Exhibit 10.10
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made and entered into by
and between VIRAL GENETICS, INC., a Delaware corporation (the "Company"), and
Therapeutic Genetics, Inc., a California corporation ("Consultant") effective
this 1st day of June, 2003.
(the "Parties")
WHEREAS the Company is engaged in the business of development of
biomedical products and technology, and Consultant has experience in Company's
business;
WHEREAS the Company owns the rights to certain patents for certain
technologies (the "Licensed Technologies") developed by Consultant pursuant to
an Assignment of Patent agreement dated August 1, 1995, and is desirous of
utilizing Consultant's expertise in the ongoing development of the Licensed
Technologies; and
WHEREAS Consultant is desirous of ensuring that the development of the
Company's Licensed Technologies and those certain other technologies owned or
possessed by Consultant do not conflict with each other and that said
development strategies are planned and executed in a manner seeking mutual
success;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties agree as follows.
1) Non-Exclusive Engagement of Consultant; Term. The Company hereby
engages Consultant as its non-exclusive provider of the consulting
services described in this Agreement, for a term (the "Term"), which
will commence on the date of this Agreement and end June 1, 2006.
2) Consultant Services. On the terms and conditions set forth in this
Agreement, Consultant will provide the following services to the
Company as directed by the Company (the "Services"):
a) Consultant will assist and advise the Company on the
commercial and clinical development of the Licensed
Technologies, seeking to maintain consistency with other
technologies developed by Consultant in the interests of the
long term prospects for commercialization of both of the
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parties' drug candidate products, including, without
limitation, seeking to ensure consistency in the presentation
of information, testing results, descriptions, and other
information concerning the Licensed Technologies, to the
United States Food and Drug Administration and other drug
regulatory bodies elsewhere in the USA and the world;
b) Consultant will assist and advise the Company on the
development and maintenance of the intellectual property
rights, including patents, for the Licensed Technology; and
c) Consultant will assist and advise the Company in other areas
in which Consultant has expertise as reasonably requested from
time to time by the Company.
3) Method of Providing Services. Consultant will perform services, and may
communicate with the Company's management and other parties, through
personal meetings, correspondence, telephone or video conferences, and
such other methods, and at such times, as Consultant may determine,
subject to the reasonable convenience of the parties. Consultant shall
be available for regular meetings with the management of the Company
during the Term, and covenants to devote not less than ____ hours per
month to the Company's business. Unless otherwise mutually agreed to,
each of the Consultant and Company shall communicate with the other
party through their respective Presidents.
4) Performance. Consultant agrees to at all times faithfully,
industriously, and to the reasonable best of its abilities, experience,
and talents, perform all of the duties that may be required of and from
them pursuant to the express and explicit terms hereof.
5) Independence of Parties. Nothing contained in this Agreement shall
constitute either party as an employee, partner, co-venturer or agent
of the other, it being intended that each shall act as an independent
contractor with respect to the other. Consultant is not authorized to
speak on behalf of the Company or bind it in any manner.
6) Compensation.
a) Signing Bonus. For and in consideration of the agreement of
Consultant to enter into this Agreement, Consultant shall
receive from the Company an option to purchase 500,000 shares
of the Company's common stock at a price of $0.52 per share in
the form attached hereto as Exhibit A (the "Signing Bonus");
b) Options. For and in consideration of the agreement of
Consultant to enter into this Agreement and as an incentive
for the Consultant to use its best efforts in pursuit of the
Company's business, at the end of each three-month period
commencing from the effective date hereof the Company will
deliver to Consultant 250,000 options to purchase shares of
the common stock of the Company in the form attached hereto as
Exhibit A with an
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exercise price equal to the closing market price of the shares
of the Company's common stock on the day prior to issuance but
in no case less than $0.30 per share ("Options"). In the event
that this Agreement is terminated for any reason prior to the
date of such issuances, the amount of the Options issuable for
such period shall be prorated for the elapsed portion of the
period in question, computed by dividing the number of days
from the date of the prior issuance to the effective date of
such termination by the total number of days in such period
and multiplying the fraction so obtained by the amount of the
Options due thereunder. Any options issuable in connection
therewith shall be issued and delivered within ten (10) days
after the effective date of such termination.
c) Benefits, Other Consideration. No benefits, vacation pay, or
other consideration or remuneration of any kind shall be owed
to Consultant by the Company, unless specifically referenced
herein.
7) Company Representations and Warranties. The Company hereby represents
and warrants, knowing that Consultant is relying thereon, that:
a) The Company is duly organized, validly existing and in good
standing under the laws of the state of Delaware. The Company
is qualified to do business as a foreign corporation in each
state in which its business requires it to be so qualified.
b) Upon receipt of the full exercise price, where applicable, all
shares of the common stock of the Company issued to Consultant
under this Agreement through exercise of Options will be duly
and validly issued, fully paid and non-assessable, and will be
delivered free and clear of any liens, claims or encumbrances,
except for restrictions imposed by reference to the
registration requirements of the Securities Act of 1933.
c) The Company represents that the information concerning the
Company and its business, as furnished and to be furnished to
Consultant in writing, will be complete and correct in all
material respects and will not contain any untrue statement of
material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in light
of the circumstances under which such statements are made. The
Company will notify Consultant promptly concerning any
statement which is not accurate or which is or has become
incomplete or misleading in any material respect. The Company
understands that Consultant is and will be relying on the
continuing accuracy of such information in carrying out its
functions under this Agreement.
d) This Agreement has been expressly authorized by the Company's
Board of Directors, has been duly and validly executed and
delivered by and on behalf of the Company, and constitutes the
valid and binding agreement of the Company, enforceable in
accordance with its terms.
e) The Company is not subject to any material pending or
threatened litigation, arbitration or governmental or
administrative proceedings, and is not in default under any of
its material agreements with employees, licensors, licensees,
suppliers, customers, shareholders, creditors or other
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third parties; provided, however, that the foregoing
representation excludes certain pending disputes with vendors
and suppliers.
f) The Company's shares are listed for quotation on the OTC
Bulletin Board administered by the National Association of
Securities Dealers. The Company is registered as a public
reporting company with the Securities and Exchange Commission
("SEC"), and the Company has filed all annual and periodic
reports required to be filed with the SEC under the Securities
Exchange Act of 1934.
8) Consultant Representations and Warranties. Consultant hereby represents
and warrants, knowing that the Company is relying thereon, that:
a) Consultant is not a broker-dealer and is not authorized to
perform broker-dealer functions;
b) Consultant has not in the past, nor will it in the future
engage in selling, direct or indirect, or in the solicitation
of the purchase or sale of securities of the Company in the
United States of America;
c) Consultant has not in the past nor will it in the future
engage in any scheme or facilitate similar acts by others, to
evade the registration requirements of any state or federal
law, agency or other regulatory body of the United States of
America related to the securities of the Company;
d) Consultant is an Accredited Investor, as that term is defined
in Regulation D in the Securities Xxx, 0000, and Consultant
has completed the attached Schedule A; and
e) Consultant has not in the past, nor will it in the future
engage in any activity contrary to the securities laws of any
jurisdiction including, without limitation, those of the
United States of America.
9) Business Conduct.
a) Consultant represents that no part of its compensation will be
used by the Consultant for any purpose, nor has Consultant
taken, nor will Consultant take any action, which would
constitute a violation of any law of any jurisdiction in which
it performs the Services hereunder or of the United States,
including, without limitation, the Foreign Corrupt Practices
Act. The Company represents that it does not desire and will
not request any service or action by Consultant which would or
might constitute any such violation. Further, Consultant has
not previously paid or promised to, and agrees prospectively
not to, pay or promise to pay or give or promise to give
anything of value, either directly or indirectly, to an
official of any government for the purpose of influencing an
act or decision in his or her official capacity, inducing him
or her to use his or her influence with a foreign government,
assisting the Company in obtaining or retaining business for
or with, or directing business to, any person or as a
political contribution of any kind;
b) The Company or Consultant will be entitled to terminate this
Agreement at any time, without further liability or obligation
on the party so terminating, if such party believes, in good
faith, that the other party has (i) engaged in
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any action which would or might constitute a breach of this
Section; or (ii) requested any such action from a
representative of either party or from any third party. In
addition, should Consultant ever receive, directly or
indirectly, from any Company or affiliate representative, a
request which Consultant believes will or might constitute a
breach of this Section, Consultant represents that it will
immediately notify the Company's attorney of the request.
10) Non-Solicitation. During the period of this Agreement, and for an
additional period of one year after termination or expiration of this
Agreement, Consultant agrees that it will not, directly or indirectly,
solicit any person who was an consultant or employee of the Company or
any subsidiary of Company at any time within six months prior to the
date of termination or expiration of this Agreement; or solicit any
person, governmental entity or agency, firm or business that was a
supplier, customer or client of the Company or any subsidiary of
Company at any time during the two year period prior to the date of
termination or expiration of this Agreement with respect to any product
or technology developed, under development, or contemplated for
development by Company prior to or as of the date of termination or
expiration. The obligation not to solicit as described above is not
limited during the term provided herein by territory. This covenant
shall survive the termination of this Agreement.
11) Non-Disclosure of Information. In further consideration of the
engagement and the continuation of the engagement by Company,
Consultant agrees as follows:
a) During the period of this Agreement and the period following
termination or expiration of this agreement, Consultant will
not, directly or indirectly:
i) use for her own benefit or give to any person not
authorized by Company to receive or use such
information, except for the sole benefit of Company,
any marketing plans, results, or product marketing
information, which are proprietary to Company;
ii) use for her own benefit or give to any person not
authorized by Company to receive it, any plans or
specifications, scientific know-how, formulas,
technical data or information, clinical study
protocols or data, patient or biologic information,
customer lists, data, study, table, report, or the
like owned by Company, or any copy thereof; or
iii) use for her own benefit or give to any persons not
authorized by Company to receive it any information
that is not generally known to anyone other than
Company, or that is designated by Company as
"Limited", "Private", or "Confidential", or similarly
designated.
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b) This restriction will cease with respect to any item of
proprietary or confidential information that becomes available
to the public other than through fault of the Consultant.
c) Consultant shall keep informed of Company's policies and
procedures for safeguarding Company's property, including
proprietary data and information, and will strictly comply
with those policies and procedures at all times during which
the restrictions imposed by this Section 11 remain in effect.
Consultant will not, except when authorized by Company or
required for the performance of duties hereunder, remove any
of Company's physical property from Company's premises.
Consultant will return to Company, immediately upon
termination of engagement, all of Company's physical property
in her possession or control.
12) Stock Certificates and Registration Rights. All Shares delivered to
Consultant pursuant to this Agreement shall bear a restrictive legend
in the form normally used by the Company for the issuance of restricted
shares, and shall be deemed restricted securities under SEC Rule 144.
The Company agrees that Consultant and its designees and assignees
shall have, with respect to all of said Shares, full piggyback
registration rights for a period of four years commencing one year
after the date of this Agreement at the Company's sole expense.
13) Changes to Common Stock. In the event that the Company shall undertake
a recapitalization, reverse stock split, forward stock split,
reclassification, or other change to its common stock (a "Change in
Common Stock Properties"), the quantity of Shares which may be acquired
through exercise of any delivered but unexercised Options or
undelivered Options, and the exercise price payable thereto shall be
increased or decreased proportionately, in accordance with the terms of
said Change in Common Stock Properties.
14) Extension and Renewal. The Term may be extended or renewed, and this
Agreement may be amended, only by the written agreement of the parties.
15) Indemnification.
a) Each of the Parties hereby indemnifies and defends the other
and each of the their respective officers, directors,
employees, shareholders, agents, advisors or representatives,
as applicable, (each, an "Indemnitee") against, and holds each
Indemnitee harmless from, any loss, liability, obligation,
deficiency, damage or expense including, without limitation,
interest, penalties, reasonable attorneys' fees and
disbursements (collectively, "Damages"), that any Indemnitee
may suffer or incur based upon, arising out of, relating to or
in connection with (whether or not in connection with any
third party claim):
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i) any breach of any representation or warranty made by
the other party contained in this Agreement; and
ii) the failure of the other party to perform or to
comply with any covenant or condition required to be
performed or complied with in accordance with this
Agreement.
b) Indemnification Procedures for Third Party Claims.
i) Promptly after notice to an indemnified party of any
claim or the commencement of any action or
proceeding, including any actions or proceedings by a
third party (hereafter referred to as "Proceeding" or
"Proceedings"), involving any Damage referred to in
this Section, such indemnified party shall, if a
claim for indemnification in respect thereof is to be
made against an indemnifying party pursuant to this
Section, give written notice to the indemnifying
party, setting forth in reasonable detail the nature
thereof and the basis upon which such party seeks
indemnification hereunder; provided, however, that
the failure of any indemnified party to give such
notice shall not relieve the indemnifying party of
its obligations hereunder, except to the extent that
the indemnifying party is actually prejudiced by the
failure to give such notice.
ii) In the case of any Proceeding by a third party
against an indemnified party, the indemnifying party
shall, upon notice as provided above, assume the
defense thereof, with counsel reasonably satisfactory
to the indemnified party, and, after notice from the
indemnifying party to the indemnified party of its
assumption of the defense thereof, the indemnifying
party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred
by the indemnified party in connection with the
defense thereof (but the indemnified party shall have
the right, but not the obligation, to participate at
its own cost and expense in such defense by counsel
of its own choice) or for any amounts paid or
foregone by the indemnified party as a result of any
settlement or compromise thereof that is effected by
the indemnified party (without the written consent of
the indemnifying party).
iii) Anything in this Section 15 notwithstanding, if both
the indemnifying party and the indemnified party are
named as parties or subject to such Proceeding and
either party determines with advice of counsel that
there may be one or more legal defenses available to
it that are different from or additional to those
available to the other party or that a material
conflict of interest between such parties may exist
in respect of such Proceeding, then the indemnifying
party may decline to assume the defense on behalf of
the indemnified party or the indemnified party may
retain the defense on its own behalf, and, in either
such case, after notice to such effect is duly given
hereunder to the other party, the indemnifying party
shall be relieved of its obligation to assume the
defense on behalf of the indemnified party, but shall
be required to pay any legal or other expenses
including, without
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limitation, reasonable attorneys' fees and
disbursements, incurred by the indemnified party in
such defense.
iv) If the indemnifying party assumes the defense of any
such Proceeding, the indemnified party shall
cooperate fully with the indemnifying party and shall
appear and give testimony, produce documents and
other tangible evidence, and otherwise assist the
indemnifying party in conducting such defense. No
indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment
or enter into any settlement or compromise which does
not include as an unconditional term thereof the
giving by the claimant or plaintiff to such
indemnified party of a release from all liability in
respect of such claim or Proceeding. Provided that
proper notice is duly given, if the indemnifying
party shall fail promptly and diligently to assume
the defense thereof, then the indemnified party may
respond to, contest and defend against such
Proceeding and may make in good faith any compromise
or settlement with respect thereto, and recover from
the indemnifying party the entire cost and expense
thereof including, without limitation, reasonable
attorneys' fees and disbursements and all amounts
paid or foregone as a result of such Proceeding, or
the settlement or compromise thereof. The
indemnification required hereunder shall be made by
periodic payments of the amount thereof during the
course of the investigation or defense, as and when
bills or invoices are received or loss, liability,
obligation, damage or expense is actually suffered or
incurred.
16) Termination.
a) Either party may terminate this Agreement upon not less than
50 days notice in the event of a material breach of this
Agreement or material non-performance by the other party,
which breach is not cured within 30 days after the giving of
written notice to the breaching party specifying the
circumstances of such breach.
b) The Company may terminate this Agreement without further
notice to Consultant in the event that Consultant:
i) becomes the subject of an investigation concerning a
felony or a violation of any securities laws;
ii) declares bankruptcy;
iii) becomes an employee, consultant, officer, director or
principal of a competitor;
iv) misrepresents the Company;
v) has been grossly negligent in the performance of
duties at least three times in any consecutive 30-day
period, and Consultant has been notified in writing
within 5 days of each such occurrence;
vi) has engaged in material and willful or gross
misconduct in the performance of duties hereunder; or
vii) acts in any other manner which materially affects the
Company in a negative manner.
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17) Consequences of Termination. Any termination or expiration of this
Agreement, whether or not for cause, shall not affect the obligation of
the Company to pay compensation to Consultant which was earned or
accrued prior to the date of termination or expiration. Other than as
specifically provided for herein, no further fees or payments of any
kind shall be owed to Consultant upon or following Termination.
18) Cooperation. The parties shall deal with each other in good faith, good
faith meaning honesty in fact and the observance of all commercial
standards of fair dealing and usages of trade, which are regularly
observed within the industry.
19) No Strict Construction. The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied
against any party.
20) Arbitration. In the event of dispute or controversy between the parties
as to the performance hereof, this Agreement shall be and remain in
full force and effect and all terms hereof shall continue to be
complied with by both parties, it shall be submitted to two
arbitrators, one to be appointed by each, and if those arbitrators do
not agree, they shall select a third disinterested and competent person
to act with them, and the decision of the three, or a majority of them,
shall be final and conclusive. If either party does not appoint an
arbitrator as aforesaid within 90 days after receipt of notice to the
other that it desires arbitration, which notice shall state the name
and address of the arbitrator appointed by such other, and does not
within such period furnish to such other party the name and address of
the second arbitrator, then the arbitrator first named shall appoint a
disinterested and competent arbitrator for the party thus defaulting,
and the two arbitrators so appointed shall select a third to act with
them as aforesaid and with like effect. Cost of arbitration shall be
borne by the parties equally. Judgment upon the reward rendered may be
entered in any court having jurisdiction thereof.
21) Governing Law and Disputes. This Agreement shall be governed by the
laws of the State of California, without regard to choice of law
provisions.
22) Waiver. Any party hereto may waive compliance by the other with any of
the terms, provisions and conditions set forth herein; provided,
however, that any such waiver shall be in writing specifically setting
forth those provisions waived thereby. No such waiver shall be deemed
to constitute or imply waiver of any other term, provision or condition
of this Agreement.
23) Severability. If and to the extent that any court of competent
jurisdiction holds any provision or any part thereof of this Agreement
to be invalid or
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unenforceable, such holding shall in no way affect the validity of the
remainder of this Agreement.
24) Counterpart and Headings. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument. All
headings in this Agreement are inserted for convenience of reference
and shall not affect its meaning or interpretation.
25) Entire Agreement. This Agreement is and shall be considered to be the
only agreement or understanding between the parties hereto with respect
to the engagement of Consultant by the Company. All negotiations,
commitments, and understandings acceptable to both parties have been
incorporated herein. No letter, telegram, or communication passing
between the parties hereto shall be deemed a part of this Agreement;
nor shall it have the effect of modifying or adding to this Agreement
unless it is distinctly stated in such letter, telegram, or
communication that it is to constitute a part of this Agreement and is
to be attached as a rider to this Agreement and is signed by the
parties to this Agreement.
26) Modification of Contract. This Agreement cannot be modified by tender,
acceptance or endorsement of any instrument of payment, including
check. Any words contained in an instrument of payment modifying this
contract, including a waiver or release of any claims, or a statement
referring to paying in full is void. This Agreement can only be
modified in a separate writing, other than an instrument of payment,
signed by the parties.
27) Enforcement. Consultant acknowledges that any remedy at law for breach
of Section 10 or 11 would be inadequate, acknowledges that the Company
would be irreparably damaged by an actual or threatened breach thereof,
and agrees that the Company shall be entitled to an injunction
restraining Consultant from any actual or threatened breach of Section
10 or 11 as well as any further appropriate equitable relief without
any bond or other security being required. The Company may pursue
enforcement of Section 10 or 11 by commencing an action at law or in
equity without first pursuing arbitration pursuant to Section 20 of
this Agreement. In addition to the foregoing, each of the parties
hereto shall be entitled to any remedies available in equity or by
statute with respect to the breach of the terms of this Agreement by
the other party.
28) Assignment. The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs,
legal representatives, successors and assigns. This Agreement may not
be assigned without the consent of the parties; provided, however, that
nothing contained herein shall prevent Consultant from assigning or
transferring any
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of the Shares or Options to any person or entity in accordance with
applicable securities laws and regulations.
29) Survival. The representations, warranties, and agreements of the
parties contained in this Agreement will remain operative and in full
force and effect and will survive any termination of this Agreement.
30) Notices. All notices required or permitted under this Agreement shall
be in writing and shall be sent by certified or registered first class
mail, return receipt requested, or shall be personally delivered, or
sent by an overnight delivery service such as Federal Express, or shall
be transmitted by telefax (provided such telefax message is confirmed
by telephonic acknowledgment of receipt or by sending via other
authorized means a confirmation copy of such notice) addressed to the
parties at their respective last known business addresses.
Agreed to this 1st day of June, 2003
VIRAL GENETICS, INC. THERAPEUTIC GENETICS, INC.
By: _________________________ By: ______________________________
Xxxx Xxxxxxxxx, President Xxxxxx X. Xxxxxxxxx, President
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SCHEDULE A
ACCREDITED INVESTOR QUESTIONNAIRE
PERSONAL FINANCIAL INFORMATION. The following information pertaining to the
undersigned as a natural person and U.S. Persons within the meaning of
Regulation S is being provided here in lieu of furnishing a personal financial
statement.
(a) My individual net worth, or joint net worth with my spouse, exceeds
$1,000,000.
Yes [ ] No [ ]
________
INITIAL
(b) My individual income in 2002 and 2003 exceeded $200,000 in each
such year, and I reasonably expect my individual income will be in excess of
$200,000 in 2004.
Yes [ ] No [ ]
________
INITIAL
(c) The joint income of my spouse and I in 2002 and 2003 exceeded
$300,000 in each such year, and I reasonably expect our joint income will be in
excess of $300,000 in 2004.
Yes [ ] No [ ]
________
INITIAL
(d) Considering the foregoing and all other relevant factors in my
financial and personal circumstances, I am able to bear the economic risk of an
investment in the Company.
Yes [ ] No [ ]
________
INITIAL
The foregoing is a true representation of financial status:
Therapeutic Genetics, Inc.
Duly authorized officer
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EXHIBIT A
VIRAL GENETICS, INC.
Option for the Purchase of _________
Shares of Common Stock
Par Value $0.001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE OPTION
AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION, AGREES AND ACKNOWLEDGES
THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.
This is to certify that, for value received, Therapeutic Genetics, Inc.
(the "Optionee") is entitled to purchase from VIRAL GENETICS, INC. (the
"Company" or "Corporation"), on the terms and conditions hereinafter set forth,
all or any part of __________________ shares ("Option Shares") of the Company's
common stock, par value $0.001 (the "Common Stock"), at the purchase price of
$[__] per share ("Option Price"). Upon exercise of this option in whole or in
part, a certificate for the Option Shares so purchased shall be issued and
delivered to the Optionee. If less than the total option is exercised, a new
option of similar tenor shall be issued for the unexercised portion of the
options represented by this Agreement.
This option is granted subject to the following further terms and
conditions:
5. This option shall vest and be exercisable immediately. The right to
exercise this option with respect to any of the Option Shares shall terminate on
the date which is two years from the date of issuance. In order to exercise this
option with respect to all or any part of the Option Shares for which this
option is at the time exercisable, Optionee (or in the case of exercise after
Optionee's death, Optionee's executor, administrator, heir or legatee, as the
case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the Corporation an executed
notice of exercise in substantially the form of that attached to this Agreement
(the "Exercise Notice") in which there is specified the number of Option Shares
which are to be purchased under the exercised option.
(b) Pay the aggregate Option Price for the purchased shares through one
or more of the following alternatives:
A-1
(i) full payment in cash or by check made payable to the
Corporation's order;
(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date
(as such term is defined below);
(iii) full payment through a combination of shares of
Common Stock held for the requisite period necessary
to avoid a charge to the Company's earnings for
financial reporting purposes and valued at Fair
Market Value on the Exercise Date and cash or check
payable to the Company's order; or
(iv) full payment effected through a broker-dealer sale
and remittance procedure pursuant to which Optionee
shall provide concurrent irrevocable written
instructions (i) to a brokerage firm to effect the
immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the
aggregate Option Price payable for the purchased
shares plus all applicable Federal, state and local
income and employment taxes required to be withheld
in connection with such purchase and (ii) to the
Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to
complete the sale transaction; or
(c) Furnish to the Corporation appropriate documentation that the
person or persons exercising the option (if other than Optionee) have the right
to exercise this option.
(d) For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Exercise Notice shall have been delivered to the Company.
Except to the extent the sale and remittance procedure specified above is
utilized in connection with the option exercise, payment of the Option Price for
the purchased shares must accompany such Exercise Notice.
(e) For all valuation purposes under this Agreement, the Fair Market
Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any national securities
exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the mean between the
highest "bid" and lowest "offered" quotations of a
share of Common Stock on such date (or if none, on
the most recent date on which there were bid and
offered quotations of a share of Common Stock), as
reported by the Nasdaq National Market or any
successor system.
(ii) If the Common Stock is at the time listed or admitted
to trading on any national securities exchange, then
the Fair Market Value shall be the closing selling
price per share on the date in question on the
securities exchange, as such price is officially
quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then
the Fair Market
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Value shall be the closing selling price on the
exchange on the last preceding date for which such
quotation exists.
(iii) If the Common Stock is not listed on such date on any
national securities exchange nor included in the
Nasdaq National Market, but is traded in the
over-the-counter market, the highest "bid" quotation
of a share of Common Stock on such date (or if none,
on the most recent date on which there were bid
quotations of a share of Common Stock), as reported
on the Nasdaq Smallcap Market or the NASD OTC
Bulletin Board, as applicable.
(f) Upon such exercise, the Company shall issue and cause to be
delivered with all reasonable dispatch (and in any event within three business
days of such exercise) to or upon the written order of the Optionee at its
address, and in the name of the Optionee, a certificate or certificates for the
number of full Option Shares issuable upon the exercise together with such other
property (including cash) and securities as may then be deliverable upon such
exercise. Such certificate or certificates shall be deemed to have been issued
and the Optionee shall be deemed to have become a holder of record of such
Option Shares as of the Exercise Date.
2. The Optionee acknowledges that the shares subject to this option
have not and will not be registered as of the date of exercise of this option
under the Securities Act or the securities laws of any state. The Optionee
acknowledges that this option and the shares issuable on exercise of the option,
when and if issued, are and will be "restricted securities" as defined in Rule
144 promulgated by the Securities and Exchange Commission and must be held
indefinitely unless subsequently registered under the Securities Act and any
other applicable state registration requirements. Except as provided herein, the
Company is under no obligation to register the securities under the Securities
Act or under applicable state statutes. In the absence of such a registration or
an available exemption from registration, sale of the Option Shares may be
practicably impossible. The Optionee shall confirm to the Company the
representations set forth above in connection with the exercise of all or any
portion of this option. The Company agrees to register or qualify the Option
Shares, but not this option, for resale as follows:
(a) If, at any time during the period in which the rights represented
by this Agreement are exercisable, the Company proposes to file a registration
statement or notification under the Securities Act for the primary or secondary
sale of any debt or equity security, it will give written notice at least 30
days prior to the filing of such registration statement or notification to the
Optionee of its intention to do so. The Company agrees that, after receiving
written notice from the Optionee of its desire to include its Option Shares in
such proposed registration statement or notification, the Company shall afford
the Optionee the opportunity to have its Option Shares included therein.
Notwithstanding the provisions of this paragraph 2(a), the Company shall have
the right, at any time after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of the Option Shares
shall be made) to elect not to file any such proposed registration statement or
notification or to withdraw the same after the filing but prior to the effective
date thereof. In no event shall the Company be obligated to include the Option
Shares in any registration statement or notification under this paragraph 2(a)
if, in the opinion of the underwriter, the inclusion of the Option Shares in
such registration statement or notification would be materially detrimental to
the proposed offering of debt or equity securities pursuant to which the Company
gave notice to the holders under this paragraph; provided, that the Option
Shares shall not be excluded from any such registration statement or
notification if debt or equity securities of the Company held by any other
persons are, or will be, included in such registration statement or
notification.
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(b) In connection with the filing of a registration statement,
notification, or post-effective amendment under this section, the Company
covenants and agrees:
(i) to pay all expenses of such registration statement,
notification, or post-effective amendment, including,
without limitation, printing charges, legal fees and
disbursements of counsel for the Company, blue sky
expenses, accounting fees and filing fees, but not
including legal fees and disbursements of counsel to
the Optionee and any sales commissions on Option
Shares offered and sold;
(ii) to take all necessary action which may reasonably be
required in qualifying or registering the Option
Shares included in a registration statement,
notification or post-effective amendment for the
offer and sale under the securities or blue sky laws
of such states as requested by the Optionee; provided
that the Company shall not be obligated to execute or
file any general consent to service of process or to
qualify as a foreign corporation to do business under
the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective on a continuous or shelf basis until all
registered Option Shares of the Optionee have been
sold.
(c) The Optionee shall cooperate with the Company and shall furnish
such information as the Company may request in connection with any such
registration statement, notification or post-effective amendment hereunder, on
which the Company shall be entitled to rely, and the Optionee shall indemnify
and hold harmless the Company (and all other persons who may be subject to
liability under the Securities Act or otherwise) from and against any and all
claims, actions, suits, liabilities, losses, damages, and expenses of every
nature and character (including, but without limitation, all attorneys' fees and
amounts paid in settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material fact furnished by
the Optionee in connection with such registration or qualification, or from the
failure of the Optionee to furnish material information in connection with the
facts required to be included in such registration statement, notification or
post-effective amendment necessary to make the statements therein not
misleading.
3. The Company, during the term of this Agreement, will obtain from the
appropriate regulatory agencies any requisite authorization in order to issue
and sell such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements of the Agreement.
4. The number of Option Shares purchasable upon the exercise of this
option and the Option Price per share shall be subject to adjustment from time
to time subject to the following terms. If the outstanding shares of Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, the Company or its successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the per-share
Option Price thereof, which may be issued to the Optionee under this Agreement
upon exercise of the options granted under this Agreement. The purchase rights
represented by this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common Stock arising from
the dilution or other adjustment in the number of shares subject to this option
shall rounded-up to the nearest whole share.
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5. The Company covenants and agrees that all Option Shares which may be
delivered upon the exercise of this option will, upon delivery, be free from all
taxes, liens, and charges with respect to the purchase thereof; provided, that
the Company shall have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold such amount or
require the Optionee to make such provision of funds or other consideration as
the Company deems necessary to satisfy any income tax withholding obligation
under federal or state law.
6. The Company agrees at all times to reserve or hold available a
sufficient number of shares of Common Stock to cover the number of Option Shares
issuable upon the exercise of this and all other options of like tenor then
outstanding.
7. This option shall not entitle the holder hereof to any voting rights
or other rights as a shareholder of the Company, or to any other rights
whatsoever, except the rights herein expressed, and no dividends shall be
payable or accrue in respect of this option or the interest represented hereby
or the Option Shares purchasable hereunder until or unless, and except to the
extent that, this option shall be exercised.
8. The Company may deem and treat the registered owner of this option
as the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.
9. In the event that any provision of this Agreement is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in accordance
with the internal laws of the state of California, without regard to the
principles of conflicts of law thereof.
11. Except as otherwise provided herein, this Agreement shall be
binding on and inure to the benefit of the Company and the person to whom an
option is granted hereunder, and such person's heirs, executors, administrators,
legatees, personal representatives, assignees, and transferees.
IN WITNESS WHEREOF, the Company has caused this option to be executed
on the ___ day of __________, 200_, by the signature of its duly authorized
officer.
VIRAL GENETICS, INC.
By____________________________________
Duly Authorized Officer
The undersigned Optionee hereby acknowledges receipt of a copy of the
foregoing option and acknowledges and agrees to the terms and conditions set
forth in the option.
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_______________________________________
Therapeutic Genetics, Inc.
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Exercise Notice
(to be signed only upon exercise of Option)
TO: Viral Genetics, Inc.
The Optionee, holder of the attached option, hereby irrevocable elects
to exercise the purchase rights represented by the option for, and to purchase
thereunder, ________________________________ shares of common stock of Viral
Genetics, Inc., and herewith makes payment therefor, and requests that the
certificate(s) for such shares be delivered to the Optionee at:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
If acquired without registration under the Securities Act of 1933, as
amended ("Securities Act"), the Optionee represents that the Common Stock is
being acquired without a view to, or for, resale in connection with any
distribution thereof without registration or other compliance under the
Securities Act and applicable state statutes, and that the Optionee has no
direct or indirect participation in any such undertaking or in the underwriting
of such an undertaking. The Optionee understands that the Common Stock has not
been registered, but is being acquired by reason of a specific exemption under
the Securities Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any disposition of the
Common Stock may, under certain circumstances, be inconsistent with these
exemptions. The Optionee acknowledges that the Common Stock must be held and may
not be sold, transferred, or otherwise disposed of for value unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The Company is under no obligation to register the Common Stock under
the Securities Act, except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend restricting
transfer, except in compliance with applicable federal and state securities
statutes.
The Optionee agrees and acknowledges that this purported exercise of
the option is conditioned on, and subject to, any compliance with requirements
of applicable federal and state securities laws deemed necessary by the Company.
DATED this ________ day of ________________________________, _________.
_________________________________
Signature
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