FUNDING AND RESEARCH AGREEMENT
DATED AS OF SEPTEMBER 30, 1998
BY AND AMONG
NEXTERA THERAPEUTICS, INC.,
IMMTECH INTERNATIONAL, INC.
AND
FRANKLIN RESEARCH GROUP, INC.
TABLE OF CONTENTS
Caption Page
Section 1. Authorization for Sale and Issuance of Shares .....................1
Section 2. Initial Sale and Purchase of Shares ...............................1
A. Initial Sale and Purchase of Class A Shares ...................1
B. Initial Sale and Purchase of Class B Shares ...................1
Section 3. Options for Purchase of Additional Shares .........................2
A. Immtech Option to Purchase Additional Class A Shares ..........2
X. Xxxxxxxx Option to Purchase Additional Class B Shares .........2
Section 4. Conditional Subsequent Sale and Purchase of Class B Shares ........2
Section 5. Offerings by Company ..............................................3
A. Initial Class B Offering ......................................3
B. Subsequent Class B Offering ...................................3
C. Acknowledgment of Agreement ...................................3
Section 6. Loans to Company ..................................................3
A. Initial Franklin Loans ........................................3
B. Subsequent Franklin Loans .....................................4
Section 7. Closings ..........................................................5
A. Anticipated Closings ..........................................5
B. Location for Closings .........................................5
Section 8. Provisions Regarding mCRP and mCRP Assets .........................5
A. Descriptions ..................................................5
B. Assignment of Initial mCRP Assets .............................6
C. Licenses ......................................................6
D. Patent Expenses ...............................................6
E. Equipment .....................................................6
F. Immtech Assistance ............................................6
G. Representations and Warranties of Immtech .....................6
H. Director Approval of Certain Agreements .......................7
Section 9. Representations and Warranties of Company .........................7
A. Organization ..................................................7
B. Authority .....................................................7
C. No Violation ..................................................8
D. Capital Structure of Company ..................................8
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Section 10. General Representations and Warranties of Immtech .................8
A. Organization ..................................................8
B. Authority .....................................................8
C. No Violation ..................................................9
Section 11. General Representations and Warranties of Franklin ................9
A. Organization ..................................................9
B. Authority .....................................................9
C. No Violation ..................................................9
Section 12. Investment Representations, Etc. ..................................9
A. Purchase for Investment .......................................9
B. Legends on Certificates, Etc. ................................10
C. Rule 144 Under Act; Registration .............................10
D. Access to Information ........................................10
E. Suitability, Etc. ............................................10
F. Blue Sky Matters .............................................11
Section 13. Conditions to Obligations of Immtech and Franklin ................11
A. Representations and Warranties; Covenants ....................11
B. Delivery of Certificates .....................................11
C. Initial mCRP Assets Assignment ...............................11
D. Documents ....................................................11
E. Waiver of Conditions .........................................11
Section 14. Use of Initial Required Funding ..................................11
Section 15. Obligation to Provide and Use of Subsequent Funds ................11
Section 16. Employment Matters ...............................................12
A. Employment Agreement for Xx. Xxxxxxx .........................12
B. Shares for Xx. Xxxxxxx .......................................12
C. Stock Option Plan ............................................12
Section 17. Consequences in Event of Certain Funding Failures ................12
A. Initial Funding Failure ......................................12
B. Subsequent Funding Failure ...................................13
Section 18. Put Right of Immtech .............................................14
Section 19. Miscellaneous ....................................................14
A. Broker's and Finder's Fees ...................................14
B. Expenses .....................................................14
C. Enforcement Legal Fees .......................................14
D. Remedies .....................................................14
E. Survival of Representations and Warranties ...................15
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F. Successors and Assigns .......................................15
G. Severability .................................................15
H. Counterparts .................................................15
I. Descriptive Headings; Interpretation .........................15
J. Governing Law ................................................15
K. Notices ......................................................15
L. Jurisdiction; Venue; Service of Process ......................17
M. Legend .......................................................17
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FUNDING AND RESEARCH AGREEMENT
This Funding and Research Agreement (this "Agreement") is entered into as
of September 30, 1998 by and among NextEra Therapeutics, Inc., a Delaware
corporation (the "Company"), Immtech International, Inc., a Delaware corporation
("Immtech"), and Franklin Research Group, Inc., an Ohio corporation
("Franklin").
Immtech and Franklin agreed to and have formed the Company for the purpose
of contributing thereto certain medical technology and other related assets and
receiving funding, all for the purpose of conducting further research and
finding commercial application for such medical technology.
Accordingly, in pursuance of such purposes, the parties hereto agree as
follows:
Section 1. Authorization for Sale and Issuance of Shares. The Company has
authorized the sale and issuance as provided herein to (i) Immtech of up to
369,999 shares of Class A Common Stock of the Company ("Class A Shares") and
(ii) Franklin and others of up to 360,000 shares of Class B Common Stock of the
Company ("Class B Shares"). Further, the Company has previously authorized the
sale and issuance of 1 Class A Share to Immtech and 310,000 Class B Shares to
Franklin and/or its designees, and the Company has also previously authorized
and/or reserved for sale and issuance up to 163,333 shares of Class C Common
Stock of the Company ("Class C Shares," and collectively with Class A Shares and
Class B Shares, "Shares").
Section 2. Initial Sale and Purchase of Shares.
A. Initial Sale and Purchase of Class A Shares. At the Initial Immtech
Closing (defined in Section 7.A.), the Company shall sell to Immtech and Immtech
shall purchase from the Company, in consideration of assignment by Immtech to
the Company of the Initial mCRP Assets (defined in Section 8.A.) pursuant to a
General Assignment and Xxxx of Sale in the form of Exhibit A attached hereto
(the "Initial mCRP Assets Assignment"), and the grant of other rights by and the
other agreements of Immtech set forth herein, 329,999 Class A Shares.
B. Initial Sale and Purchase of Class B Shares. At the Initial Franklin
Closing (defined in Section 7.A.), the Company shall sell to Franklin and/or its
designees and Franklin and/or its designees shall purchase from the Company, for
the initial Franklin Consideration (defined below), the Initial Franklin Class B
Shares (defined below). For purposes hereof, the "Initial Franklin
Consideration" shall be an amount equal to: (i) if the aggregate net proceeds
(the "Initial Class B Offering Proceeds") received by the Company in the Initial
Class B Offering (defined in Section 5.A.) are equal to or more than $1,350,000
(the "initial Required Funding"), $1, or (ii) if the Initial Class B Offering
Proceeds are less than the Initial Required Funding, the Initial Required
Funding less the initial Class B Offering Proceeds. (As used in this Agreement,
"net proceeds" means the total proceeds received from an offering less any
expenses thereof borne by the Company.) Also, for purposes hereof, the "Initial
Franklin Class B Shares" shall be
that number of Class B Shares as is equal to (i) the sum of (a) 200,000 Class B
Shares and (b) that number of additional Class B Shares determined by dividing
the Initial Class B Offering Proceeds in excess of the Initial Required Funding
by $40.625 (the "Additional Initial Class B Shares"), less (ii) the aggregate
number of Class B Shares sold in the Initial Class B Offering.
Section 3. Options for Purchase of Additional Shares.
A. Immtech Option to Purchase Additional Class A Shares. Immtech shall
have the option, exercisable by written notice of exercise given to the Company
at any time and from time to time on or before the Outside Option Exercise Date
(defined below), to purchase up to an aggregate of an additional 40,000 Class A
Shares at a price of $40.625 per Class A Share. For any such option exercise
occurring after the MAB Opinion Event (defined in Section 15) and on or before
the Outside Option Exercise Date (a "Post-MAB Opinion Event Exercise"), the
aggregate price shall be payable in installments as follows:
Timing of Installments (Days After Amount of Installments (As a
MAB Opinion Event) Percentage of Aggregate Loan Amount)
---------------------------------- ------------------------------------
90 23.07692%
180 23.07692%
270 53.84616%
For purposes hereof, "Outside Option Exercise Date" means such date as is ten
(10) days after the date on which occurs the MAB Opinion Event.
X. Xxxxxxxx Option to Purchase Additional Class B Shares. Franklin shall
have the option, exercisable by written notice of exercise given to the Company
at any time and from time to time before the MAB Opinion Event, for Franklin
and/or its designees to purchase up to an aggregate of (i) an additional 120,000
Class B Shares, less (ii) the Additional Initial Class B Shares, at a price of
$40.625 per Class B Share.
Section 4. Conditional Subsequent Sale and Purchase of Class B Shares. If
the MAB Opinion Event occurs, then, at the Subsequent Franklin Closing (defined
in Section 7.A.), the Company shall sell to Franklin and/or its designees and
Franklin and/or its designees shall purchase from the Company, for the
Subsequent Franklin Consideration (defined below), the Subsequent Franklin Class
B Shares (defined below). For purposes hereof, the "Subsequent Franklin
Consideration" shall be an amount equal to: (i) if the aggregate net proceeds
(the "Subsequent Class B Offering Proceeds") received by the Company in the
Subsequent Class B Offering (defined in Section 5.B.) are equal to or more than
the Subsequent Remaining Funding (defined below), $1, or (ii) if the Subsequent
Class B Offering Proceeds are less than the Subsequent Remaining Funding, the
Subsequent Remaining Funding less the Subsequent Class B Offering Proceeds.
Also, for purposes hereof, the "Subsequent Franklin Class B Shares" shall be
that number of Class B Shares as is equal to (i) 360,000 Class B Shares less
(ii) the sum of (a) the number of Class B Shares sold in the Initial Class B
Offering, (b) the Initial Franklin Class B Shares, (c) the number of Class A
Shares sold pursuant to Section 3.A., (d) the number of Class B Shares sold
pursuant to Section 3.B. and (e) the number of Class B Shares sold in the
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Subsequent Class B Offering. Further, for purposes hereof, the "Subsequent
Remaining Funding" shall be an amount equal to (i) $7,850,000 less (ii) the sum
of (a) the Initial Franklin Consideration and the Initial Class B Offering
Proceeds (the "Initial Class B Proceeds"), (b) the aggregate proceeds received
and to be received from the sales of Class A Shares pursuant to Section 3.A. and
(c) the aggregate proceeds from the sale of Class B Shares pursuant to Section
3.B.
Section 5. Offerings by Company.
A. Initial Class B Offering. As and to the extent requested by Franklin,
the Company at its expense (it being understood that such expense shall be a
reduction from the proceeds of the offering in determining the "net proceeds"
from the offering for purposes of this Agreement) shall undertake an initial
private placement offering to accredited investors of up to 320,000 Class B
Shares at a price per Class B Share and for such number of such Class B Shares
as is determined by Franklin (the "Initial Class B Offering"). The period for
the Initial Class B Offering shall commence as soon as practicable after
Franklin's request therefor and shall terminate on such date as is requested by
Franklin (which date may not be later than December 31, 1998).
B. Subsequent Class B Offering. As and to the extent requested by
Franklin, the Company at its expense (it being understood that such expense
shall be a reduction from the proceeds of the offering in determining the "net
proceeds" from the offering for purposes of this Agreement) shall undertake a
subsequent offering of up to that number of Class B Shares which Franklin and/or
its designees would be required to purchase under Section 4 but for such
offering at a price per Class B Share and for such number of such Class B Shares
as is determined by Franklin (the "Subsequent Class B Offering"). The period for
the Subsequent Class B Offering shall commence as soon as practicable after
Franklin's request therefor and shall terminate on such date as is requested by
Franklin, (which date may not be later than 210 days after the date of
occurrence of the MAB Opinion Event).
C. Acknowledgment of Agreement. In both the Initial Class B Offering and
the Subsequent Class B Offering, any purchaser of Class B Shares shall be
required in connection with such purchase to acknowledge in writing this
Agreement so that this Agreement will be treated as a "Qualifying Agreement" for
purposes of the Company's Certificate of Incorporation.
Section 6. Loans to Company.
A. Initial Franklin Loans. Franklin and/or its designees have made and
shall make the following initial loans to or for the benefit of the Company in
the aggregate amount of the Initial Required Funding:
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Dates of Loans Amount of Loans
-------------- ---------------
April, 1998 $50,000
June 4, 1998 $100,000
July 15, 1998 $50,000
July 31, 1998 $350,000
September 30, 1998 $350,000
December 31, 1998 $250,000
March 1, 1999 $200,000
----------
Total $1,350,000
The terms of such initial loans shall be as follows:
(i) The loans shall be without interest.
(ii) The loans may and shall be repaid only out of the Initial Class B
Proceeds, and shall be repaid in whole or in part upon demand by Franklin at any
time when there are sufficient Initial Class B Proceeds for such repayment.
(iii) To the extent there are Initial Class B Proceeds available, Franklin
may elect to have them applied on a one-time basis against the above loan
obligations so that Franklin will not have to make loans to such extent, it
being understood that the Initial Class B Proceeds so applied will not then be
available to repay any of the loans otherwise made under this Section 6.A.
B. Subsequent Franklin Loans. In the event of and following the occurrence
of the MAB Opinion Event, Franklin and/or its designees shall make the following
subsequent loans to the Company in the aggregate amount of the Subsequent
Remaining Funding:
Timing of Loans (Days After Amount of Loans (As a
MAB Opinion Event) Percentage of Aggregate Price)
--------------------------- -----------------------------
90 23.07692%
180 23.07692%
270 53.84616%
The terms of such subsequent loans shall be as follows:
(i) The loans shall be without interest.
(ii) The loans may and shall be repaid only out of the Subsequent Class B
Offering Proceeds and the Subsequent Franklin Consideration (the "Subsequent
Class B Proceeds"), and shall be repaid in whole or in part upon demand by
Franklin at any time when there are sufficient Subsequent Class B Proceeds for
such repayment.
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(iii) To the extent there are Subsequent Class B Proceeds available,
Franklin may elect to have them applied on a one-time basis against the above
loan obligations so that Franklin will not have to make loans to such extent, it
being understood that the Subsequent Class B Proceeds so applied will not then
be available to repay any of the loans otherwise made under this Section 6.B.
Section 7. Closings.
A. Anticipated Closings. The following closings are anticipated hereunder
and shall occur on the dates specified below unless the parties hereafter agree
to different dates:
(i) The "Initial Immtech Closing" pursuant to Section 2.A., which
shall occur effective as of the date hereof
(ii) The "Initial Franklin Closing" pursuant to Section 2.B., which
shall occur on the earlier of (i) such date as is designated by Franklin or (ii)
March 1, 1999.
(iii) The closings for option exercises under Section 3, which shall
occur sixty (60) days after the Company has been given written notice of an
option exercise under Section 3, except that the closing for a Post-MAB Opinion
Event Exercise shall occur ninety (90) days after the date of occurrence of the
MAB Opinion Event.
(iv) The "Subsequent Franklin Closing" pursuant to Section 4, which
shall occur on the earlier of (i) such date after the Outside Option Exercise
Date as is designated by Franklin or (ii) such date as is two hundred seventy
(270) days after the date of occurrence of the MAB Opinion Event.
B. Location for Closings. All closings hereunder shall take place at such
place as is mutually agreed to by the Company and the participating parties.
Section 8. Provisions Regarding mCRP and mCRP Assets.
A. Descriptions. The term "mCRP" is used to refer to the protein known as
"modified C-Reactive Protein." For purposes of this Agreement, the "mCRP Assets"
are the following assets of Immtech: (i) Immtech's domestic and international
patents relating to the manufacture, function and uses of mCRP, with the
exception of such patents for uses in Sepsis and uses as an adjuvant in
vaccines, as delineated in Schedule A attached hereto (the "Patents"); (ii) all
of Immtech's proprietary and non-proprietary information on mCRP, including any
records and printed material relating thereto; (iii) all licensed rights
relating to mCRP, including any rights licensed from Northwestern University;
(iv) all instruments and other equipment listed on Schedule B attached hereto
and all other instruments and other equipment currently owned by Immtech and
used in the research and manufacture of mCRP, including all personal property
located at 0000 Xxxxx Xxxxxx in Evanston, Illinois (the "Equipment"); and (v)
all other assets, tangible and intangible, of Immtech primarily used in
connection with mCRP. The "Initial mCRP Assets" are all of the mCRP Assets other
than the Equipment.
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B. Assignment of Initial mCRP Assets. Immtech shall assign the Initial
mCRP Assets to the Company at the Initial Immtech Closing as provided in Section
2.A., and shall also execute and deliver to the Company such patent assignments
and other documents as are requested by the Company to further document and
effect the assignment of the Initial mCRP Assets to the Company.
C. Licenses. Effective upon completion of the Initial Immtech Closing, the
Company hereby grants to Immtech a perpetual, non-exclusive, royalty-free
license for the manufacture of mCRP solely for the purpose of uses in Sepsis and
uses as an adjuvant in vaccines. In the event any of Immtech's existing licenses
as licensor to any licensee for the use by such licensee of mCRP in the
treatment of Sepsis and/or as an adjuvant in vaccines is terminated for any
reason, Immtech shall offer the Company a license therefor on the same terms as
the existing license which terminated.
D. Patent Expenses. Following assignment of the Patents to the Company as
a part of the Initial mCRP Assets Assignment, the Company shall become and
thereafter be responsible for the future maintenance and prosecution of the
Patents and the costs therefor, it being understood that the Company shall not
have any such responsibility with respect to the patents for uses in Sepsis and
uses as an adjuvant in vaccines which are not so assigned to the Company.
E. Equipment. If the MAB Opinion Event occurs, Immtech shall assign the
Equipment to the Company, pursuant to an assignment in a form substantially the
same as the Initial mCRP Assets Assignment, within ninety (90) days after the
occurrence of the MAB Opinion Event. In this regard, the representations and
warranties of Immtech set forth in Section 8.G.(i) and Section 8.G.(ii) shall be
accurate at the time of such assignment. Prior to such assignment, the Company
shall have access to and usage of all of the Equipment, and shall have the
obligation to pay its reasonable share of any maintenance costs associated with
the Equipment.
F. Immtech Assistance. During the Phase I Trials (defined in Section 14)
and thereafter through completion of the Phase II and Phase III human clinical
trials (see Section 15), Immtech shall make available to the Company, at
reasonable times and for reasonable compensation, Immtech employees and
consultants who have knowledge concerning mCRP and its development.
G. Representations and Warranties of Immtech. Immtech hereby represents
and warrants to the Company and Franklin with respect to the mCRP Assets as
follows:
(i) Immtech has good and merchantable title (and complete right of
possession) to the mCRP Assets and owns the mCRP Assets free and clear of all
mortgages, liens, pledges, encumbrances, charges or claims of any nature
whatsoever or howsoever arising. All of the mCRP Assets are in material
compliance with all applicable laws, rules, regulations and requirements of
governmental authorities having jurisdiction.
(ii) Upon assignment of any of the mCRP Assets to the Company as
provided herein, the mCRP Assets so assigned will, in the possession of the
Company, be free and clear of
6
all mortgages, liens, pledges, encumbrances, charges or claims of any nature
whatsoever or howsoever arising, except those created by the Company (if any).
(iii) There are no unpaid taxes, assessments or public charges of
any type or nature whatsoever due or payable to a federal, state or local
government or agency which are or will become a lien or charge against or which
will otherwise affect any of the mCRP Assets.
(iv) There are no actions, suits, proceedings, claims or
investigations pending or threatened against Immtech in any court or before any
governmental body or agency nor is Immtech subject to any order, judgment or
decree, stipulation or consent or any agreement with any governmental body or
agency which adversely affects or may adversely affect the mCRP Assets, and
there is no basis or grounds for any such action, suit, proceeding, claim,
investigation, order, judgment or decree, stipulation or consent or agreement.
(v) Except for this Agreement, Immtech has not entered into any
agreement with any person to sell, assign, transfer or in any way encumber the
mCRP Assets or any part thereof.
(vi) The Equipment is in good and operable condition and has been
maintained properly and, where applicable, in accordance with standard industry
maintenance procedures.
(vii) To the best of Immtech's knowledge, no Patent infringes upon
any patent or patent application of any third party and no Patent has been or is
now currently involved in any interference or opposition proceeding. Immtech is
not aware of any interfering patent or patent application of any third party
with respect to the Patents or of any infringement by any third party of the
Patents.
H. Director Approval of Certain Agreements. Until completion of the Phase
I Trials, any agreement (other than this Agreement and all agreements and
instruments contemplated herein) entered into by the Company relating to mCRP,
including any license or sublicense with respect thereto, with any person or
entity that is related in any way to Immtech or Franklin or any other
shareholder or any director of the Company shall require approval by a Special
Director Vote (as such term is defined in the Company's Certificate of
Incorporation).
Section 9. Representations and Warranties of Company. The Company hereby
represents and warrants to Immtech and Franklin as follows:
A. Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has delivered to each of Immtech and Franklin true and complete copies
of the Company's Certificate of Incorporation and By-Laws (the "Company
Organizational Documents"), in each case as amended to the date hereof, and the
Company Organizational Documents are in full force and effect on the date
hereof.
B. Authority. The Company has all requisite corporate power and authority
to execute and deliver this Agreement and to perform all of its obligations
hereunder, and no
7
consent or approval of any other person or governmental authority is required
therefor. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of the Company. This Agreement is a valid and binding
obligation of the Company, and is enforceable against it in accordance with its
terms and conditions, except as the enforceability thereof may be limited by the
following "Enforceability Limitations": bankruptcy, insolvency or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
C. No Violation. The execution and delivery of this Agreement and the
consummation by the Company of the transactions contemplated hereby will not,
and with the giving of notice or lapse of time will not, (i) violate, constitute
a default under or cause the termination of (a) the Company Organizational
Documents, (b) any agreement, mortgage, license, permit or other instrument or
obligation to which the Company is bound or to which any of the assets of the
Company is subject or (c) any statute or law or any judgment, decree, order,
regulation or rule of any court or governmental authority, or (ii) result in or
require the creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of the assets of the Company or the
Shares.
D. Capital Structure of Company. The authorized capital stock of the
Company as of the date hereof consists of (i) 1,000,000 Class A Shares, of which
1 Class A Share is issued and outstanding and held by Immtech, (ii) 1,000,000
Class B Shares, of which 310,000 Class B Shares are issued and outstanding and
held by Franklin and/or its designees, and (iii) 500,000 Class C Shares, of
which 33,333 Class C Shares are issued and outstanding and held by Xxxxxxxx X.
Xxxxxxx ("Xx. Xxxxxxx"), 30,000 Class C Shares are reserved for issuance
pursuant to options granted or to be granted to Xx. Xxxxxxx and 100,000 Class C
Shares are reserved for issuance pursuant to options to be granted under the
Company Stock Option Plan (defined in Section 16.C.). All of the Shares that are
issued and outstanding are duly authorized, validly issued, fully paid and
non-assessable. The Shares to be issued at all closings pursuant hereto will,
upon issuance, be duly authorized, validly issued, fully paid and
non-assessable. Except as contemplated by this Agreement and except as set forth
above, there are no outstanding subscriptions, options, rights, warrants,
convertible securities or other agreements or commitments obligating the Company
to issue or to transfer from its treasury any additional shares of its capital
stock of any class, nor are there any agreements or commitments obligating the
Company to repurchase or redeem any of the shares of its capital stock.
Section 10. General Representations and Warranties of Immtech. Immtech
hereby represents and warrants to the Company and Franklin as follows:
A. Organization. Immtech is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware.
B. Authority. Immtech has all requisite corporate power and authority to
execute and deliver this Agreement and to perform all of its obligations
hereunder, and no consent or approval of any other person or governmental
authority is required therefor. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been
8
duly authorized by all necessary corporate action of Immtech. This Agreement is
a valid and binding obligation of Immtech, and is enforceable against it in
accordance with its terms and conditions, except as the enforceability thereof
may be limited by the Enforceability Limitations.
C. No Violation. The execution and delivery of this Agreement and the
consummation by Immtech of the transactions contemplated hereby will not, and
with the giving of notice or lapse of time will not, violate, constitute a
default under or cause the termination of (i) the Certificate of Incorporation
or By-Laws of Immtech, (ii) any agreement, mortgage, license, permit or other
instrument or obligation to which Immtech is bound or (iii) any statute or law
or any judgment, decree, order, regulation or rule of any court or governmental
authority.
Section 11. General Representations and Warranties of Franklin. Franklin
hereby represents and warrants to the Company and Immtech as follows:
A. Organization. Franklin is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio.
B. Authority. Franklin has all requisite corporate power and authority to
execute and deliver this Agreement and to perform all of its obligations
hereunder, and no consent or approval of any other person or governmental
authority is required therefor. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary corporate action of Franklin. This Agreement is a valid and
binding obligation of Franklin, and is enforceable against it in accordance with
its terms and conditions, except as the enforceability thereof may be limited by
the Enforceability Limitations.
C. No Violation. The execution and delivery of this Agreement and the
consummation by Franklin of the transactions contemplated hereby will not, and
with the giving of notice or lapse of time will not, violate, constitute a
default under or cause the termination of (i) the Articles of Incorporation or
Regulations of Franklin, (ii) any agreement, mortgage, license, permit or other
instrument or obligation to which Franklin is bound or (iii) any statute or law
or any judgment, decree, order, regulation or rule of any court or governmental
authority.
Section 12. Investment Representations, Etc. Each of Immtech and Franklin
severally represents, warrants and acknowledges to the Company as follows:
A. Purchase for Investment. The Shares being purchased by it hereunder
(the "Securities") have not been registered under the Securities Act of 1933, as
amended (the "Act"), in reliance on the nonpublic offering exemption contained
in Section 4(2) of the Act. The Securities are being and will be acquired by it
for its own account, for investment purposes (meaning to hold for an indefinite
period) and without any intention to distribute or otherwise dispose of the
same. It will not sell, hypothecate, assign, transfer or otherwise dispose of
the Securities in violation of any federal or state securities law, and in any
event not unless (i) the Securities are registered under the Act pursuant to an
effective registration statement contemplating the transaction or transactions
in which the Securities are to be disposed of or (ii) the Company shall have
received an opinion of counsel (both the opinion and such counsel being
reasonably satisfactory to the Company) to the effect that the sale or other
proposed disposition
9
of the Securities may be accomplished without such registration. It understands
that it must bear the economic risk of the investment in the Securities for an
indefinite period of time. It has not offered or reoffered the Securities to any
other person, and has taken no action which of itself would cause the aforesaid
nonpublic offering exemption not to be available to the Company with respect to
the offer and sale of the Securities to it.
B. Legends on Certificates, Etc. The Company shall appropriately note its
stock records and may give instructions to any transfer agent for its securities
consistent with Section 12.A., and the certificates for the issued Securities
shall bear an appropriate legend in that regard.
C. Rule 144 Under Act: Registration. Rule 144 under the Act (the "Rule")
is not available for resales of the Securities by it because the Company does
not satisfy certain conditions of the Rule. For so long as the Rule is not
available any resale or other transfer of the Securities, under circumstances
in which the seller or the person through whom the sale is made may be deemed to
be an underwriter as that term is used in the Act, may require compliance with
some other exemption under the Act or the rules and regulations of the
Securities and Exchange Commission, or any governmental authority succeeding
thereto or substituted therefor, and any resale or other transfer of the
Securities at such time in the future as the Rule may be available which is made
in reliance upon the Rule can be made only in limited amounts in accordance with
the terms and conditions of the Rule (including the fact that the Securities
must be held for minimum periods of time). It understands that the Securities
are characterized as "restricted securities" under the United States securities
law inasmuch as they are being acquired from the Company in transactions not
involving a public offering and that under such laws and applicable regulations
the Securities may be resold without registration under the Act only in certain
circumstances. In this connection, it represents that it understands the resale
limitations imposed by the Rule. The Company is under no obligation to register
any of the Securities under the Act.
D. Access to Information. It and representatives of it such as its
attorneys, accountants and other financial advisors, if any, have received
access to such information (financial and other) concerning the Company and its
business and prospects as shall have been requested by it and its
representatives; the Company has made available thereto the officers,
accountants and employees of the Company for the purpose of discussing and
responding to questions concerning the Company and its business, operations,
market potential, capitalization, financial condition and prospects, and all
other matters deemed relevant by it and its representatives; and the Company has
provided thereto copies of all material corporate documents, records, financial
statements and other data pertaining to the foregoing as shall have been
requested thereby.
E. Suitability, Etc. It has evaluated the risks of purchasing the
Securities, and has determined that the Securities are a suitable investment for
it. It has such knowledge and experience in financial and business matters that
it is capable of evaluating the merits and risks of its purchase of and
investment in the Securities. It has not been formed for the purpose of
investing in the Company. It has sufficient financial resources to bear the loss
of its entire investment in the Securities.
10
F. Blue Sky Matters. All offers or sales of the Securities to it have
taken or will take place in no state or jurisdiction other than in the State of
Delaware, and it intends that the state securities or blue sky laws of only such
State shall govern the offer and sale of the Securities to it.
Section 13. Conditions to Obligations of Immtech and Franklin. The
obligations of each of Immtech and Franklin to perform hereunder are subject to
the satisfaction of the following conditions:
A. Representations and Warranties: Covenants. The representations and
warranties of the other parties hereto contained herein shall be true and
correct, and the other parties hereto shall have performed in all material
respects all of the covenants then required to be performed by them hereunder.
B. Delivery of Certificates. The Company shall have delivered share
certificates evidencing the Shares purchased by Immtech or Franklin and/or its
designees in connection with any closing therefor.
C. Initial mCRP Assets Assignment. Immtech shall have executed and
delivered to the Company the Initial mCRP Assets Assignment at the Initial
Immtech Closing.
D. Documents. The parties hereto shall have delivered such documents
relating to the transactions contemplated by this Agreement as the other parties
hereto or counsel therefor may reasonably request.
E. Waiver of Conditions. Any condition specified in this Section 13 for
the benefit of a party may be waived if consented to by such party, provided
that no waiver shall be effective against any party unless it is set forth in a
writing executed by that party.
Section 14. Use of Initial Required Funding. The Company shall use the
Initial Required Funding to prepare for and conduct Phase I human clinical
trials on the safety and effectiveness of mCRP (the "Phase I Trials"). The Phase
I Trials shall include at least 30 patients and shall be conducted primarily as
safety tests, and it is anticipated that the Phase I Trials will also provide
preliminary but statistically significant data evidencing that mCRP is
therapeutically efficacious in the treatment of cancer in humans. The Phase I
Trials will commence in 1999, and it is anticipated that the Phase I Trials will
be completed before the end of 1999.
Section 15. Obligation to Provide and Use of Subsequent Funds. Following
completion of the Phase I Trials, a Medical Advisory Board (the "MAB") having no
fewer than three qualified members shall be appointed by the Company's Board of
Directors. The MAB shall be requested to render an opinion as to whether or not
the results of the Phase I Trials indicate that mCRP is safe for use in humans
and has a statistically significant and therapeutically efficacious effect on
cancer in humans. The MAB shall render its opinion within thirty (30) days of
receipt of the data from the Phase I Trials. If a majority of the MAB members
render an opinion that the results of the Phase 1 Trials indicate that mCRP is
safe for use in
11
humans and has a statistically significant and therapeutically efficacious
effect on cancer in humans (the rendering of such opinion shall be considered
the "MAB Opinion Event"), then Franklin shall be obligated to make the loans
pursuant to Section 6.B. and purchase the Subsequent Franklin Class B Shares
pursuant to Section 4. These funds and all other funds provided pursuant to this
Agreement in excess of the Initial Required Funding and amounts applied to the
repayment of loans pursuant to Section 6 shall be used by the Company to conduct
Phase II and Phase III human clinical trials.
Section 16. Employment Matters.
A. Employment Agreement for Xx. Xxxxxxx. The Company shall enter into an
employment agreement with Xx. Xxxxxxx in such form as is mutually agreed to by
Xx. Xxxxxxx and the Company (the "Xxxxxxx Employment Agreement"). The Xxxxxxx
Employment Agreement shall (i) have an initial term of three (3) years
commencing October 1, 1998, (ii) provide an option for the Company to renew the
term for an additional two (2) years, (iii) provide for an initial annual salary
of $120,000 plus benefits provided to other employees of the Company, (iv)
provide for bonuses and salary increases as determined by the Company's Chief
Executive Officer and/or Board of Directors and (v) contain appropriate
competition restriction provisions.
B. Shares for Xx. Xxxxxxx. Xx. Xxxxxxx currently owns 33,333 Class C
Shares. Further, Xx. Xxxxxxx shall be granted an option for an additional 30,000
Class C Shares pursuant to an option agreement in such form as is approved by
the Company's Board of Directors (the "Xxxxxxx Option Agreement"). The Xxxxxxx
Option Agreement shall provide for an option price of $.10 per Class C Share
and have vesting provisions. The vesting provisions shall provide for vesting of
such option in four (4) equal annual installments of 7,500 Class C Shares each
on April 1, 1999 and thereafter on each anniversary of such date, provided that
any portion of the option which is unvested automatically shall become fully
vested (i) upon the submission of a "new drug application" by the Company in any
major industrialized country for regulatory approval of a product based upon
mCRP, (ii) if the Company enters into a license with any person who is required
by the terms of the license to file such a "new drug application" or (iii) if
there is a change in control of the Company as specified in the Xxxxxxx Option
Agreement.
C. Stock Option Plan. The Company has established a stock option plan (the
"Company Stock Option Plan") for employees and consultants pursuant to which
100,000 Class C Shares have been reserved by the Company for option grants and
issuance.
Section 17. Consequences in Event of Certain Funding Failures.
A. Initial Funding Failure. If Franklin fails to make any of the loans
provided for in Section 6.A. or the purchase of Initial Franklin Class B Shares
pursuant to Section 2.B. as required by either of said Sections, and if any such
failure continues uncured for thirty (30) days after Immtech or the Company
notifies Franklin in writing of such failure, then Immtech shall have the
option, exercisable by written notice given by Immtech to Franklin (the "Immtech
Notice") at any time while such failure thereafter continues, of (i) if Immtech
is publicly traded (trading on the OTC Bulletin Board service or any other
electronic bulletin board providing an
12
electronic quotation medium for securities not listed on the Nasdaq Stock Market
or a registered national securities exchange shall not constitute "publicly
traded" for this purpose) at such time, exchanging, for all of the outstanding
Class B Shares and the outstanding loans from Franklin under Section 6.A.,
Immtech stock which has a value (based on the average price for the Immtech
stock over the thirty (30) trading days immediately preceding the day the
Immtech Notice is given) which is 90% of the aggregate amount contributed to the
Company for the purchase of such Class B Shares and outstanding as loans from
Franklin under Section 6.A. or (ii) purchasing all of the outstanding Class B
Shares and the outstanding loans from Franklin under Section 6.A. for cash in an
amount which is 90% of the aggregate amount contributed to the Company for the
purchase of such Class B Shares and outstanding as loans from Franklin under
Section 6.A. If Immtech exercises either such option, it must close thereon
within ninety (90) days after it gives the Immtech Notice.
B. Subsequent Funding Failure. If Franklin fails to make any of the loans
provided for in Section 6.B. or the purchase of the Subsequent Franklin Class B
Shares pursuant to Section 4 as required by either of said Sections, and if any
such failure continues uncured for thirty (30) days after Immtech or the Company
notifies Franklin in writing of such failure, then Immtech shall have the
option, exercisable by an Immtech Notice given at any time while such failure
thereafter continues, of purchasing an additional number of Class A Shares at a
price of $1.00 per Class A Share such that Immtech would have a simple majority
of the issued and outstanding Class A Shares and Class B Shares on a combined
basis, and in the event Immtech exercises and closes on such option then (i) the
Company shall be deemed to have sold and Franklin shall be deemed to have
purchased, effective immediately prior to Immtech's closing on such option, in
consideration of the outstanding amount of the subsequent loans to the Company
by Franklin under Section 6.B. which loans shall be deemed paid by Franklin as
consideration therefor, that number of Class B Shares as such consideration
would have purchased under Section 4 if the Subsequent Franklin Closing had
occurred as of such sale and purchase, (ii) all outstanding Class B Shares
(including without limitation the Class B Shares deemed sold and purchased
pursuant to clause (i)) automatically shall thereupon convert to Class A Shares
pursuant to provision therefor in the Company's Certificate of Incorporation and
(iii) Franklin and the Company shall cease to have any further rights or
obligations under Section 4, Section 5.B. and Section 6.X.
Xxxxxxxx agrees to, and hereby grants to Immtech, with full power of
substitution, an irrevocable proxy pursuant to the provisions of the Delaware
General Corporation Law to vote, and to execute and deliver written consents or
otherwise act with respect to, all Shares and all other voting securities of the
Company now owned or hereafter acquired by Franklin as fully, to the same extent
and with the same effect as Franklin might or could do under any applicable laws
or regulations governing the rights and powers of stockholders of a Delaware
corporation, in connection with any matter necessary to give Immtech the full
benefit of the option provided for above in this Section 17.B., including
without limitation voting with respect to an amendment to the Company's
Certificate of Incorporation to increase the number of authorized Class A
Shares. Franklin hereby affirms that this proxy is coupled with an interest and
is irrevocable. The Company agrees to take such action as may be necessary to
give Immtech the full benefit of such option, including without limitation a
vote by the Board of Directors with respect to, and
13
the filing of such documents necessary to evidence, an amendment to the
Company's Certificate of Incorporation to increase the number of authorized
Class A Shares.
Section 18. Put Right of Immtech. At any time during the Put Period
(defined below), Immtech shall have the right (but not the obligation) to
require the Company to purchase all (but not less than all) of Immtech's Shares
at a purchase price equal to the lesser of (i) the fair market value of such
Shares as determined by a national investment banking firm selected by Immtech
and the Company and approved by Franklin which has experience in valuing
biotechnology companies (the "Value Determination") or (ii) $5.00 per Share. The
cost of such Value Determination shall be borne by Immtech. If Immtech exercises
its right to require the Company to purchase all of its Shares, then the closing
of the Company's purchase of such Shares shall occur within sixty (60) days
after the Company's receipt of the Value Determination. At such closing, Immtech
shall deliver certificates representing the Shares being acquired by the
Company, duly endorsed for transfer, and such Shares shall be free and clear of
any liens, claims, options, charges, encumbrances or rights of others, and
Immtech shall so represent and warrant and shall further represent and warrant
that it is the beneficial owner of such Shares. The Company shall deliver at
such closing, by official bank check or by wire transfer of immediately
available funds, payment in full for such Shares. At such closing, all parties
to the transaction shall execute and deliver such documents as are reasonably
requested and otherwise appropriate. For purposes hereof, the "Put Period" shall
be from July 8, 2003 through and including August 6, 2003.
Section 19. Miscellaneous.
A. Broker's and Finder's Fees. Each party hereto represents and warrants
to the other parties hereto that neither they nor any of their affiliates have
engaged or dealt with any broker, finder or other person who may be entitled to
any brokerage fee or commission in respect of the execution of this Agreement or
the consummation of the transactions contemplated hereby. Each of the parties
hereto shall indemnify and hold harmless the other parties hereto against any
and all claims for brokerage commissions or finder's fees incurred by reason of
any action taken by the indemnifying party.
B. Expenses. The Company agrees to pay and hold Immtech and Franklin
harmless from liability for the payment of the fees and expenses of Squire,
Xxxxxxx & Xxxxxxx L.L.P. and [Immtech Counsel] arising in connection with the
negotiation, execution and consummation of this Agreement and the other
agreements and documents contemplated hereby.
C. Enforcement Legal Fees. In the event of any dispute arising out of the
subject matter of this Agreement, a party which obtains a judgment in its favor
shall be entitled to recover from the adverse party to the judgment, in addition
to any other damages assessed, its reasonable attorneys' fees and other costs
and expenses incurred in obtaining such judgment.
D. Remedies. Each party hereto shall have all rights and remedies set
forth in this Agreement and all rights and remedies which such party has under
any law. Any party having rights under any provision of this Agreement shall be
entitled to enforce such rights specifically
14
(without posting a bond or other security), to recover damages by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law.
E. Survival of Representations and Warranties. All representations and
warranties contained herein or made in writing by any party in connection
herewith shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, regardless of any
investigation made by any party or on behalf of any party.
F. Successors and Assigns. Except as otherwise expressly provided herein,
all covenants and agreements contained in this Agreement by or on behalf of any
of the parties hereto shall bind and inure to the benefit of and be enforceable
by the respective successors and assigns of the parties hereto whether so
expressed or not. In addition, and whether or not any express assignment has
been made, the provisions of this Agreement which are for any party's benefit as
a purchaser or holder of Shares are also for the benefit of, and enforceable by,
any subsequent holder of such Shares.
G. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such prohibition or invalidity, without invalidating the remainder of this
Agreement.
H. Counterparts. This Agreement may be executed in separate counterparts,
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same agreement.
I. Descriptive Headings; Interpretation. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the word "including" in this Agreement shall be by way of
example rather than by limitation.
J. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law) as to all matters.
K. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally to the
recipient, sent to the recipient by reputable express courier service (charges
prepaid) or mailed to the recipient by certified or registered mail, return
receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to each party at the address indicated below:
15
If to the Company, to:
NextEra Therapeutics, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Philipp D. Nick
President
With a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
If to Immtech, to:
Immtech International, Inc.
0000 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attention: T. Xxxxxxx Xxxxxxxx
President
With a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
If to Franklin, to:
Franklin Research Group, Inc.
0000 Xxxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attention: Philipp D. Nick
President
16
With a copy to:
Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxxx X. Xxxxx, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
L. Jurisdiction; Venue; Service of Process. Each of the parties
irrevocably submits to the exclusive jurisdiction of any State of Ohio or United
States Federal Court sitting in Franklin County, Ohio in any action or
proceeding arising out of or relating to this Agreement or the transactions
contemplated hereby. Each of the parties irrevocably waives, to the fullest
extent it may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action or proceeding. Each of the parties consents to
the service of copies of the summons and complaint and any other process which
may be served in any such action or proceeding by the mailing or delivering of a
copy of such process to such party at its address specified in or pursuant to
Section 19.K. Each of the parties agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
M. Legend. All certificates issued for Shares shall contain an appropriate
legend providing notice of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
NEXTERA THERAPEUTICS, INC. IMMTECH INTERNATIONAL, INC.
By: /s/ Philipp D. Nick By: /s/ T. Xxxxxxx Xxxxxxxx
---------------------------- ----------------------------
Name: Philipp D. Nick Name: T. Xxxxxxx Xxxxxxxx
--------------------------- ---------------------------
Title: President Title: President
-------------------------- --------------------------
FRANKLIN RESEARCH GROUP, INC.
By: /s/ Philipp D. Nick
---------------------------
Name: Philipp D. Nick
--------------------------
Title: President
-------------------------
17
