using more power than Landlord
furnishes pursuant to Section 12.2, Landlord may install separate
meters of Tenant's power usage, and Tenant will pay for the cost
of such excess power as Additional Rent, together with the cost
of installing any risers, meters, or other facilities that may be
necessary to furnish or measure such excess power to the
Premises.
<PAGE> 115
12.4 Limitation on Liability. Landlord will not be in
default under this Lease or be liable to Tenant or any other
person for direct or consequential damage, or otherwise, for any
failure to supply any heat, air conditioning, elevator, cleaning,
lighting, or security; for surges or interruptions of
electricity; or for interruptions to other services Landlord has
agreed to supply. Landlord will use reasonable efforts to
diligently remedy any interruptions in the furnishing of such
services. Landlord reserves the right temporarily to discontinue
such Services at such times as may be necessary by reason of
accident; repairs, alterations or improvements; strikes;
lockouts; riots; acts of God; governmental preemption in
connection with a national or local emergency; any rule, order,
or regulation of any governmental agency; conditions of supply
and demand that make any product unavailable; Landlord's
compliance with any mandatory governmental energy conservation or
environmental protection program, or any voluntary energy
conservation program at the request of or with consent or
acquiescence of Tenant; or any other happening beyond the control
of Landlord. Landlord will not be liable to Tenant or any other
person or entity for direct or consequential damages resulting
from the admission to or exclusion from the Building or Project
of any person. In the event of invasion, mob, riot, public
excitement, strikes, lockouts, or other circumstances rendering
such action advisable in Landlord's sole opinion, Landlord will
have the right to prevent access to the Building or Project
during the continuance of the same by such means as Landlord, in
its sole discretion, may deem appropriate, including without
limitation locking doors and closing parking areas and other
common areas. Landlord will not be liable for damages to person
or property or for injury to, or interruption of, business for
any discontinuance permitted under this Article 12, nor will such
discontinuance in any way be construed as an eviction of Tenant
or cause an abatement of Rent or operate to release Tenant from
any of Tenant's obligations under this Lease.
ARTICLE 13. TENANT'S CARE OF THE PREMISES.
Tenant will maintain the Premises (including Tenant's
equipment, personal property, and trade fixture located in the
Premises) in their condition at the time they were delivered to
Tenant, normal wear and tear excluded. Tenant will immediately
advise Landlord of any damage to the Premises or the Project. Any
damage or injury to the Premises, the Project, or the fixtures,
appurtenances, and equipment in the Premises or the Project that
is caused by Tenant its agents, employees, or invitees may be
repaired, restored, or replaced by Landlord, at the expense of
Tenant. Such expense (plus 15% of such expense for Landlord's
overhead) will be collectible as Additional Rent and will be paid
by Tenant within 10 days after delivery of a statement for such
expense.
<PAGE> 116
ARTICLE 14. ALTERATIONS.
14.1 General.
(a) Tenant will not make or allow to be made any
alterations, additions, or improvements to or of the
Premises or any part of the Premises, or attach any
fixtures or equipment to the Premises, without first
obtaining Landlord's written consent. In no event shall
the work of Tenant affect or impair the structure, the
elevators, or utility systems of the Building.
Landlord's approval of the plans, specifications, and
working drawings for Tenant's alterations shall create
no responsibility or liability on the part of the
Landlord for their completeness, design sufficiency, or
compliance with all laws, ordinances, rules,
requirements, and regulations of governmental agencies
or authorities, or the use and occupancy permit for the
Building. All such alterations, additions, and
improvements consented to by Landlord, and capital
improvements that are required to be made to the Project
as a result of the nature of Tenant's use of the
Premises:
(1) Will be performed by contractors approved by landlord
and subject to conditions specified by Landlord
(which may include requiring the posting of
performance and payment bonds);
(2) At Landlord's option, in the event the alteration,
addition or improvement exceeds $5,000, will be made
by Landlord for Tenant's account, and Tenant will
reimburse Landlord for their cost (including 15% for
Landlord's overhead) within 10 days after receipt of
a statement of such cost;
(3) Will be done in a good and workmanlike manner and
shall be completed promptly;
(4) Shall not cause a loss or diminution of electric
power or other utilities or services to other tenants
of the Building;
(5) Will be performed according to plans, specifications,
and working drawings approved by Landlord; and
(6) Will be in accordance with all applicable federal,
state, county and local laws, rules, regulations,
ordinances and codes.
At all times between the start and completion of the work,
in addition to the other policies of insurance required by
this Lease, Tenant shall maintain a policy of "All Risk"
<PAGE> 117
Builder's Risk Insurance covering the full replacement
value of all work done and fixtures and equipment
installed or to be installed at the Premises pursuant to
this Article 14. Tenant herewith agrees to be responsible
for all damages to persons or property, including loss of
life, as a result of occurrences connected with activities
undertaken by Tenant its agents, contractors, and
employees pursuant hereto, and hereby indemnifies Landlord
and shall defend and hold Landlord harmless from and
against any and all loss, cost or expense in connection
with its responsibilities hereunder.
(b) Subject to Tenant's rights in Article 16, all
alterations, additions, fixtures, and improvement,
whether temporary or permanent in character, made in or
upon the Premises either by Tenant or Landlord, will
immediately become Landlord's property and at the end of
the Term will remain on the Premises without
compensation to Tenant unless Landlord at the time of
the installation, advises Tenant in writing that such
alterations, additions, fixtures, or improvements must
be removed at the expiration or other termination of
this Lease.
14.2 Free-Standing Partitions. Tenant Will have the right to
install free-standing work station partitions, without Landlord's
prior written consent, so long as no building or other
governmental permit is required for their installation or
relocation; however, if a permit is required, Landlord will not
unreasonably withhold its consent to such relocation or
installation. The free-standing work station partitions for which
Tenant pays will be part of Tenant's trade fixtures for all
purposes under this Lease. All other partitions installed in the
Premises are and will be Landlord's property for all purposes
under this Lease.
14.3 Removal. If Landlord has required Tenant to remove any
or all alterations, additions, fixtures, and improvements that
are made in or upon the Premises pursuant to this Article 14
prior to the Expiration Date, Tenant will remove such
alterations, additions, fixtures, and improvements at Tenant's
sole Cost and will restore the Premises to the condition in which
they were before such alterations, additions, fixtures,
improvements, and additions were made.
ARTICLE 15. MECHANICS' LIENS.
Tenant will pay or cause to be paid all costs and charges for
work (a) done by Tenant or caused to be done by Tenant in or to
the Premises, and (b) for all material furnished for or in
connection with such work. Tenant will indemnify Landlord against
and defend and hold Landlord, the Premises, and the Project free,
clear, and harmless of and from all mechanics liens and claims of
<PAGE> 118
liens, and all other liabilities, liens, claims, and demands on
account of such work by or on behalf of Tenant, other than work
performed by Landlord pursuant to the Workletter. If any such
lien, at any time, is filed against the Premises or any part of
the Premises, Tenant will cause such lien to be discharged of
record within 10 days after the filing of such lien except that
if Tenant desires to contest such lien, it will furnish Landlord,
within such 10-day period, security reasonably satisfactory to
Landlord of at least 125% of the amount of the claim, plus
estimated costs and interest, or comply with such statutory
procedures as may be available to release the lien. If a final
judgment establishes the validity or existence of a Lien for any
amount is entered, Tenant will pay and satisfy the same at once.
If Tenant fails to pay any charge for which a mechanics' lien has
been filed, and has not given Landlord security as described
above, or has not complied with such statutory procedures as may
be available to release the lien, Landlord may, at its option,
pay such charge and related costs and interest and the amount so
paid, together with reasonable attorneys' fees incurred in
connection with such lien, will be immediately due from Tenant to
Landlord as Additional Rent. Nothing contained in this Lease will
be deemed the consent or agreement of Landlord to subject
Landlord's interest in the Project to liability under any
mechanics' or other lien law. If Tenant receives written notice
that a lien has been or is about to be filed against the Premises
or the Project, or that any action affecting due to the Project
has been commenced on account of work done by or for or materials
furnished to or for Tenant it will immediately give Landlord
written notice of such notice. At least 15 days prior to the
commencement of any work (including but not limited to any
maintenance, repairs, alterations, additions, improvements, or
installations) in or to the Premises, by or for Tenant, Tenant
will give Landlord written notice of the proposed work and the
name and address of the persons supplying labor and material for
the proposed work. Landlord will have the right to post notices
of non-responsibility or similar written notices on the Premises
in order to protect the Premises against any such liens.
ARTICLE 16. END OF TERM.
At the end of this Lease, Tenant will promptly quit and
surrender the Premises broom-clean, in good order and repair,
ordinary wear and tear excepted and deliver all keys to the
Premises and the Building to Landlord. If Tenant is not then in
default, Tenant may remove from the Premises any trade fixtures,
equipment and movable furniture placed in the Premises by Tenant
whether or not such trade fixtures or equipment are fastened to
the Building; Tenant will not remove any trade fixtures or
equipment without Landlord's prior written consent if such
fixtures or equipment are used in the operation of the Building,
or if the removal of such fixtures or equipment will result in
impairing the structural strength of the Building. Whether or not
<PAGE> 119
Tenant is in default, Tenant will remove such alterations,
additions, improvements, trade fixtures, equipment and furniture
as Landlord has requested in accordance with Article 14. Tenant
will fully repair any damage occasioned by the removal of any
trade fixtures, equipment, furniture, alterations, additions, and
improvements. All trade fixtures, equipment, furniture,
inventory, effects, alterations, additions, and improvements on
the Premises after the end of the Term will be deemed
conclusively to have been abandoned and may be appropriated,
sold, stored, destroyed, or otherwise disposed of by Landlord
without notice to Tenant or any other person and without
obligation to account for them. Tenant will pay Landlord for all
expenses incurred in connection with the removal of such
property, including but not limited to the cost of storage, and
the cost of repairing any damage to the Building or Premises
caused by the removal of such property. Tenant's obligation to
observe and perform this covenant will survive the expiration or
other termination of this Lease.
ARTICLE 17. EMINENT DOMAIN.
If all of the Premises are taken by exercise of the power of
eminent domain (or conveyed by Landlord in lieu of such exercise)
this Lease will terminate on a date (the "termination date")
which is the earlier of the date upon which the condemning
authority takes possession of the Premises or the date on which
title to the Premises is vested in the condemning authority. If
more than 25% of the Rentable Area of the Premises is so taken,
Tenant will have the right to cancel this Lease by written notice
to Landlord given within 20 days after the termination date. If
less than 25% of the Rentable Area of the Premises is so taken,
or if the Tenant does not cancel this Lease according to the
preceding sentence, the Monthly Rent will be abated in the
proportion of the Rentable Area of the Premises so taken to the
Rentable Area of the Premises immediately before such taking, and
Tenant's Share will be proportionally recalculated. If 25% or
more of the Building or the Project is so taken, Landlord may
cancel this Lease by written notice to Tenant given within 30
days after the termination date. In the event of any such taking,
the entire award will be paid to Landlord, and Tenant will have
no right or claim to any part of such award; however, Tenant will
have the right to assert a claim against the condemning authority
in a separate action, so long as Landlord's award is not reduced
as a consequence of such claim, for Tenant's moving expenses and
trade fixtures owned by Tenant.
ARTICLE 18. DAMAGE AND DESTRUCTION.
(a) If the Premises or the Building is damaged by fire or
other insured casualty, Landlord will give Tenant
written notice of the time which will be needed to
repair such damage, as deemed by Landlord in its
<PAGE> 120
reasonable discretion, and the election (if any) which
Landlord has made according to this Article 18. Such
notice will be given before the 60th day (the "notice
date") after the fire or other insured casualty.
(b) If the Premises or the Building is damaged by fire or
other insured casualty to an extent which may be
repaired within 180 days after the notice date, as
reasonably determined by Landlord, Landlord will
promptly begin to repair the damage after the notice
date and will diligently pursue the completion of such
repair. In that event this Lease will continue in full
force and effect except that Monthly Rent will be abated
on a pro rata basis from the date of the damage until
the date of the completion of such repairs (the "repair
period") based on the proportion of the Rentable Area of
the Premises Tenant is unable to use during the repair
period.
(c) If the Premises or the Building is damaged by fire or
other insured casualty to an extent that may not be
repaired within 180 days after the notice date, as
reasonably determined by Landlord, then (1) Landlord may
cancel this Lease as of the case of such damage by
written notice given to Tenant on or before the notice
date or (2) Tenant may cancel this Lease as of the date
of such damage by written notice given to Landlord
within 10 days after Landlord's delivery of a written
notice that the repairs cannot be made within such 180-
day period. If neither Landlord nor Tenant so elects to
cancel this Lease, Landlord will diligently proceed to
repair the Building and Premises and Monthly Rent will
be abated on a pro rata basis during the repair period
based on the proportion of the Rentable Area of the
Premises Tenant is unable to use during the repair
period.
(d) Notwithstanding the provisions of subparagraphs (a),
(b), and (c) above, if the Premises or the Building or
the project are damaged by uninsured casualty, or if the
proceeds of insurance are insufficient to pay for the
repair of any damage to the Premises or the Building or
the Project, Landlord will have the option to repair
such damage or cancel this Lease as of the date of such
casualty by written notice to Tenant on or before the
notice date.
(e) If any such damage by fire or other casualty is the
result of the willful conduct or negligence or failure
to act of Tenant, its agents, contractors, employees, or
invitees, there will be no abatement of Monthly Rent as
otherwise provided for in this Article 18. Tenant will
have no rights to terminate this Lease on account of any
<PAGE> 121
damage to the Premises, the Building, or the Project,
except as set forth in this Lease.
(f) For purposes of this Article 18 and subjects to
subsections (a) thru (e) hereof, Landlord shall repair
or restore any portion of the alterations, additions or
improvements in the Premises or the decorations thereto
to the extent that such alterations, additions,
improvements and decorations thereto provided by
Landlord at the beginning of the Term. Landlord shall
have no further obligations pursuant to this Lease to
repair or restore any alterations, additions or
improvements in the Premises or the decorations thereto.
If Tenant desires any other or additional repairs or
restoration and if Landlord consents thereto, the same
shall be done at Tenant's sole cost and expense. Tenant
acknowledges that Landlord shall be enticed to the full
proceeds of any insurance coverage, carried by Landlord
for damage to alterations, additions, improvements or
decorations.
ARTICLE 19. SUBORDINATION.
19.1 General. This Lease and Tenant's rights under this
Lease are subject and subordinate to any ground or underlying
lease, mortgage, indenture, deed of trust, or other lien
encumbrance (each a "superior lien"), together with any renewals,
extensions, modifications, consolidations, and replacements of
such superior lien, now or in the future affecting or placed,
charged, or enforced against the Land, the Building, or all or
any portion of the Project or any interest of Landlord in them or
Landlord's interest in this Lease and the leasehold estate
created by this Lease (except to the extent any such instrument
expressly provides that this Lease is superior to such
instrument). This provision will be self-operative and no further
instrument of subordination will be required in order to effect
it. Notwithstanding the foregoing, Tenant will execute,
acknowledge, and deliver to Landlord, within 20 days after
written demand by Landlord, such documents as may be reasonably
requested by Landlord or the holder of any superior lien to
confirm or effect any such subordination or superiority, as
applicable.
19.2 Attornment. Tenant agrees that in the event that any
holder of a superior lien succeeds to Landlord's interest in the
Premises, Tenant will pay to such holder all Rent subsequently
payable under this Lease. Further, Tenant agrees that in the
event of the enforcement by the holder of a superior lien of the
remedies provided for by law or by such superior Lien, Tenant
will, upon request of any person or party succeeding to the
interest of Landlord as a result of such enforcement,
automatically become the Tenant of and attorn to such successor
<PAGE> 122
in interest without change in the terms or provisions of this
Lease. Such successor in interest will not be bound by:
(a) Any payment of Rent for more than one month in advance,
except prepayments in the name of security for the
performance by Tenant of its obligations under this
Lease that are actually received by such successor in
interest; or
(b) Any amendment or modification of this Lease made without
the written consent of such successor in interest (if
such consent was required under the terms of such
superior lien);
(c) Any claim against Landlord arising prior to the date on
which such successor in interest succeeded to Landlord's
interest; or
(d) Any claim or offset of Rent against the Landlord.
Upon request by such successor in interest and without cost to
Landlord or such successor in interest, Tenant will, within 20
days after written demand, execute, acknowledge, and deliver an
instrument or instruments confirming the attornment.
If Tenant shall fail to execute and deliver any such documents
provided for in this Article 19, then Tenant hereby appoints
Landlord its attorney-in-fact for the purpose of executing,
acknowledging, and delivering such documents on behalf of Tenant.
ARTICLE 20 ENTRY BY LANDLORD
Landlord, its agents, employees, and contractors may enter
the Premises at any time in response to an emergency and at any
other reasonable time upon reasonable notice to Tenant to:
(a) Inspect the Premises;
(b) Exhibit the Premises to prospective purchasers and
lenders, and, during the last eight (8) months of the
term, prospective tenants;
(c) Determine whether Tenant is complying with all its
obligations in this Lease;
(d) Supply cleaning service and any other service to be
provided by Landlord to Tenant according to this Lease;
(e) Post written notices of non-responsibility or similar
notices; or
<PAGE> 123
(f) Make repairs required of Landlord under the terms of
this Lease or make repairs to any adjoining space or
utility services or make repairs, alterations, or
improvements to any other portion of the Building.
Tenant, by this Article 20, waives any claim against Landlord,
its agents, employees, or contractors for damages for any injury
or inconvenience to or interference with Tenant's business, any
loss of occupancy or quite enjoyment of the Premises, or any
other loss occasioned by any entry in accordance with this
Article 20 provided same is not caused by the gross negligence or
wilful misconduct of Landlord. Landlord will at all times have
and retain a key with which to unlock all of the doors in, on, or
about the Premises (excluding Tenant's vaults, safes, and similar
areas designated in writing by Tenant in advance). Landlord will
have the right to use any and all means Landlord may deem proper
to open doors in and to the Premises in an emergency in order to
obtain entry to the Premises, provided that Landlord will
promptly repair any damages caused by any forces entry. Any entry
on the Premises by Landlord in accordance with this Article 20
will not be construed or deemed to be a forcible or unlawful
entry into or a detainer of the Premises or an eviction, actual
or constructive, of Tenant from the Premises or any portion of
the Premises, nor will any such entry entitled Tenant to damages
or an abatement of Monthly Rent' Additional Rent, or other
charges that this Lease requires Tenant to pay.
ARTICLE 21. INDEMNIFICATION, WAIVER, AND RELEASE.
21.1 Indemnification. Unless caused by the gross negligence
or wilful misconduct of Landlord, to the extent not prohibited by
law, Landlord, its employees and agents shall not be liable for
damage to person, property or business or resulting from the loss
of use thereof sustained by Tenant or other persons due to the
Building or any part thereof becoming out of repair or due to an
accident or due to any act or neglect of any tenant, occupant or
other person. Tenant further agrees that all personal property
upon the Premises, loading dock, holding areas, and freight
elevators shall be at the sole risk of Tenant.
Tenant will neither hold nor attempt to hold Landlord, its
employees, or agents liable for, and Tenant will indemnify and
defend and hold harmless Landlord, its employees, and agents from
and against, any and all demands, claims, causes of action,
fines, penalties, damages (including consequential damages),
liabilities, judgments, and expenses (including without
limitation reasonable attorneys' fees) incurred in connection
with or arising from:
(a) the use or occupancy or manner of use or occupancy of
the Premises or any common areas by Tenant or any person
claiming under Tenant;
<PAGE> 124
(b) any activity, work, or thing done or permitted by Tenant
in or about the Premises, the Building, or the Project;
(c) any breach by Tenant or its employees, agents,
contractors, or invitees of this Lease; and
(d) any injury or damage to the person, property, or
business of Tenant its employees, agents, contractors,
or invitees entering upon the Premises under the express
or implied invitation of Tenant.
If any action or Proceeding is brought against Landlord, its
employees, or agents by reason of any such claim for which Tenant
has indemnified Landlord, Tenant upon written notice from
Landlord will defend the same at Tenant's expense, with counsel
reasonably satisfactory to Landlord.
21.1 Waiver and Release. Tenant, as a material part of the
consideration to Landlord for this Lease, by this Section 21.2
waives and releases all claims against Landlord, its employees,
and agents with respect to all matters for which Landlord has
disclaimed liability pursuant to the provisions of this Lease.
ARTICLE 22. SECURITY DEPOSIT.
INTENTIONALLY OMITTED
ARTICLE 23. QUIET ENJOYMENT.
Landlord covenants and agrees with Tenant that so long as
Tenant pays the Rent and observes and performs all the terms,
covenants, and conditions of this Lease on Tenants part to be
observed and performed, Tenant may peaceably and quietly enjoy
the Premises subject, nevertheless, to the terms and conditions
of this Lease, and Tenant's possession will not be disturbed by
anyone claiming by, through, or under Landlord.
ARTICLE 24. EFFECT OF SALE.
A sale, conveyance, or assignment of the Building or the
Project will operate to release Landlord from liability from and
after the effective date of such sale, conveyance, or assignment
upon all of the covenants, terms, and conditions of this Lease,
express or implied, except those labilities that arose prior to
such effective date, and, after the effective date of such sale,
conveyance, or assignment Tenant will look solely to Landlord's
successor in interest in and to this Lease. This Lease will not
be affected by any such sale, conveyance, or assignment, and
Tenant will attorn to Landlord's successor in interest to this
Lease from and after such effective date.
<PAGE> 125
ARTICLE 25. DEFAULT.
25.1 Events of Default. The following events are referred to,
collectively, as "events of default" or, individually, as an
"event of default":
(a) Tenant fails to pay any Rent or other monetary
obligation when due, and such failure constitutes for 5
business days after written notice from Landlord
however, Tenant will not be entitled to more than 1
written notice for monetary defaults during any 12-month
period, and if after such written notice any Rent is not
paid when due, an event of default will be considered to
have occurred without further notice;
(b) Tenant vacates or abandons the Premises;
(c) This Lease or the Premises or any part of the Premises
is taken upon execution or by other process of law
directed against Tenant or is taken upon or subject to
any attachment by any creditor of Tenant or offset
against Tenant, and said attachment is not discharged or
disposed of within 15 days after its levy;
(d) Tenant or any guarantor of Tenant's obligations under
this Lease ("Guarantor") files a petition in bankruptcy
or insolvency or for reorganization or arrangement under
the bankruptcy laws of the United States or under any
insolvency act of any state, or admits the material
allegations of any such petition by answer or otherwise,
or admits in writing its inability to meet its debts as
they mature, or is dissolved or makes an assignment for
the benefit of creditors;
(e) Involuntary proceedings under any such bankruptcy law or
insolvency act or for the dissolution of Tenant or any
Guarantor are instituted against Tenant or any
Guarantor, or a receiver or trustee is appointed for all
or substantially all of the property of Tenant or any
Guarantor, and such preceding is not dismissed or such
receivership or trusteeship vacated within 60 days after
such institution or appointment;
(f) INTENTIONALLY OMITTED;
(g) Tenant violates the terms of Article 9 "Assignment and
Subletting";
(h) Tenant breaches any of the agreements, terms, covenants,
or conditions of this Lease and such breach involves a
hazardous condition and is not cured immediately upon
written notice to Tenant;
<PAGE> 126
(i) Tenant breaches any of the other agreements, terms,
covenants, or conditions that this Lease requires Tenant
to perform, and such breach continues for a period of 30
days after written notice from Landlord to Tenant or, if
such breach cannot be cured reasonably within such 30-
day period, if Tenant fails to diligently commence to
cure such breach within 30 days after written notice
from Landlord and to complete such cure within a
reasonable time thereafter; or
(j) Any guaranty of the Lease obligations becomes
unenforceable in whole or in part for any reason.
25.2 Landlord's Remedies. If any one or more events of
default set forth in Section 25.1 occurs then Landlord has the
right, at its election:
(a) To give Tenant written notice of Landlord's intention to
terminate this Lease on the earliest date permitted by
law or on any later date specified in such notice, in
which case Tenant's right to possession of the Premises
will cease and this Lease will be terminated, except as
to Tenant's liability, as if the expiration of the term
fixed in such notice were the end of the Term;
(b) Without further demand or notice, and without
terminating this Lease, to reenter and take possession
of the Premises or any part of the Premises, repossess
the same, expel Tenant and those claiming through or
under Tenant, and remove the effects of both or either,
using such force for such purposes as may be necessary,
without being liable for prosecution, without being
deemed guilty of any manner of trespass, and without
prejudice to any remedies for arrears of Monthly Rent or
other amounts payable under this Lease or as a result of
any preceding breach of covenants or conditions; or
(c) Without further demand or notice to cure any event of
default and to charge Tenant for the cost of effecting
such cure, including without limitation reasonable
attorneys' fees and interest on the amount so advanced
at the rate set forth in Section 27.21, provided that
Landlord will have no obligation to cure any such event
of default of Tenant
Should Landlord elect to reenter as provided in subsection
(b), or should Landlord take possession pursuant to legal
proceedings or pursuant to any notice provided by law, Landlord
may, from time to time, without terminating Lease, relet the
Premises or any part of the Premises in Landlord's or Tenant's
name, but for the account of Tenant, for such term or terms
(which may be greater or less than the period which would
<PAGE> 127
otherwise have constituted the balance of the Term) and on such
conditions and upon such other term or terms (which may include
concessions of free rent and alteration and repair of the
Premises) as Landlord, in its reasonable discretion, may
determine, and Landlord may collect and receive the rents from
such reletting. Landlord will in no way be responsible or liable
for any failure to relet the Premises, or any part of the
Premises, or far any failure to collect any rent due upon such
reletting. No such reentry or taking possession of the Premises
by Landlord will be construed as an election an Landlord's part
to terminate this Lease unless a written notice of such intention
is given to Tenant. No written notice from Landlord under this
Section or under a forcible or unlawful entry and detainer
statute or similar law will constitute an election by Landlord to
terminate this Lease unless such Notice specifically so states.
Landlord reserves the right following any such reentry or
reletting to exercise is right to terminate this Lease by giving
Tenant such written notice, in which event this Lease will
terminate as specified in such notice.
25.3 Certain Damages. In the event that Landlord does not
elect to terminate this Lease as permitted in Section 25.2(a),
but on the contrary elects to take possession as provided in
Section 25.2(b), Tenant will pay to Landlord Monthly Rent and
other sums as provided in this Lease that would be payable under
this Lease if such repossession had not occurred, less the net
proceeds, if any, of any reletting of the Premises after
deducting all of Landlord's reasonable expenses in connection
with such reletting, including without limitation all
repossession costs, brokerage commissions, attorneys' fees,
expenses of employees, alteration and repair costs, and expenses
of preparation for such reletting. Tenant will pay such Rent and
other sums to Landlord monthly on the day on which the Monthly
Rent would have been payable under this Lease if possession had
not been retaken, and Landlord will be entitled to receive such
Rent and other Sums from Tenant on each such day.
25.4 Continuing Liability After Termination. If this Lease
is terminated on account of the occurrences of an event of
default, Tenant will remain liable to Landlord for damages in an
amount equal to the Rent and other amounts that would have been
owing by Tenant for the balance of the Term, had this Lease not
been terminated less the net proceeds, if any, of any reletting
of the Premises by Landlord subsequent to such termination, after
deducting all of Landlord's expenses in connection with such
reletting, including without limitation the expenses in Section
25.3. Landlord will be enticed to collect such damages from
Tenant monthly on the day on which Monthly Rent and other amounts
would have been payable under this Lease if this Lease had not
been terminated, and Landlord will be entitled to receive such
monthly Rent and other amounts from Tenant on each such day.
Alternatively, at the option of Landlord, in the event this Lease
<PAGE> 128
is so terminated, Landlord will be entitled to recover against
Tenant as damages for loss of the bargain and not as a penalty:
(a) The worth at the time of award of the unpaid Rent that
bad been earned at the time of termination;
(b) The worth at the time of award of the amount by which
the unpaid Rent that would have been earned after
termination until the time of award exceeds the amount
of such rent loss that Tenant proves could have been
reasonably avoided;
(c) The worth at the time of award of the amount by which
the unpaid Rent for the balance of the Term of this
Lease (had the same not been so terminated by Landlord)
after the time of award exceeds the amount of such
rental loss that Tenant proves could be reasonably
avoided;
(d) Any other amount necessary to compensate Landlord for
all the detriment proximately caused by Tenant's failure
to perform its obligations under this Lease or which in
the ordinary course of things would be likely to result
therefrom.
The "worth at the time of award" of the amounts referred to in
clauses (a) and (b) above is computed by adding interest at the
per annum interest rate described in Section 27.21 on the date on
which this Lease is terminated from the date of termination until
the time of the award. The "worth at the time of award" of the
amount referred to in clause (c) above is computed by discounting
such amount at the discount rate of the Federal Reserve Bank of
New York, New York, at the time of award plus 1%.
25.5 Cumulative Remedies. Any suit or suits for the recovery
of the amounts and damages set forth in Sections 25.3 and 25.4
may be brought by Landlord, from time to time, at Landlord's
election, and nothing in this Lease will be deemed to require
Landlord to await the date upon which this Lease or the Term
would have expired had there occurred no event of default. Each
right and remedy provided for in this Lease is cumulative and is
in addition to every other right or remedy provided for in this
Lease or now or after the Lease Date existing at law or in equity
or by statute or otherwise, and the exercise or beginning of the
exercise by Landlord of any one or more of the right or remedies
provided for in this Lease or now or after the Lease Date
existing at law or in equity or by statute or otherwise will not
preclude the simultaneous or later exercise by Landlord of any or
all other rights or remedies provided for in this Lease or now or
after the Lease Date existing at law or in equity or by statute
or otherwise. All costs incurred by Landlord in collecting any
amounts and damages owing by Tenant pursuant to the provisions of
<PAGE> 129
this Lease or to enforce any provision of this Lease, including
reasonable attorneys' fees from the date any such matter is
turned over to an attorney, whether or not one or more actions
are commenced by Landlord, will also be recoverable by Landlord
from Tenant.
25.6 Waiver Of Redemption. Tenant waives any right of
redemption arising as a result of Landlord's exercise of its
remedies under this Article 25.
ARTICLE 26. PARKING.
Tenant will be entitled to use only the parking spaces set
forth in Section 1.1(q) during the Term subject to the rules and
regulations set forth in Exhibit D, and any amendments or
additions to them. The parking charges set forth in Section
1.1(r), if any, will be due and payable in advance at the same
time and place as Monthly Rent. Tenant's parking spaces will be
unassigned, nonreserved, and nondesignated. Landlord reserves the
right to adjust the parking charges in Landlord's sole discretion
at any time after 30 days' prior written notice.
Neither Landlord nor any operator of the parking areas within
the Project, as the same are designated and modified by Landlord,
in its sole discretion, from time to time (the "parking areas")
will be liable for loss of or damage to any vehicle or any
contents of such vehicle or accessories to any such vehicle, or
any property left in any of the parking areas, resulting from
fire, theft, vandalism, accident, conduct of other users of the
parking areas and other persons, or any other casualty or cause.
Further, Tenant understands and agrees that (a) Landlord will not
be obligated to provide any traffic control, security protection
or operator for the parking areas; (b) Tenant uses the parking
areas at its own risk; and (c) Landlord will not be liable for
personal injury or death, or theft, loss of, or damage to
property. Tenant waives and releases Landlord from any and all
liability arising out of the use of the parking areas by Tenant,
its employees, agents, invitees, and visitors, whether brought by
any of such persons or any other person.
Tenant's right to use the parking areas will be in common
with other tenants of the Project and with other parties
permitted by Landlord to use the parking areas. Landlord reserves
the right to assign and reassign, from time to time, particular
parking spaces for use by persons selected by Landlord, provided
that Tenant's rights under the Lease are preserved. Landlord
will not be liable to Tenant for any unavailability of Tenant's
designated spaces, if any, nor will any unavailability entitle
Tenant to any refund, deduction, or allowance. Tenant will not
park in any numbered space or any space designated as: RESERVED,
HANDICAPPED, VISITORS ONLY, or LIMITED TIME PARKING (or similar
designation).
<PAGE> 130
If the parking areas are damaged or destroyed, or if the use
of the parking areas is limited or prohibited by any governmental
authority, or the use or operation of the parking areas is
limited or prevented by strikes or other labor difficulties or
other causes beyond Landlord's control, Tenant's inability to use
the parking spaces will not subject Landlord or any operator of
the parking areas to any liability to Tenant and will not relieve
Tenant of any of its obligations under the Lease and the Lease
will remain in full force and effect.
Tenant has no right to assign or sublicense any of its rights
in the parking spaces, except as part of a permitted assignment
or sublease of the Lease.
ARTICLE 27. MISCELLANEOUS.
27.1 No Offer. Submission of the Lease to Tenant is for
examination and shall not bind Landlord in any manner. No lease
or obligations of Landlord shall arise until this instrument is
signed by both Landlord and Tenant and delivery is made to each;
provided, however, the execution and delivery by Tenant of this
Lease to Landlord or Landlord's agent shall constitute an
irrevocable offer by Tenant to lease the Premises on the terms
and conditions herein contained, which offer may not be withdrawn
or revoked for 15 days after such execution and delivery.
27.2 Joint and Several Liability. If Tenant is composed of
more than one signatory to this Lease, each signatory will be
jointly and severally liable with each other signatory for
payment and performance according to this Lease. The act of,
written notice to, written notice from, refund to, or signature
of any signatory to this Lease (including without limitation
modifications of this Lease made by fewer than all such
signatories) will bind every other signatory as though every
other signatory had so acted, or received or given the written
notice or refund, or signed.
27.3 No Construction Against Drafting Party. Landlord and
Tenant acknowledge that each of them and their counsel have had
an opportunity to review this Lease and that this Lease will not
be construed against Landlord merely because Landlord has
prepared it.
27.4 Time of the Essence. Time is of the essence of each
and every provision of this Lease.
27.5 No Recordation. Tenant's recordation of this Lease or
any memorandum or short form of it will be void and an event of
default under this Lease. Tenant shall, at the request of
Landlord, execute a short-form lease ant have it properly
acknowledged for the purpose of recording. The cost of recording
such short-form lease shall be borne by Landlord.
<PAGE> 131
27.6 No Waiver. No waiver by Landlord of any agreement,
condition or provision contained in this Lease will be valid or
binding unless expressed in writing and signed by Landlord. The
waiver by Landlord of any agreement, condition, or provision
contained in this Lease will not be deemed to be a waiver of any
subsequent breach of the same or any other agreement, condition,
or provision contained in this Lease, nor will any custom or
practice that may grow up between the parties in the and
administration of the terms of this Lease be construed to waive
or to lessen the right of Landlord to insist upon the
performance-by Tenant in strict accordance with the terms of this
Lease. The subsequent acceptance of Rent by Landlord will not be
deemed to be a waiver of any preceding breach by Tenant of any
agreement, condition, or provision of this Lease, other than the
failure of Tenant to pay the particular Rent so accepted,
regardless of Landlord's knowledge of such preceding breach at
the time of acceptance of such Rent.
27.7 Limitation on Recourse. Tenant specifically agrees to
look solely to Landlord's interest in the Project for the
recovery of any judgments from Landlords. It is agreed that
Landlord (and its agents, shareholders, venturers, and partners,
and their shareholders, venturers, and partners and all of their
officers, directors, and employees) will not be personally liable
for any such judgments.
27.8 Estoppel Certificates. At any time and from time to
time but within 5 business days after prior written request by
Landlord, Tenant will execute, acknowledge, and deliver to
Landlord or such other person as Landlord shall direct, promptly
upon request, a certificate supplied to Tenant certifying (a)
that this Lease is unmodified and in full force and effect or, if
there have been modifications, that this Lease is in full force
and effect, as modified, and stating the date and nature of each
modification; (b) the date, if any, to which Rent and other sums
payable under this Lease have been paid; (c) that no written
notice of any default has been delivered to Landlord which
default has not been cured, except as to defaults specified in
said certificate; (d) that the Tenant has no knowledge of and
that there is no event of default under this Lease or an event
which, with notice or the passage of time, or both. would result
in an event of default under this Lease, except for defaults
specified in said certificate; and (e) such other matters as may
be reasonably requested by Landlord. Any such certificate may be
relied upon by any prospective purchaser or existing or
prospective mortgagee or beneficiary under any deed of trust of
the Building or any part of the Projects. Tenant's failure to
deliver such a certificate within such time will be conclusive
evidence of the matters set forth in it, and such failure shall
be an event of default.
<PAGE> 132
27.9 Attorneys' Fees. If Landlord and Tenant litigate any
provision of this Lease or the subject matter of this Lease, the
unsuccessful litigant will pay to the successful litigant all
costs and expenses, including reasonable attorneys' fees and
court costs, incurred by the successful litigant at trial and on
any appeal. If, without fault, either Landlord or Tenant is made
a party to any litigation instituted by or against the other, the
other will indemnify the faultless one against all loss,
liability, and expense, including reasonable attorneys' fees and
court costs, incurred by it in connection with such litigation.
27.10 No Merger. The voluntary or other surrender of this
Lease by Tenant or the cancellation of this Lease by mutual
agreement of Tenant and Landlord or the termination of this Lease
on account of Tenant's default will not work a merger, and will,
at Landlord's option, (a) terminate all or any subleases and
subtenancies or (b) operate as an assignment to Landlord of all
or any subleases or subtenancies. Landlord's option under this
Section 27.10 will be exercised by written notice to Tenant and
all known subleases or subtenants in the Premises or any part of
the Premises.
27.11 Holding Over. Tenant will have no right to remain in
possession of all or any part of the Premises after the
expiration of the Term and Landlord may, at its option, re-enter
and take possession of the Premises, reserving its rights to
collect damages sustained by reason of Tenant's unlawful
retention of possession of the Premises or any part thereof. If
Tenant remains in possession of all or any part of the Premises
after the expiration of the Term, with the express written
consent of Landlord: (a) such tenancy will be deemed to be a
periodic tenancy from month-to-month only; (b) such tenancy will
not constitute a renewal or extension of this Lease for any
further term; and (c) such tenancy may be terminated by Landlord
upon the earlier of 30 days' prior written notice or the earliest
date permitted by law. In such event, Monthly Rent will be
increased to an amount equal to 150% of the Monthly Rent payable
during the last month of the Term, and any other sums due under
this Lease will be payable in the amount and at the times
specified in this Lease. During such month-to-month tenancy,
Tenant will observe every other term, condition, and covenant
contained in this Lease.
27.12 Notices. Any notice, request, demand, consent,
approval, or other communication required or permitted under this
Lease must be in writing and will be deemed to have been given
when personally delivered, sent by facsimile with delivery
acknowledged by the sending machine, deposited with any
nationally recognized overnight carrier that routinely issues
receipts, or deposited in any depository regularly maintained by
the United States Postal Service, postage prepaid, certified
mail, return receipt requested addressed to the party for whom it
<PAGE> 133
is intended at its address(a) set forth in Section 1.1. Either
Landlord or Tenant may add additional address or change its
address for purpose of receipt of any such communication by
giving 10 days' prior written notice of such change to the other
party in the manner prescribed in this Section 27.12.
27.13 Severability. If any provision of this Lease proves
to be illegal, invalid, or unenforceable, the remainder of this
Lease will not be affected by such finding, and in lieu of each
provision of this Lease that is illegal, invalid, or
unenforceable a provision shall be deemed added as a part of this
Lease as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid,
and enforceable.
27.14 Written Amendment Required. No amendment,
alteration, modification of, or addition to the Lease will be
valid or binding unless expressed in writing and signed by
Landlord and Tenant. Tenant agrees to make any modifications of
the terms and provisions of this Lease required or requested by
any lending institution providing financing for the Building, or
Project, as the case may be, provided that no such modifications
will materially adversely affect Tenant's rights and obligations
under this Lease.
27.15 Entire Agreement. This Lease, the exhibits and
addenda, if any, contain the entire agreement between Landlord
and Tenant. No provisions or representations, except as contained
in this Lease, have been made to Tenant respecting the condition
or the manner of operating the Premises, the Building, or the
Project.
27.16 Captions. The captions of the various articles and
sections of this Lease are for convenience and do not necessarily
define, limit, describe, or construe the contests of such
articles or sections.
27.17 Notice of Landlord's Default. In the event of any
alleged default in the obligation of Landlord under this Lease,
Tenant will deliver to Landlord written notice listing the
reasons for Landlord's default and Landlord will have 30 days
following receipt of such notice to cure such alleged default or,
in the event the alleged default cannot reasonably be cured
within a 30 day period, to commence action and proceed diligently
to cure such alleged default. A copy of such notice to Landlord
will be sent to any holder of a mortgage or other encumbrance on
the Building or Project of which Tenant has been notified in
writing, and any such holder will also have an additional like
period to cure such alleged default.
<PAGE> 134
27.18 Authority. Tenant and the party executing this Lease
on behalf of Tenant represent to Landlord that such party is
authorized to do so by requisite action of the board of directors
or partners, as the case may be, and agree upon request to
deliver to Landlord a resolution or similar document to that
effect. Landlord and the party executing this Lease on behalf of
the Landlord represent to Tenant that such party is authorized to
do so by requisite action of the board of directors.
27.19 Brokers. Tenant represents and warrants that it has
not consulted or negotiated with any broker, finder or agent with
regard to the Premises except the broker named in Section 1.1, if
any. Tenant agrees to hold Landlord harmless and indemnify
Landlord against all costs, expenses, attorney's fees, or other
liability for commissions or other compensation or charges
claimed by any broker, finder or agent claiming the same by,
through or under Tenant and such indemnity shall survive the
expiration or earlier termination of this Lease.
27.20 Governing Law. This Lease will be governed by and
construed pursuant to the laws of the state in which the Project
is located.
27.21 Late Payments. Any Rent or other monetary obligation
due Landlord that is not paid when due will accrue interest at a
rate of the Prime Rate plus 5% per annum (but in no event in an
amount in excess of the maximum rate allowed by applicable law)
from the date on which it was due under the date on which it is
paid in full with accrued interest. In addition to the
foregoing, Tenant shall pay to Landlord a late charge of 5% of
the amount due.
27.22 No Easements for Air or Light. Any diminution or
shutting off of lights, air, or view by any structure that may be
erected on lands adjacent to the Building will in no way affect
this Lease or impose any liability on Landlord.
27.23 Tax Credits. Landlord is entitled to claim all tax
credits and depreciation attributable to leasehold improvements
in the Premises. Promptly after Landlord's demand, Landlord and
Tenant will prepare a detailed list of the leasehold improvements
and fixtures and their respective costs for which Landlord or
Tenant has paid. Landlord will be entitled to all credit and
depreciation for those items for which Landlord has paid by means
of any Tenant finish allowance or otherwise. Tenant will be
entitled to any tax credits and depreciation for all items for
which Tenant has paid with funds not provided by Landlord.
27.24 Relocation of the Premises.
INTENTIONALLY OMITTED
<PAGE> 135
27.25 Financial Reports. Within 15 days after Landlord's
request, Tenant will furnish Tenant's most recent audited
financial statements (including any notes to them) to Landlord,
or, if no such audited statements have been prepared, such other
financial statements (and notes to these) as they have been
prepared by an independent certified public accountant or,
failing those, Tenant's internally prepared financial statements.
Tenant will discuss its financial statements with Landlord.
Landlord will not disclose any aspect of Tenant's financial
statement that Tenant designates to Landlord as confidential
except (a) to Landlord's lenders or prospective purchasers of the
Project, (b) in litigation between Landlord and Tenant, and (c)
if required by court order or subpoena.
27.26 Landlord's Fees. Whenever Tenant requests Landlord
to take any action or give any consent required or permitted
under this Lease, Tenant will reimburse Landlord for all of
Landlord's reasonable costs incurred in reviewing the proposed
action or consent, including without limitation reasonable
attorneys', engineers' or architects' fees, within 10 days after
Landlord's delivery to Tenant of a statement of such costs.
Tenant will be obligated to make such reimbursement without
regard to whether Landlord consents to any such proposed action.
27.27 Binding Effect. The covenants, conditions, and
agreements contained in this Lease will bind and inure to the
benefit of Landlord and Tenant and their respective heirs,
distubutees, executors, administrators, successors, and, except
as otherwise provided in this Lease, their assigns.
27.28 Terms. The necessary grammatical changes required to
make the provisions hereof apply either to corporations,
partnerships, or individuals, men or women, as the case may be,
shall in all cases be assumed as though in each case fully
expressed.
27.29 Definition of Landlord. All indemnities, covenants
and agreements of Tenant contained herein which inure to the
benefit of Landlord shall be construed to also inure to the
benefit of Landlord's beneficiaries and their partners, agents
and employees and employees of their agents.
27.30 Rights Cumulative. All rights and remedies of
Landlord under this Lease shall be cumulative and none shall
exclude any other rights and remedies allowed by law.
27.31 Change of Building Name. Landlord reserves the right
at any time and without liability to any Tenant to change the
name by which the Building or Project is designated.
<PAGE> 136
27.32 Force Majeure. When a period of time is herein
prescribed for any action to be taken by landlord, Landlord shall
not be liable or responsible for, and there shall be excluded
from the computation for any such period of time, any delays due
to strikes, riots, acts of God, shortages of labor or materials,
war, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of Landlord.
27.33 Third Party Beneficiary. It is specifically
understood and agreed that no person shall be a third party
beneficiary hereunder, and that none of the provisions of this
Lease shall be for the benefit of or be enforceable by anyone
other than the parties hereto, and that only the parties hereto
and their permitted assignees shall have rights hereunder.
27.34 No Joint Venture. Landlord and Tenant are not and
shall not be deemed to be, for any purpose, partners or joint
venturers with each other.
27.35 Remedies. If Tenant believes that Landlord has
unreasonably withheld its consent in any instances in connection
with this Lease, Tenants's sole remedy will be to seek a
declaratory judgment that Landlord has unreasonably withheld its
consent or an order of specific performance or mandatory
injunction in connection with Landlord's agreement to give its
consent, and Tenant shall not be entitled to make claim for, and
hereby expressly waives, any claim for damage by reason of
Landlord withholding its consent.
27.36 WAIVER OF JURY TRIAL. LANDLORD AND TENANT BY THIS
SECTION 27.36 WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES TO THIS LEASE
AGAINST THE OTHER ON ANY MATTERS WHATSOEVER ARISING OUT OF OR IN
ANY WAY CONNECTED WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD
AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, OR ANY
OTHER CLAIMS (EXCEPT CLAIMS FOR PERSONAL INJURY OR PROPERTY
DAMAGE), AND ANY EMERGENCY STATUTORY OR ANY OTHER STATUTORY
REMEDY.
Landlord and Tenant have executed this Lease as of the day
and year first above written.
Tenant: Landlord:
IGG International, Inc. MBL Life Assurance Corporation
/s/ Bradley J. Carver /s/ Andrew P. Galenas
President Senior Vice President
Attest/Witness: Attest/Witness:
/s/ B. David Sandberg /s/ Daniel Davitt
Attorney Senior Assistant Manager
<PAGE> 137
CLERK'S CERTIFICATE
The undersigned, being the Clerk (or Assistant Clerk) of IGG
International Inc., a Nevada Corporation, does hereby certify
that a meeting of the Board of Directors of said corporation,
duly called and held for the purpose and at which meeting a
quorum of the Directors was present and voting throughout, the
execution and delivery of the foregoing Lease by the party
signing the same was authorized and directed.
I further certify that at the time of the execution of the
foregoing Lease, the party signatory thereto held the office set
forth above adjacent to such party's signature.
Date as of the execution date of the foregoing Lease.
/s/ illegible signature
Clerk (or Assistant Clerk)
EXHIBIT A
The Premises
map omitted for transmission on EDGAR
EXHIBIT B
Legal Description of the Land
EXHIBIT B
All that certain lot, piece or parcel of land situated,
lying and being in the City of Boston, Suffolk County,
Massachusetts, with the buildings thereon, bounded and described
as follows:
NORTHERLY: by Providence Street, six hundred seven
and 40/100 (607.40) feet,
EASTERLY: by Arlington Street, seventy-five and
06/100 (75.06) feet,
SOUTHERLY: by St. James Avenue, six hundred four
and 31/100 (604.31) feet and
WESTERLY: by Berkeley Street, seventy-five (75)
feet.
containing 45,439 square feet, more or less and being the same
premises conveyed by deed dated April 30, 1981 and recorded with
Suffolk County Registry of Deeds, Book 9741, Page 184.
<PAGE> 138
EXHIBIT C
PLANS AND SPECIFICATIONS
Map omitted for transmission on EDGAR.
EXHIBIT D
RULES AND REGULATIONS
1. Landlord may from time to time adopt appropriate systems
and procedures for the security or safety of the Building, any
persons occupying, using, or entering the Building, or any
equipment, finishings or contents of the Building, and Tenant
will comply with Landlord's reasonable requirements relative to
such systems and procedures.
2. The sidewalks, halls, passages, exits, entrances,
elevators, and stairways of the Building will not be obstructed
by any tenants or used by any of them for any purpose other than
for ingress to and egress from their respective Premises. The
halls, passages, exits, entrances, elevators, escalators, and
stairways are not for the general public, and Landlord will in
all cases retain the right to control and prevent access to such
halls, passages, exits, entrances, elevators, and stairways of
all persons whose presence in the judgment of Landlord would be
prejudicial to the safety, character, reputation, and interests
of the Building and its tenants, provided that nothing contained
in these rules and regulations will be construed to prevent such
access to persons with whom any tenant normally deals in the
ordinary course of its business, unless such persons are engaged
in illegal activities. No tenant and no employee or invitee of
any tenant will go upon the roof of the Building except such roof
or portion of such roof as may be continuous to the Premises of a
particular tenant and may be designated in writing by Landlord as
a roof deck or roof garden area. No Tenant will be permitted to
place or install any object (including without limitation radio
and television antennas, loudspeakers, sound amplifiers,
microwave dishes, solar devices, or similar devices) on the
exterior of the Building or on the roof of the Building.
3. No sign, placard, picture, name, advertisement, or
written notice visible from the exterior of Tenant's Premises
will be inscribed, painted, affixed, or otherwise displayed by
Tenant on any part of the Building or the Premise without the
prior written consent of Landlord. Landlord will adopt and
furnish to Tenant general guidelines relating to signs inside the
Building on the office floors. Tenant agrees to conform to such
guidelines. All approved signs or lettering on doors will be
printed, painted, affixed, or inscribed at the expense of the
Tenant by a person approved by Landlord. Other than draperies
expressly permitted by Landlord and building standard window
<PAGE> 139
treatments, material visible from outside the Building will not
be permitted. In the event of the violation of this rule by
Tenant, Landlord may remove the violating items without any
liability, and may charge the expense incurred by such removal to
the tenant or tenants violating this rule.
4. No cooking will be done or permitted by any tenant on the
Premises, except in areas of the Premises which are specially
constructed for cooking and except that use by the tenant of
microwave ovens and Underwriters' Laboratory approved equipment
for brewing coffee, tea, hot chocolate, and similar beverages
will be permitted, provided that such use is in accordance with
all applicable federal, state, and city laws, codes, ordinances,
rules, and regulations.
5. No tenant will employ any person or persons other than
the cleaning service of Landlord for the purpose of cleaning the
Premises, unless otherwise agreed to by Landlord in writing.
Except with the written consent of Landlord, no person or persons
other than those approved by Landlord will be permitted to enter
the Building for the purpose of cleaning it. No tenant will cause
any unnecessary labor by reason of such tenant's carelessness or
indifference in the preservation of good order and cleanliness.
Should Tenant's actions result in any increased expense for any
required cleaning, Landlord reserves the right to assess Tenant
for such expenses.
6. The toilet rooms, toilets, urinals, wash bowls and other
plumbing fixtures will not be used for any purposes other than
those for which they were constructed, and no sweepings, rubbish,
rags, or other foreign substances will be thrown in such plumbing
fixtures. All damages resulting from any misuse of the fixtures
will be borne by the tenant who, or whose servants, employees,
agents, visitors, or licensees, caused the same.
7. No tenant, or tenant's invitees or licensees, will in any
way deface any part of the Premises or the Building of which they
form a part In those portions of the Premises where carpet has
been provided directly or indirectly by Landlord, Tenant will at
its own expense install and maintain pads to protect the carpet
under all furniture having casters other than carpet casters.
8. No tenant will alter, change, replace, or rekey any lock
or install a new lock or a knocker on any door of the Premises.
Landlord, its agents, or employees will retain a pass (master)
key to all door locks on the Premises. Any new door locks
required by Tenant or any change in keying of existing locks will
be installed or changed by Landlord following tenant's written
request to Landlord and will be at Tenant's expense. All new
locks and rekeyed locks will remain operable by Landlord's pass
(master) key. Landlord will furnish each tenant, free of charge,
with two (2) keys to each suite entry door lock on the Premises.
<PAGE> 140
Landlord will have the right to collect a reasonable charge for
additional keys and cards requested by any tenant. Each tenant,
upon termination of its tenancy, will deliver to Landlord all
keys and access cards for the Premises and Building that have
been furnished to such tenant.
9. The elevator designated for freight by Landlord will be
available for use by all tenants in the Building during the hours
and pursuant to such procedures as Landlord may determine from
time to time. The persons employed to move Tenant's equipment,
material, furniture, or other property in or out of the Building
must be acceptable to Landlord. The moving company must be a
locally recognized professional mover, whose primary business is
the performing of relocation services, and must be bonded and
fully insured. A certificate or other verification of such
insurance must be received and approved by Landlord prior to the
start of any moving operations. Insurance must be sufficient, in
Landlord's sole opinion, to cover all personal liability, theft
or damage to the Project, including but not limited to floor
coverings, doors, walls, elevators, stairs, foliage, and
landscaping. Special care must be taken to prevent damage to
foliage and landscaping adverse weather. All moving operations
will be conducted at such times and in such a manner as Landlord
will direct, and all moving will take place during non-Business
Hours unless Landlord agrees in writing otherwise. Tenant will be
responsible for the provision of building security during all
moving operations, and will be liable for all losses and damages
sustained by any party as a result of the failure to supply
adequate security. Landlord will have the right to prescribe the
weight, size, and position of all equipment, materials,
furniture, or other property brought into the Building. Heavy
objects will, if considered necessary by Landlord, stand on wood
strips of such thickness as is necessary to properly distribute
the weight. Landlord will not be responsible for loss of or
damage to any such property from any cause, and all damage done
to the Building by moving or maintaining such property will be
repaired at the expense of Tenant. Landlord reserves the right
to inspect all such property to be brought into the Building and
to exclude from the Building all such property which violates any
of these rules and regulations or the Lease of which these rules
and regulations are a part. Supplies, goods, materials, packages,
furniture, and all other items of every kind delivered to or
taken from the Premises will be delivered or removed through the
entrance and route designated by Landlord, and Landlord will not
be responsible for the loss or damage of any such property.
10. No tenant will use or keep in the Premises or the
Building any kerosene, gasoline or inflammable or combustible or
explosive fluid or material or chemical substance other than
limited quantities of such materials or substances reasonably
necessary for the operation or maintenance of office equipment or
limited quantities of cleaning fluids hard solvents required in
<PAGE> 141
tenant's normal operations in the Premises, which shall be stored
in accordance with applicable law. Without Landlord's prior
written approval, no tenant will use any method of heating or air
conditioning other than that supplied by Landlord. No tenant will
use or keep or permit to be used or kept any foul or noxious gas
or substance in the Premises.
11. Tenants shall not, prior to or during the Term, either
directly or indirectly, employ or permit the employment of any
contractor, mover, mechanic or laborer, or permit any materials
in the Premises, if the use of such contractor, mover, mechanic
or laborer or such materials would, in Landlord's opinion. create
any difficulties, strike or jurisdictional dispute with other
contractors, movers, mechanics or laborers engaged by Landlord,
tenants, or others, or would in any way disturb the construction,
maintenance, cleaning, repair, management security or operation
of the Building, Project or any part thereof. Any tenant, upon
demand by Landlord, shall cause all contractors, movers,
mechanics, laborers or materials causing such interference,
difficulty or conflict to leave or be removed from the Project
immediately.
12. Landlord will have the right to prohibit any advertising
by Tenant mentioning the Building that, in Landlord's reasonable
opinion, tends to impair the reputation of the Building or its
desirability as a building for offices, and upon written notice
from Landlord, Tenant will refrain from or discontinue such
advertising.
13. Tenant will not bring any animals (except "Seeing Eye"
dogs) or birds into the Building, and will not permit bicycles or
other vehicles inside or on the sidewalks outside the Building
except in areas designated from time to time by Landlord for such
purposes.
14. All persons entering or leaving the Building between the
hours of 6 p.m. and 7 a.m. Monday through Friday, and at all
hours on Saturdays, Sundays, and holidays will comply with such
off-hour regulations as Landlord may establish and modify from
time to time. Landlord reserves the right to limit reasonably or
restrict access to the Building during such time periods.
15. Each tenant will store all its trash and garbage within
its Premises. No material will be placed in the trash boxes or
receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage without being in violation of any
law or ordinance governing such disposal. All garbage and refuse
disposal will be made only through entryways and elevators
provided for such purposes and at such times as Landlord
designates. Removal of any furniture or furnishings, large
equipment, packing crates, packing materials, and boxes will be
<PAGE> 142
the responsibility of each tenant and such items may not be
disposed of in the Building trash receptacles nor will they be
removed by the Building's janitorial service, except at
Landlord's sole option and at the tenant's expense. No furniture,
appliances, equipment, or flammable products of any type may be
disposed of in the Building trash receptacles.
16. Canvassing, peddling, soliciting, and distributing
handbills or any other written materials in the Building are
prohibited, and each tenant will cooperate to prevent the same.
17. The requirements of the tenants will be attended to only
upon application by written, personal, or telephone notice at the
office of the Building. Employees of Landlord or Landlord's agent
will not perform any work or do anything outside of their regular
duties unless under special instructions from Landlord.
18. A directory of the Building will be provided for the
display of the name and location of tenants only. All entry on
the Building directory display will conform to standards and
style set by Landlord in its sole discretion. Space on any
exterior signage will be provided in Landlord's sole discretion.
No tenant will have any right to the use of any exterior sign.
19. Tenant will see that the doors of the Premises are
closed and locked and that all water faucets, water apparatus,
and utilities are shut off before Tenant or Tenant's employees
leave the Premises, so as to prevent waste or damage, and for any
failure to comply or carelessness in this regard Tenant will make
good all injuries sustained by other tenants or occupants of the
Building or Landlord. On multiple-tenancy floors, all tenants
will keep the doors to the Building corridors closed at all times
except for ingress and egress.
20. Tenant will not conduct itself in any manner that is
inconsistent with the character of the Building as a first
quality building or that will impair the comfort and convenience
of other tenants in the Building.
21. Tenant (including tenant's employees, agents, invitees,
and visitors) will use the parking spaces solely for the purpose
of parking passenger model cars, small vans, and small trucks and
will comply in all respects with any rule and regulation that may
be promulgated by Landlord from time to time with respect to the
parking areas. The parking areas will not be used by Tenant, its
agents, or employees, for overnight parking of vehicles, except
with Landlord's prior consent. Tenant will ensure that any
vehicle parked in any of the parking spaces will be kept in
proper repair and will not leak oil, grease, gasoline, or any
other fluids. If any of the parking spaces are at any time used
(a) for any purpose other than parking as provided above; (b) in
any way or manner reasonably objectionable to Landlord; or (c) by
<PAGE> 143
Tenant after default by Tenant under the Lease, Landlord, in
addition to any other rights otherwise available to Landlord, may
consider such default an event of default under the Lease.
22. No act or thing done or omitted to be done by Landlord
or Landlord's agent during the term of the Lease in connection
with the enforcement of these rules and regulations will
constitute an eviction by Landlord of any tenant nor will it be
deemed an acceptance of surrender of the Premises by any Tenant
and no agreement to accept such termination or surrender will be
valid unless in a writing signed by Landlord. The delivery of
keys to any employee or agent of Landlord will not operate as a
termination of the Lease or a surrender of the Premises unless
such delivery of keys is done in connection with a written
instrument executed by Landlord approving the termination or
surrender.
23. Neither Tenant, nor any of its sublessee or permitted
assigns, nor any agents or employees of Tenant or its sublessee
or permitted assigns, nor other person or entity will under any
circumstances allow entry onto the Premises by (i) any inmates of
any prison or other correctional facility, (ii) any in-patients
of any psychiatric facilities, (iii) any person who is physically
restrained (e.g., by handcuffs, shackles straight jackets or
under guard) at the time he or she enters the Premises, of (iv)
any other person who is in the custody of any government
authority.
24. In the rules and regulations, the term "tenant" includes
the employees, agents, invitees, and licensees of Tenant and
others permitted by Tenant to use or occupy the Premises.
25. Landlord may waive any one or more of the rules and
regulations for the benefit of any particular tenant or tenants,
but no such waiver by Landlord will be construed as a waiver of
such rules and regulations in favor of any other tenant or
tenants, nor prevent Landlord from enforcing any such rules and
regulations against any or all of the tenants of the Building
after such waiver.
26. These rules and regulations are in addition to, and will
not be construed to modify or amend, in whole or in part, the
terms, covenants, agreements, and conditions of the Lease.
EXHIBIT E
COMMENCEMENT DATE AND ESTOPPEL CERTIFICATE
This Commencement Date and Estoppel Certificate is entered
into by Landlord and Tenant pursuant to Section 3.1 of the Lease.
<PAGE> 144
1. DEFINITIONS. In this Certificate the following terms
have the meanings given to them:
(a) Landlord: MBL Life Assurance Corporation
(b) Tenant: IGG International, Inc.
(c) Lease: Office lease dated _______________ between
Landlord and Tenant.
(d) Premises: Suite ____________.
(e) Building Address: Park Square Building
31 St. James Avenue
Boston, MA 02116
2. Landlord and Tenant confirm that the Commencement Date
of the Lease is ____________ and the Expiration Date is
____________________ and Section 1.1(k) and (l) are accordingly
amended.
3. The Rentable Area of the Premises is deemed to by 2,968
square feet.
4. The Rentable Area of the Building is deemed to be
445,765 square feet.
5. Tenant's Share is .666 percent.
6. Tenant has accepted possession of the Premises as
provided in the Lease.
7. The Improvements required to be furnished by the
Landlord in accordance with the Workletter (if any) have been
furnished to the satisfaction of Tenant (subject to any
corrective work or punch-list items submitted previously to
Landlord.
8. All terms and conditions to be performed by Landlord
under the Lease have been satisfied and on this date there are no
existing defenses or offsets which Tenant has against the full
enforcement of the Lease by Landlord.
9. The Lease is in full force and effect and has not been
modified, altered, or amended, except as follows: ______________
_________________________________________________________________
10. There are no setoffs or credits against Rent, and no
Security Deposit or prepaid Rent has been paid except as provided
by the Lease.
<PAGE> 145
Landlord and Tenant have executed this Commencement Date and
Estoppel Certificate as of the dates set forth below.
Tenant: Landlord:
IGG International, Inc. MBL Life Assurance Corporation
By:_____________________ By:________________________
Name:___________________ Name:______________________
Title:__________________ Title:_____________________
Date:___________________ Date:______________________
EXHIBIT F
CLEAN IRREVOCABLE UNCONDITIONAL LETTER OF CREDIT NO. DATE:
MBL Life Assurance Corporation
520 Broad Street
Newark, New Jersey 07102-3111
By Order of our Client, ________________________________________,
we hereby open our clean, irrevocable, unconditional, Letter of
Credit No.________ in your favor, for an amount not to exceed the
aggregate of $_____________ effective immediately.
Funds under this Letter of Credit are available to you against
your signs draft on us mentioning thereon our Credit
No._____________.
This Letter of Credit shall expire on ____________; provided,
however, that it is a condition of this Letter of Credit that it
shall be deemed automatically extended, from time to time,
without amendment for one year from the expiry date hereof and
from each and every future expiry date, unless at lease thirty
(30) days prior to any expiry date we shall notify you, by
certified mail, return receipt requested, that we elect not to
consider this Letter of Credit renewed for any such additional
period.
This Letter of Credit is transferable and may be transferred one
or more times upon receipt of your written instruction. (Insert
standard provision for the right to transfer the letter of credit
in accordance with the Uniform Customs and Practice for
Documentary Credits.)
We hereby agree with you that all drafts drawn with the terms of
the Letter of Credit will be duly honored upon presentment and
delivery to our office at _________________________________
_______________________________________ on or prior to the
expiry date, or as the same may from time to time be extended.
<PAGE> 146
Except as otherwise specified herein, this Letter of Credit is
subject to the Uniform Customs and Practice for Documentary
Credits, International Chamber of Commerce Publication No 500 or
the most recent version thereof.
Very truly yours,
(NAME OF BANK)
By:____________________________________
Title:___________________________________
F-1
ADDENDUM TO LEASE BETWEEN
IGG INTERNATIONAL, INC.
AS TENANT,
AND
MBL LIFE ASSURANCE CORPORATION,
AS LANDLORD.
DATED AS OF 9/12/97
The lease referred to above (herein, the "Lease") is hereby
amended as follows:
1. Paragraph l.l(t) is hereby amended to provide that the term
"holidays" shall also include President's Day, Patriot's Day,
Bunker Hill Day, Columbus Day, Veterans' Day and the
following when any holiday occurs on a Sunday, as well as
such other days that generally may be recognized as business
holidays in the Commonwealth of Massachusetts from time to
time.
2. Paragraph 3.1, exclusive of the last sentence thereof, is
hereby deleted and the following is inserted in lieu thereof.
Reference is hereby made to the plans and specifications
attached hereto as Exhibit C. The construction work called
for thereunder is hereinafter called the "Buildout
Construction." Upon the execution hereof by both parties
hereto, Landlord will prepare all necessary architectural,
engineering and other construction drawings and will then
commence, and thereafter diligently pursue the installation
of the Buildout Construction in the Premises, the same to be
performed at Landlord's sole cost and expenses (except to the
extent hereinafter set forth). Tenant acknowledges that if
the Buildout Construction includes any items of a standard or
quality other than "Building Standard" (a substantial
<PAGE> 147
description of which is included within the specifications
included within said Exhibit C), any cost thereof in excess
of Building Standard shall be borne by Tenant and paid to
Landlord on the Commencement Date (hereinafter defined).
Tenant further acknowledges that if the Buildout Construction
exceeds $28.00 per rentable square foot, any cost in excess
thereof shall be borne by Tenant and paid to Landlord on the
Commencement Date. However, if the Buildout Construction is
less than $28.00 per rentable square foot, Tenant shall be
entitled credit towards the Monthly Rent first coming due
hereunder in an amount equal to the lesser of (i) the
difference between $28.00 per rentable square foot and the
actual cost of the Building Construction, or (ii) $12,767.34.
Tenant shall have the right, acting timely, to require
additional items of construction to be installed in the
Premises (subject to Landlord's approval which shall not be
unreasonably withheld or delayed); but in such event, the
entire cost of the installation of the same also shall be
born by Tenant and paid by Tenant to Landlord on the
Commencement Date. Landlord shall exercise reasonable
efforts to install the Buildout Construction by _________,
199_, and the same shall be deemed ready for Tenant's
occupancy when completed except for items of the Buildout
Construction (and, if applicable, adjustment of equipment and
fixtures) which can be completed after occupancy has been
taken without causing undue interference with Tenant's use of
the Premises (i.e., so call "punch list" items). The date on
which the same occurs is hereinafter called the "Commencement
Date", and such degree of completion is hereinafter called
"Substantial Completion". Landlord shall complete as soon as
conditions reasonably permit all "Punch list" items and
Tenant shall afford Landlord access to the Premises for such
purposes; in all such cases, however, Landlord shall use
reasonable efforts to avoid interfering with Tenant's conduct
of its business. Notwithstanding the foregoing, in the event
that through Tenant's action or inaction (which term shall be
deemed to include, without limitation, delay caused by
changes to the Buildout Construction elected by Tenant and
which are not called for under said plans and specifications)
the Landlord is delayed in the timely completion of the
Buildout Construction, then the same will be deemed ready for
occupancy on the day as of which the Buildout Construction
would have been substantially completed, save for such Tenant
caused delays; further and apart from the foregoing, the
Completion Date shall also be extended for such period as may
be necessitated by acts of God, casualty, labor difficulties,
shortages of materials and other "force majeure" matters not
reasonably within the control of Landlord. Upon the
occurrence of the Commencement Date, Landlord and Tenant
shall join in executing and exchanging a recordable form of
agreement setting forth the Commencement Date. Except to the
extent of Landlord's construction obligations set forth
<PAGE> 148
above, Tenant accepts the Premises and the Building in their
present "as-is" condition.
3. Paragraph 6.1(a) is hereby amended to provide that all
casualty insurance on the Building provided by Landlord may
provide that loss proceeds may be first payable to Landlord's
mortgagees of record as their interest may appear in
accordance with a standard form of mortgagee payment clause.
4. After the word "laws" at the end of the third line of
Paragraph 7, the following language shall be inserted:
", or applicable zoning or other municipal ordinances".
5. Paragraph 8.2(a) is amended by inserting, after section
"6901-6987;" in the sixth line thereof, "or "oil and hazardous
materials", as those terms are defined in the
Massachusetts Oil and Hazardous Material Release
Prevention and Response Act, M.G.L. Ch. 21E".
6. Article 8, Paragraph 8.2(c) is amended by inserting, after
"for" in the fourth line thereof, "removing and properly
disposing of any hazardous materials that are released in,
on, or about the Premises or the Project (except if such
release is caused by an act or omission of the Landlord, its
agents, servants or employees).
7. Article 26 of the Lease is hereby deleted in its entirety.
8. The following provisions shall be inserted at the end of
Paragraph 25.6:
"25.7 "Without limitation of any nature upon the rights,
remedies and damages of Landlord as set forth above, in all
events
a) At any time after termination of this Lease by Landlord
on account of an event of default of Tenant, as
liquidated final damages and in lieu of all other
damages beyond the date of demand, Tenant shall pay to
Landlord an amount equal to the excess, if any, of the
rent and other sums as hereinbefore provided which would
be payable hereunder from the date of such demand
(assuming that, for the purposes of this paragraph,
payments by Tenant on account of Operating Expenses
would be the same as the payments required for the
immediately preceding year) for what would be the then
unexpired term of this Lease if the same remained in
effect, over the then fair net rental value of the
Premises for the same period and will indemnify Landlord
monthly for its further loss thereafter; and
<PAGE> 149
b) The specified remedies to which Landlord may resort, and
damages which Landlord may seek as herein provided
hereunder are not intended to be exclusive of any
remedies, means of redress or damages to which Landlord
may at any time entitled lawfully, and Landlord may
invoke any remedy (including the remedy of specific
performance) and seek any damages allowed at law or in
equity as if such specific remedies and damages were
herein provided for."
9. In Paragraph 27.5 the last two sentences together commencing
with the words, "Tenant shall, at" and ending with the words
"borne by Landlord" are hereby deleted and the following is
inserted in lieu thereof: "Tenant may record a standard form
of notice of lease, however, provided the same contains only
the minimum statutory provisions thereof and in no event
discloses any rent or other monetary amount payable
hereunder; provided, however, that such notice of lease shall
not be executed unless the term hereof is such that under the
statute and applicable law the recording of a notice of lease
is necessary to protect Tenant's interest in this Lease."
10 Article 19.1 in its entirety and Article 19.2 through and
including the last full line thereof ending with the words
"in interest will" are hereby delated and the following is
inserted in lieu thereof:
"This Lease shall be subordinate to any mortgage from time
to time encumbering the Premises, whether executed and
delivered prior to or subsequent to the date of this Lease,
if the holder of such mortgage shall so elect. Tenant agrees
to execute such instruments of subordination in confirmation
of me foregoing agreement as counsel for such holder
reasonably may request, and Tenant hereby appoints such
holder as Tenant's attorney-in-fact to execute such
subordination agreement upon default of Tenant in complying
with such holder's request. Not without the foregoing
provisions, the Tenant agrees that any first mortgagee of the
Property shall have the right at any time to subordinate any
rights of such first mortgagee to the rights of the Tenant
under this Lease on such terms and subject to such condition
as such first mortgagee deems appropriate. Additionally,
Tenant shall, in the event of the sale or assignment of
Landlord's interest in the Building or in the event of any
proceeding brought for the foreclosure of, or in the event of
exercise of the power of sale under any mortgage covering the
Premises, attorn to the purchaser, assignee or mortgagee, as
the mortgagee as Landlord under this Lease. The execution of
all such documents of subordination shall be conditioned upon
such mortgagee agreeing with Tenant that upon foreclosure of
its mortgage the mortgagee will accept Tenant and Tenant
will attorn to the mortgagee under this Lease but in any such
case such mortgagee shall."
<PAGE> 150
11 Without limitation of the provisions of Article 27.7 hereof,
Tenant agrees that in no event shall Landlord ever be liable
hereunder for any indirect or consequential damages in any
respect in connection with any default or breach by Landlord
of any of its obligations, under any provision of this Lease.
12 The provisions of Article 12 and any other provisions of this
Lease to the contrary notwithstanding, Tenant shall be
responsible for, and shall pay when due the cost of all
electricity consumed on, within and from the Premises and all
portions thereof. At Landlord's election either (i) Tenant
will arrange with the utility supplying such electricity to
separately meter the same and bill Tenant directly therefor
or (ii) Landlord will install a "check meter" to monitor
Tenant's usage and will bill Tenant for Tenant's usage as
shown thereon; or (iii) Landlord will bill Tenant monthly for
such electricity at the rate of $1.00 per rentable square
foot per year ($247.33 per month). Billings under (ii) and
(iii) above shall be paid by Tenant at the same time and in
the same manner as Monthly Rent provided above and shall
constitute Additional Rent hereunder.
13 Paragraph 27.26 is deleted in its entirety and the following
is inserted in lieu thereof:
27.26 Landlord's Fees. Whenever Tenant requests Landlord
to take any action or give any consent required or permitted
under this Lease, or takes any action in connection with its
tenancy hereunder as to which Landlord's inspection or
suspension, in Landlord's judgment, is necessary or
appropriate, Tenant will reimburse Landlord for all of
Landlord's reasonable costs incurred in reviewing the
proposed action or consent or inspecting or supervising such
action, including without limitation reasonable attorneys',
engineers' or architects' fees, within 10 days after
Landlord's delivery to Tenant of a statement of such costs.
Tenant will be obligated to make such reimbursement without
regard to whether Landlord consents to any such proposed
action."
14 There being no workletter, all references in the Lease to a
workletter are hereby deleted.
15 Prior to execution of this Lease by Landlord, Tenant shall
deposit with Landlord a clean, irrevocable unconditional
letter of credit issued by a bank acceptable to Landlord (in
Landlord's sole discretion) in the form attached hereto as
Exhibit "F" in the amount equal to $108,128 (the "Initial
LOC"). At any time that Tenant is in default under the lease
beyond applicable notice and grace periods, Landlord shall
have the right to draw down the entire credit and apply the
process to any amounts which are due or which may become due
<PAGE> 151
hereunder. Landlord shall also have the right to draw down
the entire amount of the letter of credit in the event that
Landlord receives notice that the date of expiry of the
letter of credit will not be extended by the issuing bank. In
the event Landlord draws down the letter of credit and all
proceeds therefrom are not utilized to cure the default,
Landlord will hold such excess amount in a separate security
deposit account until Tenant obtains a new irrevocable letter
of credit in the original amount issued by a bank acceptable
to Landlord (in Landlord's sole discretion) in the form
attached hereto as Exhibit "F" at which time such excess
amount will be refunded to Tenant.
Notwithstanding the above, on the first anniversary of the
Commencement Date, Tenant may, provided it is not in default,
replace the Initial LOC with a clean irrevocable
unconditional letter of credit issued by the same bank, in
the same form, in an amount equal to 80% of the Initial LOC.
On the second anniversary of the Commencement Date, Tenant
may, provided it is not in default, replace the then current
letter of credit with a clean irrevocable unconditional
letter of credit issued by the same bank, in the same form,
in an amount equal to 60% of the Initial LOC. On the third
anniversary of the Commencement Date, Tenant may, provided it
is not in default, replace the then current letter of credit
with a clean irrevocable unconditional letter of credit
issued by the same bank, in the same form, in an amount equal
to 40% of the Initial LOC. On the fourth anniversary of the
Commencement Date, Tenant may, provided it is not in default,
replace the then current letter of credit with a clean
irrevocable unconditional letter of credit issued by the same
bank, in the same form, in an amount equal to 20% of the
Initial LOC.
Provided Tenant is not in default and Tenant has surrendered
the Premises in accordance with Article 16 of the Lease,
Landlord will return the then current letter of credit to
Tenant on the Expiration Date.
Tenant: Landlord:
IGG INTERNATIONAL, INC. MBL ASSURANCE CORPORATION
By: /s/ Bradley J. Carver By: /s/ Andrew P. Galenas
Date: September 10, 1997 Date: September 15, 1997
