-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SftWNurGRxF4442GBCKFAnRZAw6xW8llxs1e1viG/2/CVxOz47fPtdHJGo+K6+F4 qMzYqFXEgQ43i9dnGrMCkg== 0000812796-97-000010.txt : 19970513 0000812796-97-000010.hdr.sgml : 19970513 ACCESSION NUMBER: 0000812796-97-000010 CONFORMED SUBMISSION TYPE: 10KSB/A PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970512 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ENDOREX CORP CENTRAL INDEX KEY: 0000812796 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 411505029 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10KSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-16929 FILM NUMBER: 97600139 BUSINESS ADDRESS: STREET 1: 3233 15TH STREET SOUTH CITY: FARGO STATE: ND ZIP: 58104 BUSINESS PHONE: 7012329575 MAIL ADDRESS: STREET 1: 3233 15TH STREET SOUTH CITY: FARGO STATE: ND ZIP: 58104 FORMER COMPANY: FORMER CONFORMED NAME: IMMUNOTHERAPEUTICS INC DATE OF NAME CHANGE: 19920703 10KSB/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-KSB/A AMENDMENT #2 (Mark One) [ ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED] For the fiscal year ended [x] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from February 1, 1996 to December 31, 1996 Commission File Number 0-11572 Endorex Corp. (Name of small business issuer in its charter) Delaware 41-1505029 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 900 North Shore Drive Lake Bluff, Illinois 60044 (Address of principal executive offices) (Zip Code) Issuer's telephone number, including area code: 847-604-7555 ImmunoTherapeutics, Inc., 3233 15th Street South, Fargo, ND 58104, January 31, 1996 (Former name, former address and former fiscal year, if changed since last report) Securities registered under Section 12(b) of the Exchange Act: Title of Each Class Name of each exchange on which registered None Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $.001 per share Common Stock Purchase Warrants (Title of class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ] Revenues for its most recent fiscal year were - $-0-. The aggregate market value of the voting stock held by non-affiliates computed by reference to the average bid and asked prices of such stock, as of April 8, 1997 was $2,414,186. Non-affiliates have been determined on the basis of holdings set forth under Item 11 of this Annual Report on Form 10-KSB. As of April 8, 1997 the issuer had 16,318,870 shares of Common Stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE None ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K. (c) Exhibits: 3 (i) Certificate of Incorporation of Registrant (1). 3 (i)(a) Certificate of Ownership and Merger filed March 30, 1987 (1). 3 (i)(b) Certificate of Amendment to Certificate of Incorporation filed September 7, 1989(2). 3 (i)(c) Certificate of Amendment to Certificate of Incorporation filed November 13, 1990 (3). 3 (i)(d) Certificate of Amendment to Certificate of Incorporation filed May 29, 1991 (3). 3 (i)(e) Certificate of Amendment to Certificate of Incorporation filed February 27, 1992 (reverse stock split)(3). 3 (i)(f) Certificate of Amendment to Certificate of Incorporation filed February 27, 1992 (increase in authorized shares)(3). 3 (i)(g) Certificate of Amendment to Certificate of Incorporation filed June 29, 1993. SE 3 (i)(h) Certificate of Amendment to Certificate of Incorporation filed August 15, 1996. SE 3 (ii) By-laws of Registrant (1). 4 (i)(a) Specimen Common Stock Certificate (1). 4 (i)(b) Form of Warrant Agreement between the Registrant and American Stock Transfer & Trust Company (1). 10.1 Patent License Agreement dated December 16, 1996 between the Registrant and Massachusetts Institute of Technology. SE 10.2 Consultation Agreement dated as of September 1, 1996 between the Registrant and Kenneth Tempero, Ph.D., M.D. SE 10.3 Employment Agreement dated June 1, 1996 between the Registrant and Gerald Vosika. SE 10.4 Letter Agreement Amendment and Waiver dated June 25, 1996 to Employment Agreement between Registrant and Gerald Vosika dated June 1, 1996. SE 10.5 Employment Agreement dated July 25, 1996 between the Registrant and Michael S. Rosen (5). 10.6 Employment Agreement dated December 1, 1996 between the Registrant and Robert N. Brey. SE 10.7 Purchase Agreement dated March 1, 1996 between the Registrant and Dominion Resources, Inc.(4). 10.8 Purchase Agreement dated as of June 13, 1996 between the Registrant, Dominion Resources, Inc., The Aries Fund and The Aries Domestic Fund, L.P. SE 10.9 Purchase Agreement dated as of June 26, 1996 between the Registrant, The Aries Fund and The Aries Domestic Fund, L.P. SE 10.10 Incentive Stock Option Plan (1). 10.11 Lease dated April 28, 1993 between the Registrant and Landmark Investors. SE 10.12 Office Lease dated September 18, 1996 between the Registrant and American National Bank & Trust Company of Chicago, as amended. SE 11 Statement re: computation of per share earnings (7). 16 Letter on change in certifying accountants (6). 21 Subsidiaries of the Registrant. SE 27 Financial Data Schedule (7). (1) Incorporated by reference to the Registrant's Registration Statement on Form S-1 (File No. 33-13492). (2) Incorporated by reference to the Registrant's Annual Report on Form 10-K (File no. 0-11572) for the fiscal year ended January 31, 1989. (3) Incorporated by reference to the Registrant's Annual Report on Form 10-K (File No. 0-11572) for the fiscal year ended January 31, 1992. (4) Incorporated by reference to the Registrant's Annual Report on Form 10-KSB (File No. 0-11572) for the fiscal year ended January 31, 1996. (5) Incorporated by reference to the Registrant's Quarterly Report on Form 10-QSB for the quarter ended July 31, 1996. (6) Incorporated by reference to the Registrant's Report on Form 8-K/A dated February 10, 1997. (7) Previously filed on this Form 10-KSB. EX-3 2 EXHIBIT 3(I)(G) CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF IMMUNOTHERAPEUTICS, INC. ImmunoTherapeutics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of ImmunoTherapeutics, Inc., resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the introductory paragraph to the Fourth Article of the Certificate of Incorporation of this corporation be hereby amended to read as follows: "The total number shares of capital stock of all classes which the Corporation shall have authority to issue is fifty-million-five-hundred-thousand (50,500,000) shares of which fifty-million (50,000,000) shares, of a par value of $.001 per share, shall be of a class designated "Common Stock," and five- hundred-thousand (500,000) shares of a par value of $.05 per share, shall be of a class designated "Preferred Stock". Be it further RESOLVED, that except as expressly amended, the Fourth Article of the Certificate of Incorporation of this corporation shall hereby remain in effect as heretofore set forth and shall be unchanged in any respect by any provision hereof. SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation law of the state of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. FOURTH: That the capital of said corporation shall not be reduced under or by reason of said amendment. IN WITNESS WHEREOF, said ImmunoTherapeutics, Inc. has caused this certificate to be signed by Gerald Vosika, its President, and Harold Rotunda, its Secretary, this 9th day of June, 1993. ImmunoTherapeutics, Inc. By: /s/ Gerald Vosika President Attest: /s/ Harold Rotunda Secretary EX-3 3 EXHIBIT 3(I)(H) CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION OF IMMUNOTHERAPEUTICS, INC. ImmunoTherapeutics, Inc., a corporation organizion and existing under and by virtue of the General Corporation Law of the State of Delaware, DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of ImmunoTherapeutics, Inc., resolutions were duly adopted setting forth a proposed amendment of the Certificate of Incorporation of said corporation, declaring said amendment to be advisable and calling a meeting of the stockholders of said corporation for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that to the First Article of the Certificate of Incorporation of this corporation be hereby amended to read in its entirety as follows: "The name of the corporation (herein referred to as the "Corporation") is Endorex Corp. SECOND: That thereafter, pursuant to resolution of its Board of Directors, an annual meeting of the stockholders of said corporation was duly called and held, upon notice in accordance with Section 222 of the General Corporation Law of the State of Delaware at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, said ImmunoTherapeutics, Inc. has caused this certificate to be signed by Gerald Vosika, its President, and James W. Burrow, its Secretary, this 8th day of August, 1996. Attest: BY: /s/ James W. Burrow Secretary ImmunoTherapeutics, Inc. BY: /s/ Gerald Vosika President EX-10.1 4 EXHIBIT 10.1 MASSACHUSETTS INSTITUTE OF TECHNOLOGY and ORASOMAL TECHNOLOGIES, INC. PATENT LICENSE AGREEMENT (EXCLUSIVE) TLO: LP 12/6/96 TABLE OF CONTENTS WITNESSETH 1 1 DEFINITIONS 2 2 GRANT 3 3 DILIGENCE 4 4 ROYALTIES AND OTHER PAYMENTS 5 5 REPORTS AND RECORDS 6 6 PATENT PROSECUTION 8 7 INFRINGEMENT 8 8 PRODUCT LIABILITY 10 9 EXPORT CONTROLS 11 10 NON-USE OF NAMES 12 11 ASSIGNMENT 12 12 DISPUTE RESOLUTION 12 13 TERMINATION 13 14 PAYMENTS, NOTICES AND OTHER COMMUNICATIONS 14 15 MISCELLANEOUS PROVISIONS 14 APPENDIX A 16 APPENDIX B 17 MASSACHUSETTS INSTITUTE OF TECHNOLOGY AND ORASOMAL TECHNOLOGIES, INC. PATENT LICENSE AGREEMENT This Agreement is made and entered into this _____ day of December, 1996 (the "Effective Date") by and between the Massachusetts Institute of Technology, a corporation duly organized and existing under the laws of the Commonwealth of Massachusetts and having its principal office at 77 Massachusetts Avenue, Cambridge, Massachusetts 02139, U.S.A. (hereinafter referred to as "M.I.T."), and Orasomal Technologies, Inc., a corporation duly organized under the laws of the State of Delaware and a subsidiary of Endorex Corp. and having its principal office at 900 North Shore Drive, Lake Bluff, Illinois 60044 (hereinafter referred to as "Licensee"). WITNESSETH WHEREAS, M.I.T. is the owner of certain Patent Rights (as later defined herein) relating to M.I.T. Case No. 6388, "Polymerized Liposomes with Enhanced Stability," by Junichi Okada, Smadar Cohen and Robert S. Langer, and has the right to grant licenses under said Patent Rights; WHEREAS, M.I.T. desires to have the Patent Rights developed and commercialized to benefit the public and is willing to grant a license thereunder; WHEREAS, Licensee has represented to M.I.T., to induce M.I.T. to enter into this Agreement, that Licensee is experienced in the development, production, manufacture, marketing and sale of products similar to the Licensed Products (as later defined herein) and/or the use of the Licensed Processes (as later defined here) and that it shall commit itself to a thorough, vigorous and diligent program of exploiting the Patent Rights so that public utilization shall result therefrom; and WHEREAS, Licensee desires to obtain a license under the Patent Rights upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the parties hereto agree as follows: 1 - DEFINITIONS For the purposes of this Agreement, the following words and phrases shall have the following meanings: 1.1 Licensee shall mean Orasomal Technologies, Inc., a Delaware corporation. 1.2 Patent Rights shall mean all of the following M.I.T. intellectual property: (a) the United States patent applications listed in Appendix A, and divisionals, continuations and claims of continuation-in-part applications which shall be directed to subject matter specifically described in such patent applications, and the resulting patents; (b) any patents resulting from reissues or reexaminations of the United States patents described in (a) above; (c) the Foreign patents, if any, listed in Appendix A; (d) the Foreign patent applications, if any, listed in Appendix A, and divisionals, continuations and claims of continuation-in-part applications which shall be directed to subject matter specifically described in such Foreign patent applications, and the resulting patents; (e) Foreign patent applications filed after the Effective Date in the countries listed in Appendix B and divisionals, continuations and claims of continuation-in-part applications which shall be directed to subject matter specifically described in such patent applications, and the resulting patents; and (f) any Foreign patents, resulting from equivalent Foreign procedures to United States reissues and reexaminations, of the Foreign patents described in (c), (d) and (e) above. 1.3 A Licensed Product shall mean any product or part thereof which: (a) is covered in whole or in part by an issued, unexpired claim in the Patent Rights in the country in which any such product or part thereof is made, used or sold; or (b) is manufactured by using a process or is employed to practice a process which is covered in whole or in part by an issued, unexpired claim in the Patent Rights in the country in which any Licensed Process is used or in which such product or part thereof is used or sold. 1.4 A Licensed Process shall mean any process which is covered in whole or in part by an issued, unexpired claim or a pending claim contained in the Patent Rights. 1.5 Net Sales shall mean Licensee's and its sublicensees' billings for Licensed Products and Licensed Processes less the sum of the following: (a) discounts, rebates, and other price adjustments or price reduction programs allowed in amounts customary in the trade for quantity purchases, cash payments, prompt payments, to wholesalers and distributors; (b) sales, use, value-added and other direct taxes, tariff duties and/or other governmental charges directly imposed and with reference to particular sales; (c) outbound transportation prepaid or allowed; (d) amounts allowed or credited on returns; and (e) bad debts, as written off in accordance with Licensee's (or sublicensee's) customary accounting practices (which practices shall be based on generally accepted accounting principles consistently applied), provided that such bad debts do not exceed five percent (5%) of total Net Sales per calendar year. No deductions shall be made for commissions paid to individuals whether they be with independent sales agencies or regularly employed by Licensee and on its payroll, or for cost of collections. Net Sales shall occur when a Licensed Product or Licensed Process shall be invoiced. If a Licensed Product or Licensed Process shall be distributed or invoiced for a discounted price substantially lower than customary in the trade or distributed at no cost to affiliates or otherwise, Net Sales shall be based on the customary amount billed for such Licensed Products or Licensed Processes. Net Sales shall be determined at the point of sale from Licensee (or from its sublicensees) to an entity other than Licensee. Sales by Licensee or a sublicensee to an entity other than Licensee shall constitute a sale for purposes of this definition if the entity or sublicensee is the end user of the Licensed Product or Licensed Process. Notwithstanding the foregoing, any Licensed Product or Licensed Process used (but not sold for consideration) for promotional or advertising purposes or used for clinical or other research purposes shall not be considered Net Sales hereunder. 1.6 Territory shall mean any country in which patent rights exist 1.7 Major Country shall mean the United States of America, Great Britain, France, Germany, or Japan. 1.8 Running Royalties shall mean a royalty paid on Net Sales of Licensed Product or Licensed Process. 2 - GRANT 2.1 M.I.T. hereby grants to Licensee the exclusive right and license in the Territory to practice under the Patent Rights and to make, have made, use, lease, sell and import Licensed Products and to practice the Licensed Processes, until the expiration of the last to expire of the Patent Rights, unless this Agreement shall be sooner terminated according to the terms hereof. 2.2 Licensee agrees that Licensed Products leased or sold in the United States shall be manufactured substantially in the United States. 2.3 M.I.T. reserves the right to practice under the Patent Rights for non- commercial research purposes. 2.4 Licensee shall have the right to enter into sublicensing agreements for the rights, privileges and licenses granted hereunder. Upon any termination of this Agreement, sublicensees' rights shall also terminate, subject to Paragraph 13.6 hereof. 2.5 Licensee agrees to incorporate terms and conditions substantively similar to Articles 2, 5.1, 7.1, 7.2, 73, 7.5, 7.6, 8, 9, 10, 12 and 15 of this Agreement into its sublicense agreements, that are sufficient to enable Licensee to comply with this Agreement. 2.6 Licensee agrees to forward to M.I.T. a copy of any and all sublicense agreements promptly upon execution by the parties. 2.7 Licensee shall not receive from sublicensees anything of value in lieu of cash payments in consideration for any sublicense under this Agreement, without the express prior written permission of M.I.T. 2.8 Nothing in this Agreement shall be construed to confer any rights upon Licensee by implication, estoppel or otherwise as to any technology or patent rights of M.I.T. or any other entity other than the Patent Rights, regardless of whether such patent rights shall be dominant or subordinate to any Patent Rights. 3 - DILIGENCE 3.1 Licensee shall use its best efforts to bring one or more Licensed Products or Licensed Processes to market through a thorough, vigorous and diligent program for exploitation of the Patent Rights and to continue active, diligent marketing efforts for one or more Licensed Products or Licensed Processes throughout the life of this Agreement. 3.2 Licensee shall deliver to M.I.T. on or before June 30, 1997, a business plan showing the amount of money, number and kind of personnel and time budgeted and planned for each phase of development of the Licensed Products and Licensed Processes and shall provide similar reports to M.I.T. on or before sixty (60) days of the close of each fiscal year of Licensee thereafter. 3.3 On or before January 1, 1998 Licensee will start animal studies to further evaluate and develop the technology described in the Patent Rights as: a) a potential carrier or delivery system for a vaccine and/or b) a potential carrier system for a therapeutic agent, compound or drug. 3.4 On or before January 1, 2000 Licensee will enter Phase I clinical trials or equivalent in the U.S. or other Major Country for at least one application of the technology described in the Patent Rights. 3.5 Within 12 months of receiving approval for marketing the Licensed Product by the F.D.A. or equivalent agency of a Major Country, Licensee will have the product available for sale. 3.6 Licensee's failure to perform in accordance with either paragraph 3.1, 3.2, 3.3, 3.4. or 3.5 above shall be grounds to terminate this Agreement pursuant to Paragraph 13.3 hereof. 4 - ROYALTIES AND OTHER PAYMENTS 4.1 For the rights, privileges and license granted hereunder, Licensee shall pay royalties and other payments to M.I.T. in the manner hereinafter provided to the end of the term of the Patent Rights or until this Agreement shall be terminated: (a) License Issue Fee of Twenty-Five Thousand Dollars ($25,000), which said License Issue Fee shall be deemed earned and due immediately upon the Effective Date. (b) License Maintenance Fee of Ten Thousand Dollars ($10,000) per year payable on January 1, 1998, January 1, 1999, and January 1, 2000, provided, however, that such License Maintenance Fees may be fully credited to Running Royalties subsequently due on Net Sales for each said year. Furthermore, Licensee may submit evidence of money spent the previous calendar year prosecuting the Patent Rights, which money shall be fully creditable against the License Maintenance Fees due in this paragraph. For example, money spent between January 1, 1997 and December 31, 1997 shall be creditable against the January 1, 1998 License Maintenance Fee. (c) License Maintenance Fee of Ten Thousand Dollars ($10,000) per year payable on January 1, 2001, January 1, 2002, and January 1, 2003, provided, however, that such License Maintenance Fees may be fully credited to Running Royalties subsequently due on Net Sales for each said year. Furthermore, Licensee may submit evidence of money spent the previous calendar year prosecuting the Patent Rights, which money shall be fully creditable against up to one half of the License Maintenance Fees due in this paragraph. (d) License Maintenance Fee of Ten Thousand Dollars ($10,000) per year payable on January 1, 2004 and each subsequent year, provided, however, that such License Maintenance Fees may be fully credited to Running Royalties subsequently due on Net Sales for each said year. (e) Licensee shall pay to M.I.T. a milestone payment of Twenty Thousand Dollars ($20,000) upon the first Investigational New Drug application incorporating the Patent Rights that is accepted and approved by the U.S. Food and Drug Administration or equivalent agency in a Major Country. (f) Licensee shall pay to M.I.T. an additional milestone payment of Two Hundred Fifty Thousand Dollars ($250,000) upon the first New Drug Application or Product License Application or Establishment License Application incorporating the Patent Rights that is approved by the U.S. Food and Drug Administration or equivalent agency in a Major Country. (g) Licensee shall pay Running Royalties to M.I.T. equal to Three Percent (3%) of Net Sales of Licensed Products. (h) Licensee shall pay M.I.T. the greater of (i) one and one-half percent (1.5%) of its sublicensee's Net Sales of Licensed Products, or (ii) fifteen percent (15%) of earned royalties received from sublicensee(s) of the Patent Rights. (i) The Licensee shall pay M.I.T. fifteen percent (15%) of any lump sum type payments, such as sublicense issue fees, received from sublicensees for rights to the Patent Rights. 4.2 All payments due hereunder shall be paid in full, without deduction of taxes or other fees which may be imposed by any government, except as otherwise provided in Paragraph 1.5(b). 4.3 No multiple royalties shall be payable because any Licensed Product, its manufacture, use, lease or sale are or shall be covered by more than one Patent Rights patent application or Patent Rights patent licensed under this Agreement. 4.4 Royalty payments shall be paid in United States dollars in Cambridge, Massachusetts, or at such other place as M.I.T. may reasonably designate consistent with the laws and regulations controlling in any foreign country. If any currency conversion shall be required in connection with the payment of royalties hereunder, such conversion shall be made by using the exchange rate prevailing at the Chase Manhattan Bank (N.A.) on the last business day of the calendar quarterly reporting period to which such royalty payments relate. 4.5 In the event that Licensee believes it necessary or appropriate to pay a royalty to a third party in order to avoid infringement of such third party's patent or other intellectual property rights arising from the manufacture, use or sale of a Licensed Product or Licensed Process in a country, Licensee will notify M.I.T. of such intention and discuss same with M.I.T. In the event that Licensee pays a royalty or other payment to such third party in order to avoid infringement of such third party's patent or other intellectual property rights arising from the manufacture, use or sale of a Licensed Product or Licensed Process in a country, Licensee shall be entitled to offset fifty percent (50%) of the royalty or other sums paid to such third party against the royalties payable to M.I.T. on Net Sales of such Licensed Product or Licensed Process in such country hereunder, provided, that the foregoing shall not reduce the royalties payable for an accounting period with respect to such country below fifty percent (50%) of the amount that would otherwise have been paid. Amounts that Licensee is not able to apply or offset against royalties in an accounting period shall be carried over to succeeding accounting periods until fully applied. 5 - REPORTS AND RECORDS 5.1 Licensee shall keep full, true and accurate books of account containing all particulars that may be necessary for the purpose of showing the amounts payable to M.I.T. hereunder. Said books of account shall be kept at Licensee's principal place of business or the principal place of business of the appropriate division of Licensee to which this Agreement relates. Said books and the supporting data shall be open at all reasonable times for five (5) years following the end of the calendar year to which they pertain, to the inspection of M.I.T. or its agents for the purpose of verifying Licensee's royalty statement or compliance in other respects with this Agreement. Should such inspection lead to the discovery of a greater than ten percent (10%) discrepancy in reporting to M.I.T.'s detriment, Licensee agrees to pay the full cost of such inspection. 5.2 Licensee shall deliver to M.I.T. true and accurate reports, giving such particulars of the business conducted by Licensee and its sublicensees under this Agreement as shall be pertinent to diligence under Article 3 and royalty accounting hereunder: (a) before the first commercial sale of a Licensed Product or Licensed Process, annually, on April 30 of each year; (i) amount spent toward the commercial development of Licensed Products and Licensed Processes; (ii) amount spent prosecuting the Patent Rights'; (iii) whether or not an Investigational New Drug application incorporating the Patent Rights has been accepted by the U.S. Food and Drug Administration or equivalent agency in a Major Country; (iv) whether or not a New Drug Application or Product License Application or Establishment License Application incorporating the Patent Rights has been approved by the U.S. Food and Drug Administration or equivalent agency in a Major Country. (b) after the first commercial sale of a Licensed Product or Licensed Process, quarterly, within ninety (90) days after January 31, April 30, July 31 and October 31, of each year. These reports shall include at least the following: (i) amount spent prosecuting the Patent Rights, only to the extent such an accounting may be pertinent to a calculation of the License Maintenance Fees below; (ii) License Maintenance Fees due under Paragraphs 4.1(b), (c), and (d); (iii) number of Licensed Products manufactured, leased and sold by and/or for Licensee and all sublicensees; (iv) accounting for all Licensed Processes used or sold by and/or for Licensee and all sublicensees; (v) accounting for Net Sales, noting the deductions applicable as provided in Paragraph 1.5; (vi) Royalties due under Paragraph 4.1(g) (vii) royalties due on other payments from sublicensees under Paragraphs 4.1(h) and 4.1(i); (viii) total royalties due; and (ix) names and addresses of all sublicensees of License. 5.3 With each such report submitted, Licensee shall pay to M.I.T. the royalties due and payable under this Agreement as Net Sales are collected by Licensee and its sublicensees. If no royalties shall be due, Licensee shall so report. 5.4 On or before the ninetieth (90th) day following the close of Licensee's fiscal year, Licensee shall provide M.I.T. with Licensee's certified financial statements for the preceding fiscal year including, at a minimum, a balance sheet and an income statement. 5.5 The amounts due under Articles 4 and 6 shall, if overdue, bear interest until payment at a per annum rate two percent (2%) above the prime rate in effect at the Chase Manhattan Bank (N.A.) on the due date. The pay- ment of such interest shall not foreclose M.I.T. from exercising any other rights it may have as a consequence of the lateness of any payment. 6 - PATENT PROSECUTION 6.1 M.I.T. shall apply for, seek prompt issuance of, and maintain the Patent Rights during the term of this Agreement. Appendix B is a list of the foreign countries in which patent applications corresponding to the United States Patent applications listed in Appendix A shall be filed. Appendix B may be amended by mutual agreement of both parties. The filing, prosecution and maintenance of all Patent Rights applications and patents shall be the primary responsibility of M.I.T.; provided, however, Licensee shall have reasonable opportunities to advise M.I.T. and shall cooperate with M.I.T. in such filing, prosecution and maintenance. With the prior written consent of M.I.T., Licensee may assume the responsibility in M.I.T.'s name and M.I.T.'s best interest for the filing and prosecution of patent applications and the issuance and maintenance of Patent Rights and in connection therewith Licensee may retain the firm of Pennie & Edmonds as patent counsel, the fees and expenses of which firm shall be borne by Licensee. 6.2 Payment of all fees and costs relating to the filing, prosecution and maintenance of the Patent Rights incurred after the Effective Date shall be the responsibility of Licensee. Licensee shall pay such fees and costs to M.I.T. within thirty (30) days of invoicing; late payments shall accrue interest and shall be subject to Paragraph 5.5. 7 - INFRINGEMENT 7.1 Licensee and M.I.T. shall promptly notify the other in writing of any alleged or threatened infringement of any Patent Rights of which either becomes aware. Both parties shall use all reasonable efforts in cooperating with each other to terminate such infringement without litigation. Licensee shall have the first right to bring and control any action or proceeding with respect to such infringement at its own expense and by counsel of its own choice as to any such Patent Rights, and M.I.T. shall have the right, at its own expense, to be represented in any action involving any such Patent Rights using counsel of its own choice. 7.2 If Licensee fails to bring an action or proceeding within (i) 120 days following receipt of written notice from M.I.T. with respect to such alleged infringement, or (ii) 10 days before the time limit, if any, set forth in the appropriate laws and regulations for the filing of such actions, whichever comes first, with respect to those Patent Rights as to which Licensee has the first right to bring and control an action under Section 7.1 above, M.I.T. shall have the right to bring and control any such action at its own expense and by counsel of its own choice, and Licensee shall have the right, at its own expense, to be represented in any such action by counsel of its own choice. 7.3 In the event a party hereto brings an infringement action under this Section 7, the other party shall cooperate fully, including if required to bring such action, the furnishing of a power of attorney. Licensee will consult with M.I.T. as to any significant actions that Licensee proposes to take with respect to same. The non-controlling party shall give to the controlling party all authority (including the right to exclusive control of the defense of any such suit, action or proceeding and the exclusive right to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), information and assistance necessary to defend or settle any such suit, action or proceeding, and the controlling party shall have sole discretion to determine actions to be taken or not taken in connection therewith and the terms of any settlement; provided, however, that the controlling party shall not have the right to settle any patent infringement litigation under this Section 7 without the prior written consent of the other party (not to be unreasonably withheld or delayed) in a manner that diminishes the scope or duration of the Patent Rights, which would constitute an amendment of this Agreement, which would adversely affect the compensation or revenues to be derived by a party pursuant to this Agreement, or which would require a payment by the other party hereunder, or would require an admission of wrongdoing by the other party. Except as otherwise agreed to by the parties as part of a cost sharing arrangement, any recovery realized as a result of such litigation, shall be applied first toward reimbursement of any litigation expenses of Licensee and M.I.T., and then Licensee shall pay M.I.T. Five Percent (5%) of the remainder. 7.4 M.I.T. will cooperate with Licensee, at Licensee's expense, in the defense of any suit, action or proceeding against M.I.T. or Licensee, or any sublicensee of Licensee, alleging the infringement of the intellectual property rights of a third party by reason of the manufacture, use or sale of a Licensed Product or Licensed Process. Licensee will consult with M.I.T. as to any significant actions that Licensee proposes to take with respect to same. M.I.T. shall give to Licensee all authority (including the right to exclusive control of the defense of any such suit, action, or proceeding), information and assistance necessary to defend or settle any such suit, action or proceeding, and Licensee shall have sole discretion to determine actions to be taken or not taken in connection therewith and the terms of any settlement; provided, however, Licensee shall obtain M.I.T.'s prior written consent (not to be unreasonably withheld or delayed) to all or such part of any settlement which would require a payment by M.I.T. (or any of its affiliates) to such third party, would constitute an amend- ment of this Agreement, would require an admission of wrongdoing in any way by M.I.T. or its affiliates, or which may have an adverse effect on the scope or duration of the Patent Rights licenses hereunder by M.I.T.; and provided further, that if Licensee should require that M.I.T. (or any of its affiliates or licensees) should institute or join in any such suit, action or proceeding, pursuant to this Section 7.4, Licensee shall hold M.I.T. (and any such affiliate or licensee, as applicable) free, clear and harmless from any and all costs and expenses of such litigation, including reasonable attorneys' fees, and M.I.T. shall execute all documents, provide pertinent records, and take all other actions, including using reasonable efforts to require persons within its control to give testimony, which may be reasonably required in connection with such litigation. Subject to the foregoing, M.I.T. (and such affiliates and licensees) may participate in any such litigation or other proceeding using attorneys of their choice and at their expense. 7.5 Licensee shall have the sole right, in accordance with the terms and conditions herein, to sublicense any alleged infringer in the Territory future use of the Patent Rights. Any upfront fees as part of such a sublicense shall be treated in accordance with Article 4. 8 - PRODUCT LIABILITY 8.1 Licensee shall at all times during the term of this Agreement and thereafter, indemnify, defend and hold M.I.T., its trustees, directors, officers, employees and affiliates, harmless against all claims, proceedings, demands and liabilities of any kind whatsoever, including legal expenses and reasonable attorneys' fees, arising out of the death of or injury to any person or persons or out of any damage to property, resulting from the production, manufacture, sale, use, lease, consump- tion or advertisement of the Licensed Product(s) and/or Licensed Process(es) or arising from any obligation of Licensee hereunder. 8.2 Licensee shall obtain and carry in full force and effect commercial, general liability insurance, including product liability and errors and omissions insurance, which shall protect Licensee and M.I.T. with respect to events covered by Paragraph 8.1 above. Such insurance shall be written by a reputable insurance company authorized to do business in the Commonwealth of Massachusetts, shall list M.I.T. as an additional named insured thereunder, shall be endorsed to include product liability coverage and shall require thirty (30) days written notice to be given to M.I.T. prior to any cancellation or material change thereof. The limits of such insurance shall not be less than One Million Dollars ($1,000,000.00) per occurrence with an aggregate of Three Million Dollars ($3,000,000.00) for personal injury including death; One Million Dollars ($1,000,000.00) per occurrence with an aggregate of Three Million Dollars ($3,000,000.00) for property damage; and One Million Dollars ($1,000,000.00) per occurrence with an aggregate of Three Million Dollars ($3,000,000.00) for errors and omissions. Licensee shall provide M.I.T. with Certificates of Insurance evidencing the same. 8.3 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, M.I.T., ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES, AND AFFILIATES MAKE NO REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR PARTICULAR PURPOSE, VALIDITY OF PATENT RIGHTS CLAIMS, ISSUED OR PENDING, AND THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION MADE OR WARRANTY GIVEN BY M.I.T. THAT THE PRACTICE BY LICENSEE OF THE LICENSE GRANTED HEREUNDER SHALL NOT INFRINGE THE PATENT RIGHTS OF ANY THIRD PARTY. 8.4 IN NO EVENT SHALL M.I.T., ITS TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGE OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER M.I.T. SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING. 9 - EXPORT CONTROLS Licensee acknowledges that it is subject to United States laws and regulations controlling the export of technical data, computer software, laboratory prototypes and other commodities (including the Arms Export Control Act, as amended and the United States Department of Commerce Export Administration Regulations). The transfer of such items may require a license from the cognizant agency of the United States Government and/or written assurances by Licensee that Licensee shall not export data or commodities to certain foreign countries without prior approval of such agency. M.I.T. neither represents that a license shall not be required nor that, if required, it shall be issued. 10 - NON-USE OF NAMES Licensee shall not use the names or trademarks of the Massachusetts Institute of Technology or Lincoln Laboratory, nor any adaptation thereof, nor the names of any of their employees, in any advertising, promotional or sales literature without prior written consent obtained from M.I.T., or said employee, in each case, except that Licensee may state that it is licensed by M.I.T. under one or more of the patents and/or applications comprising the Patent Rights. 11 - ASSIGNMENT 11.1 Before either: a) the start of Phase I clinical trials of a Licensed Product or b) January 1, 2000, provided that Licensee has invested a minimum of Three Hundred Thousand Dollars ($300,000) toward the development of Licensed Products and Licensed Processes, this License is assignable with M.I.T.'s written consent, which consent shall not unreasonably be withheld, providing that such assignment or transfer is in conjunction with the sale of all or substantially all of Licensee's assets pertaining to the commercialization of Licensed Products, and providing that such assignee or transferee agrees in writing to be bound by all the terms and conditions of this Agreement. 11.2 After either: a) the start of Phase I clinical trials of a Licensed Product or b) January 1, 2000, provided that Licensee has invested a minimum of Three Hundred Thousand Dollars ($300,000) toward the development of Licensed Products and Licensed Processes, this License may be assigned, with notice to M.I.T., providing that such assignment or transfer is in conjunction with the sale of all or substantially all of Licensee's assets pertaining to the commercialization of Licensed Products, and providing that such assignee or transferee agrees in writing to be bound by all the terms and conditions of this Agreement. 11.3 This Agreement shall survive any merger of Licensee with or into another party and no consent for a merger or similar reorganization shall be required hereunder. 12 - DISPUTE RESOLUTION 12.1 Except for the right of either party to apply to a court of competent jurisdiction for a temporary restraining order, a preliminary injunction, or other equitable relief to preserve the status quo or prevent irreparable harm, any and all claims, disputes or controversies arising under, out of, or in connection with the Agreement, including any dispute relating to patent validity or infringement, which the parties shall be unable to resolve within one hundred twenty (120) days shall be mediated in good faith. The party raising such dispute shall promptly advise the other party of such claim, dispute or controversy in a writing which describes in reasonable detail the nature of such dispute. By not later than five (5) business days after the recipient has received such notice of dispute, each party shall have selected for itself a representative who shall have the authority to bind such party, and shall additionally have advised the other party in writing of the name and title of such representative. By not later than ten (10) business days after the date of such notice of dispute, the party against whom the dispute shall be raised shall select a mediation firm in the Boston area and such representatives shall schedule a date with such firm for a mediation hearing. The parties shall enter into good faith mediation and shall share the costs equally. If the representatives of the parties have not been able to resolve the dispute within fifteen (15) business days after such mediation hearing, then any and all claims, disputes or controversies arising under, out of, or in connection with this Agreement, including any dispute relating to patent validity or infringement, shall be resolved by final and binding arbitration in Boston, Massachusetts under the rules of the American Arbitration Association, or the Patent Arbitration Rules if applicable, then obtaining. The arbitrators shall have no power to add to, subtract from or modify any of the terms or conditions of this Agreement, nor to award punitive damages. Any award rendered in such arbitration may be enforced by either party in either the courts of the Commonwealth of Massachusetts or in the United States District Court for the District of Massachusetts, to whose jurisdiction for such purposes M.I.T. and Licensee each hereby irrevocably consents and submits. 12.2 Notwithstanding the foregoing, nothing in this Article shall be construed to waive any rights or timely performance of any obligations existing under this Agreement. 13 - TERMINATION 13.1 If Licensee shall cease to carry on its business, this Agreement shall terminate upon notice by M.I.T. 13.2 Should Licensee fail to make any payment whatsoever due and payable to M.I.T. hereunder, M.I.T. shall have the right to terminate this Agreement effective on sixty (60) days' notice, unless Licensee shall make all such payments to M.I.T. within said sixty (60) day period. Upon the expiration of the sixty (60) day period, if Licensee shall not have made all such payments to M.I.T., the rights, privileges and license granted hereunder shall automatically terminate. 13.3 Upon any material breach or default of this Agreement by Licensee (including, but not limited to, breach or default under Paragraph 3.3), other than those occurrences set out in Paragraphs 13.1 and 13.2 hereinabove, which shall always take precedence in that order over any material breach or default referred to in this Paragraph 13.3, M.I.T. shall have the right to terminate this Agreement and the rights, privileges and license granted hereunder effective on ninety (90) days' notice to Licensee. Such termination shall become automatically effective unless Licensee shall have cured any such material breach or default prior to the expiration of the ninety (90) day period. 13.4 Licensee shall have the right to terminate this Agreement at any time on six (6) months' notice to M.I.T., and upon payment of all amounts due M.I.T. through the effective date of the termination. 13.5 Upon termination of this Agreement for any reason, nothing herein shall be construed to release either party from any obligation that matured prior to the effective date of such termination; and Articles 1, 8, 9, 10, 12, 13.5, 13.6 and 15 shall survive any such termination. Licensee and any sublicensee thereof may, however, after the effective date of such termination, sell all Licensed Products, and complete Licensed Products in the process of manufacture at the time of such termination and sell the same, provided that Licensee shall make the payments to M.I.T. as required by Article 4 of this Agreement and shall submit the reports required by Article 5 hereof. 13.6 Upon termination of this Agreement for any reason, any sublicensee not then in default shall have the right to seek a license from M.I.T. M.I.T. agrees to negotiate such licenses in good faith under reasonable terms and conditions. 14 - PAYMENTS, NOTICES AND OTHER COMMUNICATIONS Any payments, notice or other communication pursuant to this Agreement shall be sufficiently made or given on the date of mailing if sent to such party by certified first class mail, return receipt requested, postage prepaid, addressed to it at its address below, or as it shall designate by written notice given to the other party: In the case of M.I.T.: Director, Technology Licensing Office Massachusetts Institute of Technology Five Cambridge Center, Kendall Square Room NE2-230 Cambridge, Massachusetts 02142-1493 In the case of Licensee: Michael Rosen, President/CEO Orasomal Technologies, Inc. 900 North Shore Drive Lake Bluff, Illinois 60044 15 - MISCELLANEOUS PROVISIONS 15.1 All disputes arising out of or related to this Agreement, or the performance, enforcement, breach or termination hereof, and any remedies relating thereto, shall be construed, governed, interpreted and applied in accordance with the laws of the Commonwealth of Massachusetts, U.S.A., except that questions affecting the construction and effect of any patent shall be determined by the law of the country in which the patent shall have been granted. 15.2 The parties hereto acknowledge that this Agreement sets forth the entire Agreement and understanding of the parties hereto as to the subject matter hereof, and shall not be subject to any change or modification except by the execution of a written instrument signed by the parties. 15.3 The provisions of this Agreement are severable, and in the event that any provisions of this Agreement shall be determined to be invalid or unenforceable under any controlling body of the law, such invalidity or unenforceability shall not in any way affect the validity or enforceability of the remaining provisions hereof. 15.4 Licensee agrees to mark the Licensed Products sold in the United States with all applicable United States patent numbers. All Licensed Products shipped to or sold in other countries shall be marked in such manner as to conform with the patent laws and practice of the country of manufacture or sale. 15.5 The failure of either party to assert a right hereunder or to insist upon compliance with any term or condition of this Agreement shall not constitute a waiver of that right or excuse a similar subsequent failure to perform any such term or condition by the other party. IN WITNESS WHEREOF, the parties have duly executed this Agreement the day and year set forth below. MASSACHUSETTS INSTITUTE OF TECHNOLOGY By Lita Nelsen Name Lita Nelsen Title Director Date December 16, 1996 ORASOMAL TECHNOLOGIES, INC. By Michael S. Rosen Name Michael S. Rosen Title President/CEO Date December 10, 1996 APPENDIX A PATENT RIGHTS on the EFFECTIVE DATE UNITED STATES PATENT RIGHTS M.I.T. Case No. 6388 U.S.S.N. 096,689, Filed 7/23/93 "Polymerized Liposomes with Enhanced Stability" by Junichi Okada, Smadar Cohen and Robert Langer FOREIGN PATENT RIGHTS None. APPENDIX B DESIGNATED FOREIGN COUNTRIES Foreign countries in which PATENT RIGHTS shall be filed, prosecuted and maintained in accordance with Article 6: For M.I.T. Case No. _________: EX-10.2 5 EXHIBIT 10.2 CONSULTATION AGREEMENT THIS AGREEMENT, made and entered into this 1st day of August, 1996, by and between Endorex Corporation, a Delaware Corporation duly authorized To Do Business in North Dakota, hereinafter termed the 'Company'; and Kenneth Tempero, Ph.D., M.D. hereinafter termed 'Consultant'. W I T N E S S E T H : WHEREAS, the Company is engaged in, among other things, the development and marketing of immunomodulators for the treatment of cancer and other diseases, WHEREAS, Consultant is ready, willing, and able to provide consulting service in the area of corporate development upon the following terms and conditions, and WHEREAS, both parties understand that it is the policy of the Company to respect the secret or confidential information of Third Parties, and should Consultant possess secret or confidential information of Third Parties, such information will not be disclosed to the Company. NOW, THEREFORE, for and in consideration of these terms and conditions hereinafter set forth to be kept and performed, the Parties hereto agree as follows: 1. TERM The term of this Agreement will be for twelve (12) months from and after the 1st day of August 1996. However, it is mutually agreed that this agreement shall, as needed and requested by the Company, be extended for consecutive six month terms by mutual agreement. 2. COMPENSATION ImmunoTherapeutics agrees to pay Consultant a sum of $2,500/month over the twelve month period for the services herein described, to be paid in monthly installments. The Company agrees to reimburse Consultant for all out-of-pocket expenses relative to the Consultant's activities, subject to prior approval of the Company. All such expenses will be reimbursed within 30 days of submission of expenses with appropriate vouchers. 3. SERVICES Consultant, as an independent contractor and not as an employee of the Company, will devote 1-3 days per month to the Agreement. Consultant agrees, on a non-exclusive basis, to assist and advise the Company in its research and development activities and clinical trials. It is agreed that the time comittment and compensation herewith may be adjusted from time to time upon mutual agreements of the parties. Services will include the following: a) Evaluate and/or advise the Company on matters related to licensing opportunities and agreements. b) Advise the Company on product development strategy. c) Identify and assist the Company in developing corporate partners. d) Advise the Company in the design of petinent clinical trials. Consultant will not be or represent himself as an agent of ImmunoTherapeutics, Inc. and shall have no authority to incur obligation on behalf of the Company or sign contracts for the Company. 4. SUBCONTRACTS It is expressly understood that Consultant will not subcontract for, nor employ anyone to, perform the consulting services to be provided pursuant to this Agreement without the prior written approval of the Company. 5. CONFLICTS a) Consultant represents and warrants that to the best of his knowledge he has no direct or indirect interest which is, or may appear to be, incompatible with his services under this Agreement. b) Consultant agrees to refrain from any activity during the term of this Agreement which could be interpreted as constituting a conflict of interest, and to promptly notify the Company regarding any change in his private interests which might result, or appear to result, in a conflict of interest. 6. DATA AND CONFIDENTIAL INFORMATION a) With respect to "data", which term shall include, but is not limited to, writings, drawings, pictures, statistical information, graphic representation, and computer software. Consultant agrees that: 1) All data first originated, developed, or reduced to normal communicable form in collaboration with the Company personnel pursuant to this Agreement shall be available to, and for the use of the Company; and Consultant shall be reimbursed by the Company for the cost or reproduction and delivery of any data requested. 2) With respect to data subject to a copyright owned by Consultant or a Third party which is delivered to the Company pursuant to this Agreement, and to the extent Consultant may have, or may acquire, prior to expiration or termination of this Agreement the right to do so, Consultant hereby grants or agrees to grant to the Company a non-exclusive and irrevocable license throughout the world to publish, translate, reproduce, and deliver the data. 3) Consultant shall not deliver data subject to proprietary rights, or data subject to copyright owned by a Third Party, unless such data is licensed pursuant to paragraph 6: 1 and 2, above. b) With respect to "confidential information", of the Company which will be so marked and shall include, but not be limited to, unpublished information and data relating to: technological and scientific developments, including inventions, designs, plans, methods, processes, internal specifications and reports, anticipated procurements; possible new projects or programs. Consultant agrees that: 1) Confidential information shall not be disclosed or discussed with anyone except authorized personnel or persons specified in writing by the Company; 2) Consultant shall not use for personal gain and shall preserve as confidential all information furnished or acquired in the performance of this Agreement. The obligation will continue both during and after the period of this Agreement and subsequent renewals, but does not apply to information which is or will become public knowledge through no act or omission on Consultant's part. 7. ASSIGNMENT/ENTIRE AGREEMENT Neither party may assign its rights or obligations under this Agreement without the written consent of the other party. Neither this Agreement or any provision hereof may be changed, waived, discharged, or terminated orally, but rather by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is being considered. This Agreement constitutes the entire Agreement between the parties with respect to its subject matter. If any provision of this Agreement is held unenforceable or inoperative by any court, either or whole or in part the remaining provisions shall be deemed severable and unaffected and shall continue in full force and effect. IN WITNESS WHEREOF, the Parties hereto set their hands effective the date first herein written. ENDOREX CORPORATION By: /s/ GERALD J. VOSIKA, Chairman CONSULTANT: /s/ KENNETH F. TEMPERO, Ph.D., M.D. EX-10.3 6 EXHIBIT 10.3 EMPLOYMENT AGREEMENT By and Between ImmunoTherapeutics, Inc. and Gerald Vosika, M.D. Agreement made as of this 1st day of June, 1996, between ImmunoTherapeutics, Inc., a Delaware corporation (the "Company") and Gerald Vosika, M.D. (the "Executive"). The Executive is presently employed by the Company as Chairman of the Board, President and Scientific Director. The Board of Directors of the Company (the "Board") recognizes that the Executive's contribution to the Company during the past years has been substantial. The Board desires to provide for the continued employment of the Executive and to make certain changes in the Executive's employment arrangements with the Company which the Board has determined will reinforce and encourage the continued attention and dedication to the Company of the Executive as a member of the Company's management, in the best interest of the Company and its shareholders. The Executive is willing to commit himself to continue to serve the Company, on the terms and conditions herein provided. In order to effect the foregoing, the Company and the Executive wish to enter into an employment agreement on the terms and conditions set forth below. Accordingly, in consideration of the promises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Employment The Company hereby agrees to continue to employ the Executive, and the Executive hereby agrees to continue to serve the Company, on the terms and conditions set forth herein. 2. Term The employment of the Executive by the Company as provided in Section 1 will commence on the date hereof and end on May 31, 1999, unless further extended or sooner terminated as hereinafter provided. On and before May 31, 1999, and on the last day of each year thereafter, the term of the Executive's employment shall be automatically extended one (1) additional year unless, prior to such May 31 of such year, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended. 3. Position and Duties The Executive shall serve as Chairman of the Board, President and Scientific Director of the Company and shall have such responsibilities and authority consistent with those position as may, from time to time, be assigned to the Executive by the Board of Directors of the Company. The Executive shall devote substantially all his working time and efforts to the business and affairs of the Company. 4. Place of Performance In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Fargo, North Dakota, except for required travel on the Company's business to an extent substantially consistent with present business travel obligations. 5. Compensation and Related Matters (a) Salary. During the period of the Executive's employment hereunder, the Company shall pay to the Executive a salary at a rate of not less than $225,000 per annum in equal monthly or other installments. This salary may be increased from time to time in accordance with determinations made by the Company's Board of Directors and, if so increased, shall not thereafter during the term of this Agreement be decreased. Compensation of the Executive by salary payments shall not be deemed exclusive and shall not prevent the Executive from participating in any other compensation or benefit plan of the Company. The salary payments (including any increased salary payments) hereunder shall not, in any way, limit or reduce any other obligation of the Company hereunder, and no other compensation, benefit or payment hereunder shall, in any way, limit or reduce the obligation of the Company to pay the Executive's salary hereunder. (b) Expenses. During the term of the Executive's employment hereunder, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses of travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures presently established by the Company. (c) Other Benefits. The Company shall maintain in full force and effect, and the Executive shall be entitled to continue to participate in, all of its employee benefit plans and arrangements in effect on the date hereof in which the Executive participates or plans or arrangements providing the Executive with at least equivalent benefits thereunder (including, without limitation, each pension and retirement plan and arrangement, supplemental pension and retirement plan and arrangement, stock option plan, life insurance and health and accident plan and arrangement, medical insurance plan, disability plan, survivor income plan, relocation plan and vacation plan). The Company shall not make any changes in such plans or arrangements which would adversely affect the Executive's rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all executives of the Company and does not result in a proportionately greater reduction in the rights of or benefits to the Executive as compared with any other executive of the Company. The Executive shall be entitled to participate in or receive benefits under any employee benefit plan or arrangement made available by the Company in the future to its executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to the Executive pursuant to paragraph (a) of this Section. Any payments or benefits payable to the Executive hereunder in respect of any calendar year during which the Executive is employed by the Company for less than the entire such year shall, unless otherwise provided in the applicable plan or arrangement, be prorated in accordance with the number of days in such calendar year during which he is so employed. (d) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (e) Services Furnished. The Company shall furnish the Executive with office space, stenographic assistance and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of his duties as set forth in Section 3 hereof. 6. Offices The Executive agrees to serve without additional compensation, if elected or appointed thereto, as a Director of the Company and any of its subsidiaries and in one or more executive offices of any of the Company's subsidiaries, provided that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided by Article VII of the Company's By-Laws. 7. Termination The Executive's employment hereunder may be terminated without any breach of this Agreement only under the following circumstances: (a) Death. The Executive's employment hereunder shall terminate upon his death. (b) Disability. If, as a result of the Executive's incapacity due to physical or mental illness, the Executive shall have been absent from his duties hereunder on a full-time basis for the entire period of six (6) consecutive months, and within thirty (30) days after written notice of termination is given (which may occur before or after the end of each such six-month period) shall not have returned to the performance of his duties hereunder on a full-time basis, the Company may terminate the Executive's employment hereunder. (c) Cause. The Company may terminate the Executive's employment hereunder for Cause. For purposes of this Agreement, the Company shall have "Cause" to terminate the Executive's employment hereunder upon (A) the willful and continued failure by the Executive to substantially perform his duties hereunder (other than any such failure resulting from the Executive's incapacity due to physical or mental illness), after demand for substantial performance is delivered by the Company that specifically identifies the manner in which the Company believes the Executive has not substantially performed his duties, or (B) the willful engaging by the Executive in misconduct which is materially injurious to the Company, monetarily or otherwise. For purposes of this paragraph, no act, or failure to act, on the Executive's part shall be considered "willful" unless done, or omitted to be done, by him not in good faith and without reasonable belief that his action or omission was in the best interest of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause without (i) reasonable notice to the Executive setting forth the reasons for the Company's intention to terminate for Cause, (ii) an opportunity for the Executive, together with his counsel, to be heard before the Board of Directors of the Company, and (iii) delivery to the Executive of a Notice of Termination as defined in subsection (e) hereof from the Board of Directors of the Company finding that in the good faith opinion of the Board of Directors the Executive was guilty of conduct set forth above in clause (A) or (B) of the preceding sentence, and specifying the particulars thereof in detail. (d) Termination by the Executive. The Executive may terminate his employment hereunder (i) for Good Reason or (ii) if his health should become impaired to an extent that makes his continued performance of his duties hereunder hazardous to his physical or mental health or his life, provided that the Executive shall have furnished the Company with a written statement from a qualified doctor to such effect and provided, further, that, at the Company's request, the Executive shall submit to an examination by a doctor selected by the Company and such doctor shall have concurred in the conclusion of the Executive's doctor. For purposes of this Agreement, "Good Reason" shall mean (A) any event described as a change in control of the Company (as defined below) which may occur at any time or from time to time on one or more occasions during the term of this Agreement (including any extension hereof); (B) a failure by the Company to comply with any material provision of this Agreement which has not been cured within ten (10) days after notice of such non-compliance has been given by the Executive to the Company; or (C) any purported termination of the Executive's employment which is not effected pursuant to a Notice of Termination satisfying the requirements of paragraph (e) hereof (and for purposes of this Agreement, no such purported termination shall be effective). For purposes of this Agreement, a "change in control of the Company" shall mean a change in control of a nature that would be required to be reported in response to Item 5(f) of Schedule 14A promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"); provided that, without limitation, such a change in control shall be deemed to have occurred if (Y) any "person" (as such term is used in Section 13(d) and 14(d) of the Exchange Act), other than the Company or any "person" who, on the date hereof, is a director or officer of the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the combined voting power of the Company's then outstanding securities, or (Z) during any period of two (2) consecutive years during the term of this Agreement, individuals who at the beginning of such period constitute the Board cease for any reason to constitute at least a majority thereof, unless the election of each director who was not a director at the beginning of such period has been approved in advance by directors representing at least two-thirds (2/3) of the directors then in office who were directors at the beginning of the period. (e) Any termination of the Executive's employment by the Company or by the Executive (other than termination pursuant to subsection (a) above) shall be communicated by written Notice of Termination to the other party hereto. For purposes of this Agreement, a "Notice of Termination" shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive's employment under the provision so indicated. (f) "Date of Termination" shall mean (i) if the Executive's employment is terminated by his death, the date of his death, (ii) if the Executive's employment is terminated pursuant to subsection (b) above, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period), (iii) if the Executive's employment is terminated pursuant to subsection (c) above, the date specified in the Notice of Termination, and (iv) if the Executive's employment is terminated for any other reason, the date on which a Notice of Termination is given; provided that, if within thirty (30) days after any Notice of Termination is given the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be the date on which the dispute is finally determined, either by mutual written agreement of the parties, by a binding and final arbitration award or by a final judgment, order or decree of a court of competent jurisdiction (the time for appeal therefrom having expired and no appeal having been perfected). 8. Compensation Upon Termination or During Disability (a) During any period that the Executive fails to perform his duties hereunder as a result of incapacity due to physical or mental illness ("disability period"), the Executive shall continue to receive his full salary at the rate then in effect for such period until his employment is terminated pursuant to Section 7(b) hereof, and for a period of six (6) months thereafter, provided that payments so made to the Executive during the first six (6) months of the disability period shall be reduced by the sum of the amounts, if any, payable to the Executive at or prior to the time of any such payment under disability benefit plans of the Company and which were not previously applied to reduce any such payment. (b) If the Executive's employment is terminated by his death, the Company shall pay to the Executive's spouse, or if he leaves no spouse, to his estate, commencing on the next succeeding day which is the fifteenth day or last day of the month, as the case may be, and monthly thereafter on the fifteenth and last days of each month, until a total of six (6) payments have been made, an amount on each payment date equal to the monthly salary payment to the Executive pursuant to Section 5(a) hereof at the time of his death. (c) If the Executive's employment shall be terminated for Cause, the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given and the Company shall have no further obligations to the Executive under this Agreement. (d) If (A) in breach of this Agreement, the Company shall terminate the Executive's employment other than pursuant to Section 7(b) or 7(c) hereof (it being understood that a purported termination pursuant to Section 7(b) or 7(c) hereof which is disputed and finally determined not to have been proper shall be a termination by the Company in breach of this Agreement) or (B) the Executive shall terminate his employment for Good Reason, then: (i) the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given; (ii) in lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, the Company shall pay as severance pay to the Executive an amount equal to the product of (A) the Executive's annual salary rate in effect as of the Date of Termination, multiplied by (B) the greater of the number of years (including partial years) remaining in the term of employment hereunder or the number three (3), such payment to be made (X) if resulting from a termination based on a change of control of the Company, in a lump sum on or before the fifth day following the Date of Termination, or (Y) if resulting from any other cause, in substantially equal monthly installments commencing with the month in which the Date of Termination occurs and continuing for the number of consecutive monthly payment dates (including the first such date as aforesaid) equal to the product obtained by multiplying the number of years (including partial years) applicable under (ii)(B) above by twelve (12); and (iii) if termination of the Executive's employment arises out of a breach by the Company of this Agreement, the Company shall pay all other damages to which the Executive may be entitled as a result of such breach, including damages for any and all loss of benefits to the Executive under the Company's employee benefit plans (other than the Company's Incentive Compensation Plan) which the Executive would have received if the Company had not breached this Agreement and had the Executive's employment continued for the full term provided in Section 2 hereof, and including all legal fees and expenses incurred by him as a result of such termination. (e) If the Executive shall terminate his employment under clause (ii) of Section 7(d) hereof, the Company shall pay the Executive his full salary through the Date of Termination at the rate in effect at the time Notice of Termination is given. (f) Unless the Executive is terminated for Cause, the Company shall maintain in full force and effect, for the continued benefit of the Executive for the greater of the number of years (including partial years) remaining in the term of employment hereunder or the number three (3), all employee benefit plans and programs in which the Executive was entitled to participate immediately prior to the Date of Termination provided that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. In the event that the Executive's continued participation is possible under the general terms and provisions of such plans and programs. In the event that the Executive's participation in any such plan or program is barred, the Company shall arrange to provide the Executive with benefits substantially similar to those which the Executive would otherwise have been entitled to receive under such plans and programs from which his continued participation is barred. (g) The Executive shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. 9. Successors; Binding Agreement (a) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Executive, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. Failure of the Company to obtain such agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as he would be entitled to hereunder if he terminated his employment for Good Reason, except that for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 9, or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (b) This Agreement, and all rights of the Executive hereunder, shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive should die while any amounts would still be payable to him hereunder if he had continue to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Executive's devisee, legatee, or other designee or, if there be no such designee, to the Executive's estate. 10. Notice For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or (unless otherwise specified) mailed by United States registered mail, return receipt requested, postage prepaid, addressed as follows: If to the Executive: Gerald Vosika, M.D. c/o ImmunoTherapeutics, Inc. 3233 Fifteenth Street South Fargo, North Dakota 58104 If to the Company: ImmunoTherapeutics, Inc. 3233 Fifteenth Street South Fargo, North Dakota 58104 or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 11. Miscellaneous No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the parties hereto. No waiver by either party hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of North Dakota. 12. Validity The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 13. Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument. 14. Arbitration Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators, in Chicago, Illinois, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The expense of such arbitration shall be borne by the Company. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. ImmunoTherapeutics, Inc. By: /s/ James Burrow Title: Secretary /s/ Gerald Vosika, M.D. Attest: /s/ Cheryl Brammer EX-10.4 7 EXHIBIT 10.4 IMMUNOTHERAPEUTICS, INC. June 25, 1996 Gerald Vosika, M.D. 3233 Fifteenth Street South Fargo, North Dakota 58104 Letter Agreement, Amendment and Waiver Dear Mr. Vosika: In connection with the purchase by Aries Domestic Fund, L.P., a Delaware limited partnership (the "Fund"), and the Aries Trust, a Cayman Islands Trust (the "Trust", and collectively with the Fund, the "Purchasers") of 5,000,000 shares of Common Stock of ImmunoTherapeutics, Inc., a Delaware corporation (the "Company"), directly from the Company and the purchase by the Purchasers of 4,000,000 shares of the Company's Common Stock from Dominion Resources, Inc., a Delaware corporation, the Company and Mr. Gerald R. Vosika (the "Executive" and the Company, collectively referred to as the "Parties") wish to enter into an agreement as follows: (1) The Parties have agreed that the Company may hire a Chief Executive Officer who, if hired, will have the corporate title of President, which such title will be relinquished by Executive. Executive expressly agrees to relinquish such title and agrees to the hiring of such CEO and the conduct by such CEO of the duties assigned him by the Board of Directors. The Executive agrees that the hiring of such CEO will not constitute "Good Reason" as such term is defined in the Employment Agreement between the Company and Executive dated June 1, 1996 (the "Employment Agreement") and will not be grounds for the Executive to terminate his employment for "Good Reason" as provided pursuant to the Employment Agreement. Executive further agrees that the Company may take any of the foregoing actions and such actions will not result in any breach or violation of any provisions of the Employment Agreement or entitle the Executive to any payments or severance pay under the terms of the Employment Agreement. The Executive hereby waives any claims or causes of action, whether based on contract or otherwise, in any way related to or arising out of such actions. (2) The Executive hereby agrees that the acquisition of the shares of Common Stock of the Company by the Purchasers (including any purchases made subsequent to the date hereof) and the appointment by Purchasers of any representatives to the Board of Directors or other change in the configuration of the Board of Directors by Purchasers did not and will not constitute (x) a "change in control of the Company" or "Good Reason" as such terms are defined in the Employment Agreement and will not be grounds for the Executive to terminate his employment with the Company or (y) a "change of control" or other event giving rise to a cancellation of the Option under Section 5(b), (c) or (d) of the Stock Option Agreement (the "Option") dated March 21, 1996 or any other option agreement to which the Executive is a party (collectively with the Option, the "Options"). Executive further agrees that such acquisitions of shares or future acquisitions of shares or changes to the configuration of the Company's Board of Directors did not and will not result in any breach or violation, or acceleration of any rights to payment pursuant to any provisions of the Employment Agreement or Options or entitle the Executive to any payments, accelerated rights or severance pay under the terms of the Employment Agreement or Options. The Executive hereby waives any claims or causes of action, whether based on contract or otherwise, in any way related to or arising out of such actions. (3) The Executive hereby agrees to amend paragraph 8(d)(ii) of the Employment Agreement to read as follows: (ii) in lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination, the Company shall pay as severance pay to the Executive an amount equal to the product of (A) the Executive's annual salary rate in effect as of the Date of Termination, multiplied by (B) the number of years (including partial years) remaining in the term of employment hereunder, such payment to be made in substantially equal monthly installments commencing with the month in which the Date of Termination occurs and continuing for the number of consecutive monthly payment dates (including the first such date as aforesaid) equal to the product obtained by multiplying the number of years (including partial years) applicable under (ii)(B) above by twelve (12); and The foregoing language shall be substituted for and shall replace the language in paragraph 8(d)(ii). (4) The Executive hereby agrees that the Employment Agreement shall be amended to delete any reference to the term "change in control of the Company" and agrees that he shall not be entitled to terminate his employment with the Company or to any additional severance or termination payments as a result of the occurrence of any events which satisfy the definition of "change of control of the Company" in Section 7(d) of the Employment Agreement. (5) The Executive hereby agrees that the Option shall be amended to delete Sections 5(b), (c) and (d) and the Executive hereby waives any rights to any payments pursuant to those provisions. (6) The Executive hereby agrees that from the date hereof and continuing for a period (the "Lock-Up Period") of twenty four (24) months from the date hereof, he will not, without the prior written consent of Aries Financial Services, Inc., offer, pledge, sell, contract to sell, grant any option for the sale of, or otherwise dispose of, directly or indirectly, any shares of any equity securities of ImmunoTherapeutics, Inc. (the "Company") or any options, warrants or other securities convertible into equity securities of the Company (the "Shares") provided however that, on the date twelve months from the date hereof, an amount of Shares equal to 25% of the number of Shares currently owned by the Executive (as set forth in the Company's current SEC filings) shall become exempt from the lock-up provisions contained in this sentence. In addition, Executive agrees that while Executive hold any Shares, Executive will not directly or indirectly, through related parties, affiliates or otherwise sell "short" or "short against the box" (as those terms are generally understood) any equity security of the Company. Notwithstanding the foregoing, (i) the Executive will be permitted to transfer his shares in private sale transactions pursuant to a valid private placement exemption provided any transferee in connection with such any such transaction expressly consents in writing to be subject to the same restrictions and agreements applicable to such shares as Executive was hereunder, pursuant to the Employment Agreement and the Option Agreement. This letter agreement shall not be amended or modified without the prior written consent of both Parties and Aries Financial Services, Inc, a Delaware corporation. Aries Financial Services, Inc. and the Purchasers shall be third party beneficiaries of this letter agreement, have relied on the provisions contained herein and shall be entitled to enforce the rights of the Company hereunder. This letter agreement shall act as a complete release of the Company from all claims which the Executive had with respect to any of the matters with respect to which the Executive agreed to waive, forego or amend any rights as provided herein. If you agree with the foregoing, please execute a copy of this letter in the space provided below and return the executed copy to me whereupon this letter will become a binding agreement among the Parties. ________________________ IMMUNOTHERAPEUTICS, INC. Name: Title: Secretary AGREED TO AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE: GERALD VOSIKA, M.D. _____________________________ EX-10.6 8 EXHIBIT 10.6 EMPLOYMENT AGREEMENT By and Between Endorex Corp. ("Endorex"), Orasomal Technologies, Inc. ("Orasomal") and Robert Brey Agreement made this 1st day of December, 1996, between Endorex Corp., a Delaware Corporation and Orasomal Technologies, Inc., a subsidiary of Endorex Corp., (herein Endorex and Orasomal, are jointly referred to as the "Company") and ROBERT BREY (the "Employee"). The Company is desirous of employing the Employee as its Vice-President, Vaccine Development of Endorex and Vice-President, Research and Development of Orasomal, and the Employee is desirous of becoming employed by the Company in those capacities. The Company and the Employee desire to set forth in this Agreement the terms and conditions on which the Employee will be employed by the Company as its Vice-President, Vaccine Development of Endorex and Vice-President, Research and Development of Orasomal. Accordingly, in consideration of the promises and the respective covenants and agreements of the parties herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. Employment The Company hereby agrees to employ the Employee, and the Employee hereby agrees to serve the Company, on the terms and conditions set forth herein. 2. Term The employment of the Employee by the Company as provided in Section 1 will commence on the date of this Agreement and end on November 30, 2000, unless further extended or sooner terminated as hereinafter provided. 3. Position and Duties The Employee shall serve as Vice-President, Vaccine Development of Endorex and Vice-President, Research and Development of Orasomal and shall have such responsibilities and authority consistent with those positions as may, from time to time, be assigned to the Employee by the President or Board of Directors of the Company. The Employee shall devote substantially all his working time and efforts to the business and affairs of the Company. 4. Place of Performance In connection with the Employee's employment by the Company, the Employee shall be based at the principal offices of the Company located in Chicago, Illinois, except for required travel on the Company's business. 5. Compensation and Related Matters (A) Salary. During the period of the Employee's employment hereunder, the Company shall pay to the Employee a salary at a rate of not less than $100,000 per annum until such time as Employee relocates his residence and family to the Chicago, Illinois area, and thereafter at the rate of not less than $115,000 per annum payable in equal monthly or other install- ments. The Employee's salary shall be subject to an annual review commencing twelve (12) months following the commencement of the term of the Employee's employment hereunder. (B) Bonuses. At the end of each full year of employment, Employee shall be entitled to a bonus of up to 25% of Employee's salary as provided in Section 5(a) based upon meeting mutually agreed to pre-established written objectives and overall performance of the Company. (C) Expenses. The company shall reimburse Employee for all normal, usual and necessary expenses incurred by Employee in furtherance of the business and affairs of the Company (incuding up to $25,000 of reasonable relocation expenses for Employee and his family, which may include moving costs, hotel expenses, and real estate commissions and other costs of Employee selling his current residence in Atlanta, Georgia and relocating to the Chicago, Illinois area), against receipt by the company of appropriate vouchers or other proof of the Employee's expenditures and otherwise in accordance with such expense reimbursement policy as may, from time to time, be adopted by the Board of Directors of the Company. (D) Other Benefits. The Company shall provide to Employee paid medical insurance (including for the benefit of the dependents of Employee). In addition, the Company shall provide and maintain in full force and effect, and the Employee shall be entitled to participate in, all of its employee benefit plans and arrangements in effect on the date hereof or plans or arrangements hereafter adopted providing the Employee with at least equivalent benefits thereunder (including, without limitation, each pension and retirement plan and arrangement, supplemental pension and retirement plan and arrangement, stock option plan, life insurance and health and accident plan and arrangement, medical insurance plan, disability plan, survivor income plan, relocation plan and vacation plan). The Company shall not make any changes in such plans or arrangements which would adversely affect the Employee's rights or benefits thereunder, unless such change occurs pursuant to a program applicable to all employees of the Company and does not result in a proportionately greater reduction in the rights of or benefits to the Employee as compared with any other employee of the Company. The Employee shall be entitled to participate in or receive benefits under any employee benefit plan or arrangement made available by the company in the future to its key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements. Nothing paid to the Employee under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary payable to the employee pursuant to paragraph (A) of this Section. (E) Vacations. The Employee shall be entitled to three (3) weeks of vacation in each year of his employment. The Employee shall also be entitled to all paid holidays given by the Company to its Employees. (F) Services Furnished. The Company shall furnish the Employee with office space, stenographic assistance and such other facilities and services as shall be suitable to the Employee's position and adequate for the performance of his duties as set forth in Section 3 hereof. (G) Options. Subject to execution of this Agreement, Employee shall be granted an option effective on the date of execution of this Agreement, to purchase 100,000 shares of the Company's Common Stock, exercisable for a period of seven (7) years at an exercise price per share equal to the fair market value of the Common Stock on the date of execution of this Agreement, based on the bid quotations for the Common Stock in the over- the-counter market on that date. Such option shall be an Incentive Stock Option granted under the Company's 1995 Omnibus Incentive Plan. Such option shall vest and become exercisable at the rate of (i) 6,250 shares on December 1, 1996 and (ii) a cumulative additional 6,250 shares at the close of business on the last day of each three-month period thereafter, commencing March 1, 1997 through December 1, 2000, at which time this option shall have vested in full. If Employee's employment with the Company shall terminate before such option is fully vested, such option shall be exercisable only to the extent the option is exercisable on the date Employee's employment terminates. The grant of the foregoing option shall not preclude the participation of the employee in any other stock option plan of the Company. (H) It is understood that Employee will relocate his residence and family home to the Chicago, Illinois area no later than July 1, 1997. 6. Offices The Employee agrees to serve without additional compensation, if elected or appointed thereto, as an executive officer of any of the subsidiaries of Endorex or Orasomal, provided that the Employee is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided by Article VII of the Company's By-Laws. Employee agrees that, upon termination of his employment with the Company, for any reason whatsoever, he will resign from all positions as an employee and officer of the Company and all of its subsidiaries. 7. Confidential Information Employee covenants and agrees that he will not (except as required in the course of his employment), while in the employment of the Company or thereafter, communicate or divulge to, or use for the benefit of himself, or any other person, firm, association or corporation, without the consent of the Company, any information concerning any inventions, discoveries, improvements, processes, formulas, apparatus, equipment, methods, trade secrets, research, secret data, costs or uses or purchasers of the Company's current or future products, research activities, immuno- pharmaceutical agents, or services, or other confidential matters possessed, owned, or used by the Company that may be communicated to, acquired by, or learned of by the employee in the course of, or as a result of, his employment with the Company. All records, files, memoranda, reports, price lists, customer lists, drawings, plans, sketches, documents, equipment, and the like, relating to the business of the Company, which the Company shall use or prepare or come into contact with, shall remain the sole property of the Company. 8. Competition (A) During the period of the Employee's employment by the Company and for a period of eighteen (18) months after such employment (whether such employment shall have ended by reason of the expiration or termination of this Agreement or otherwise), Employee will not (i) engage in; (ii) have any interest in any person, firm or corporation that engages in; or (iii) perform any services for any person, firm or corporation that engages in competition with the Company, or any of its subsidiaries in the development, research relating to, manufacture, processing, marketing, distribution, or sale of any current or future products that were the subject of research activities, developed, licensed, manufactured, processed, distributed, or sold by the Company, or any of its subsidiaries, at any time during the period of his employment by the Company, in any area in which such business shall be carried on. (B) Employee will not, directly or indirectly, employ, solicit for employment, or advise or recommend to any other person that they employ or solicit for employment, any employee of the Company during the period of Employee's employment by the Company and for a period of two (2) years thereafter. (C) Notwithstanding any provision of this Section 8 to the contrary, Employee may own no more than three percent (3%) of the total shares of all classes of stock outstanding of any corporation having securities registered with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934. (D) Employee represents that his experience and capabilities are such that the provisions of this Section 8 will not prevent him from earning a livelihood. 9. Termination (A) Notwithstanding any provision of this Agreement to the contrary, Employee's employment shall automatically terminate upon his death, and the Company at any time may terminate his employment immediately by giving him written notice of such termination (i) for cause, as hereinafter defined; (ii) if Employee shall violate any of the provisions of Sections 7 or 8 hereof; or (iii) if Employee shall become physically or mentally incapacitated and by reason thereof unable to perform his duties hereunder for a period of ninety (90) consecutive days. For the purpose of clause (i) of this Subsection 9A, "for cause" shall mean any of the following events: (x) conviction in a court of law of any crime or offense involving money or other property of the Company, or any of its subsidiaries, or any felony, or (y) violation of specific written directions of the Board of Directors of the Company, provided, however, no discharge shall be deemed "for cause" under this clause (y) unless Employee shall have first received written notice from the Board of Directors of the Company advising of the acts or omissions that constitute such violation, and such violation continues uncured for a period of thirty (30) days after Employee shall have received such notice. (B) In the event that the Company terminates the employment of Employee for any reason other than "for cause", as defined in Section 9(A) hereof, Employee shall continue to be paid compensation by the Company for a period of six (6) months thereafter at the rate and in the amount provided in Section 5(A) hereof at the time of his termination. 10. Successors; Binding Agreement (A) The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place. As used in this Agreement, "Company" shall mean the Company as hereinbefore defined and any successor to its business and/or assets as aforesaid which executes and delivers the Agreement provided for in this Section 10, or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (B) This Agreement, and all rights of the Employee hereunder, shall inure to the benefit of and be enforceable by the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Employee should die while any amounts would still be payable to him hereunder if he had continued to life, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's devisee, legatee, or other designee or, if there be no such designee, to the Employee's estate. The Employee shall not be entitled to assign any of his rights or obligations under this Agreement. 11. Notice For the purposes of this Agreement, notices, demands and all other communications provided for in this Agreement shall be in writing and shall be deemed to be effective upon personal delivery or fax or two (2) days after deposit in the U.S. registered mail, return receipt requested, postage pre- paid, addressed as follows: If to the Employee: If to the Employer: Endorex Corp. Robert Brey 900 North Shore Drive 255 Dunhill Way Drive Lake Bluff, Illinois 60044 Alpharetta, Georgia 33202 Attn: Michael Rosen President or to such other address as any party may have furnished to the others in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 12. Miscellaneous No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the parties hereto. No waiver by either party hereto any time of any breach by the other party hereto of, or in compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not set forth expressly in this Agreement. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Illinois. 13. Validity The invalidity or unenforceability of any provision or provisions of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 14. Counterparts This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together will constitute one and the same instrument. 15. Arbitration Any dispute or controversy arising under or in connection with this agreement shall be settled exclusively by arbitration, conducted before a panel of three arbitrators, in Chicago, Illinois, in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The expense of such arbitration shall be borne by the Company. IN WITNESS WHEREOF, the parties have executed this Agreement on the date and year first above written. By: Attest By: Michael Rosen, President Endorex Corp. Attest By: Michael Rosen, President Orasomal Technologies, Inc. Robert Brey EX-10.8 9 EXHIBIT 10.8 PURCHASE AGREEMENT AGREEMENT dated as of June 13, 1996 by and among ImmunoTherapeutics, Inc., a Delaware corporation (the "Company"), Dominion Resources, Inc., a Delaware corporation ("Seller") and The Aries Fund, a Series of the Aries Trust, a Cayman Island Trust (the "Trust") and The Aries Domestic Fund, L.P., a Delaware limited partnership (the "Partnership") (herein the Trust and the Fund are collectively referred to as the "Purchasers"). WITNESSETH: WHEREAS, the Seller desires to sell to Purchasers, at a price of $.10 per share, 4,000,000 shares of the Company's Common Stock (the "Shares"); and WHEREAS, the Purchasers desire to purchase the Shares upon and subject to the terms and conditions hereinafter set forth; and WHEREAS, such shares were purchased by the Seller from the Company pursuant to a Purchase Agreement dated March 1, 1996 (the "March Purchase Agreement") (a copy of which is attached hereto as Exhibit "All); and WHEREAS, the Company has been joined with and made a party to this Agreement for the purpose of confirming the transfer of the Shares and the assignment by the Seller to the Purchasers of certain rights (the "Rights") under the March Purchase Agreement; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto hereby agree as follows: l. Purchase and Sale of the Shares. Subject to the terms and conditions set forth herein, the Seller hereby agrees to sell and transfer to Purchasers, and Purchasers hereby agree to purchase from the Seller, in the amounts set forth on Exhibit "B" hereto, the Shares at the Closing (as such term is defined in Section 2.1 hereof). The purchase price for the Shares sold pursuant to this Agreement shall be $.10 per Share, together with the assignment of the Rights. 2. Closing; Termination. 2.1 Closing. The closing of the purchase and sale of the Shares will take place at the offices of Purchasers at 375 Park Avenue, Suite 1501, New York, New York. Such closing (the "Closing") will take place at 11:00 A.M., local time, on June 13, 1996. Such Closing may take place at such other time and place or on such later date as may be mutually agreeable to the parties hereto. At such Closing, the Seller will deliver to Purchasers certificates for the Shares purchased as not forth in Section I hereof, against payment of the purchase price therefor by Purchasers, by wire transfer or certified check payable to the Seller. The Shares shall be registered in Purchasers, name or the name of the nominee of Purchasers in such denominations as Purchasers shall request according to their instructions delivered to the Seller not less than two (2) days prior to the Closing. 2.2 Termination. In the event that the transactions contemplated by this Agreement to take place at or prior to the Closing have not been consummated by June 29, 1996, this Agreement shall, at the option of Purchasers, terminate and be of no further force and effect, and any payment made by Purchasers to Seller shall be refunded to Purchasers by Seller, and there shall be no further liability on the part of any party hereto except for breaches of this Agreement prior to the time of such termination. 3. Conditions to the Obligations of Purchasers at the Closing. The obligation of Purchasers to purchase and pay for the Shares to be purchased by Purchasers at the Closing is subject to the satisfaction on or prior to June 29, 1996 of the following conditions, satisfaction of which conditions shall not be deemed waived unless waived in writing by Purchasers: 3.1 Opinion of Counsel to the Company. Purchasers shall have received from William S. Clarke, P.A., counsel for the Company, its opinion dated the date of the Closing substantially in the form of Exhibit B hereto. 3.2 Representations And Warranties. All of the representations and warranties of the Company contained in the March Purchase Agreement shall continue to be true and correct on the Closing as of the date made. 3.3 Performance of Covenants. All of the covenants and agreements of the Seller contained in this Agreement and required to be performed on or prior to the date of the Closing shall have been performed in a manner reasonably satisfactory in all respects to Purchasers. 3.4 Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 3.5 Consent. The Seller and the Company shall have obtained in writing all consents required to enable each of them to observe and comply with all of their respective obligations under this Agreement and to consummate the transactions contemplated hereby. 3.6 Board and committee Representation. The person designated by Purchasers shall have been elected as a member of the Company's Board of Directors and William McManus shall have resigned as a Director of the Company. 3.7 Closing Documents. (a) The Company shall have delivered to Purchasers a certificate executed by the President of the Company dated the date of the Closing stating that the conditions set forth in Sections 3.2 through 3.6 hereof as applicable to the Company have been satisfied, and (b) the Seller shall have delivered to Purchasers a certificate executed by the President of the Seller dated the date of the Closing stating that the conditions set forth in Sections 3.2 through 3.6 hereof am applicable to the Sellers have been satisfied, and (c) Purchasers shall have received such certificates, assignments of the Rights, other documents and instruments as Purchasers may reasonably request in connection with, and to effect, the transactions contemplated by this Agreement. 3.8 Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Purchasers. 3.9 Redemption of Rights. The Board of Directors shall redeem prior to the Closing all of the Company' a outstanding rights pursuant to Section 24(a)(i) of the Rights Agreement dated as of September 23, 1994 between the Company and American Stock Transfer and Trust Company. 4. Conditions to the Obligations of the Seller, at the Closing. The obligation of the Seller to sell the Shares to Purchasers as set forth herein at the Closing is subject to the satisfaction on or prior to the date of the Closing of the following conditions, any of which may be waived by the Company: 4.1 Representations and Warranties. The representations and warranties of Purchasers contained in this Agreement shall be true and correct at and as of the date of the Closing with the same effect as if made on the date of the Closing, except to the extent of changes caused by the transactions contemplated hereby. 4.2 Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 4.3 Proceedings. All proceedings taken or to be taken by Purchasers in connection with the transactions contemplated hereby shall be reasonably satisfactory in form and substance to the Company. 5. Conditions to the Obligations of the Company at the Closing. The obligation of the Company to fulfill the conditions to the Closing at the Closing is subject to the satisfaction on or prior to the date of the Closing of the following conditions, any of which may be waived by the Company: 5.1 Representations and Warranties. The representations and warranties of Purchasers contained in this Agreement shall be true and correct at and as of the date of the Closing with the same effect au if made on the date of the Closing, except to the extent of changes caused by the transactions contemplated hereby. 5.2 Performance of Covenants. All of the covenants and agreements of the Purchasers and the Seller contained in this Agreement and required to be performed an or prior to the date of the Closing shall have been performed in a manner reasonably satisfactory in all respects to the Company. 5.3 Board and Committee Representation. The person designated by Purchasers shall have been elected as a member of the Company's Board of Directors and William McManus shall have resigned as a Director of the Company. 5.4 Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 5.5 Proceedings. All proceedings taken or to be taken by Purchasers in connection with the transactions contemplated hereby to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Company. 6. Representation and Warranties of the Seller. The Seller hereby represents and warrants to Purchasers au follows: 6.1 Organization of Seller. The Seller is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 6.2 Authorization. The Seller has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the Seller, enforceable in accordance with its terms and conditions. The Seller need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 6.3 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of Seller's charter or by-laws, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Seller is a party or by which it is bound or to which any of its assets is subject. 6.4 Brokers' Fees. The Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this agreement for which the Purchasers could become liable or obligated. 6.5 Shares. The Seller holds of record and owns -beneficially the Shares, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and state securities laws), taxes, security interests, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands. The Seller is not a party to any option, warrant, purchase right, or other contract or commitment that could require the Seller to sell, transfer, or otherwise dispose of any capital stock of the Company (other than this Agreement) . The Seller is not a party to any voting trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of the Company. All of the Shares are validly issued, fully paid and non-assessable. 7. Representations and Warranties of the Company. The Company hereby represents and warrants to the Purchasers as follows: 7.1 Organization of the Company. The Company is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 7.2 Authorization. The Company has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of the company, enforceable in accordance with its terms and conditions. The Company need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 7.3 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of the Company's charter to by-laws, or (b) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Company is a party or by which it is bound or to which any of its assets is subject. 7.4 March Purchase Agreement. All of the representations and warranties of the company contained in Section 6 of the March Purchase Agreement are true and correct on the date of this Agreement. 7.5 Assignment of Rights. The Rights assigned and transferred by Seller to the Purchasers pursuant to this Agreement will be, upon consummation with the Closing, enforceable against the Company by the Purchasers as assignee of Seller after the date of the Closing in accordance with the terms thereof. 8. Representations and Warranties of the Purchasers. The Purchasers jointly and severally represent and warrant to Seller and the Company as follows: 8.1 Organization of the Purchasers. Each of the Purchasers are entities duly organized or created, validly existing, and in good standing under the laws of the jurisdiction of its incorporation. 8.2 Authorization. Each of the Purchasers has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. This Agreement constitutes the valid and legally binding obligation of each of the Purchasers, enforceable in accordance with its terms and conditions. Each of the Purchasers need not give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. 8.3 Non-Contravention. Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (a) violate any provision of either of Purchasers' organizational documents (which includes all documents pursuant to which Purchasers were organized or created), or (b) conflict with, result in a beach of, constitute a default under, result in the acceleration of, crate in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which either of Purchasers is a party or by which either is bound or to which any of its assets is subject. 8.4 Brokers' Fees. Neither of the Purchasers has any liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement for which Seller could become liable or obligated. 8.5 Investment. Purchasers are not acquiring the Shares with a view to or for sale in connection with any distribution thereof within the meaning of the Securities Act of 1933. Each of Purchasers is acquiring the Shares to be purchased by it for its own account, beneficially and not as a nominee for or for the account of any other person. 9. Covenants of the Seller. The Seller covenants and agrees with Purchasers and the Company as follows: 9.1 Assignment of Rights. Concurrently with and subject to consummation of the Closing, the Seller has assigned to the Purchasers the following Rights under the March Purchase Agreement: (i) all rights of Dominion to the performance of those obligations of the Company set forth in Section 8 of the March Purchase Agreement, (ii) all rights of Dominion, if any, to enforce any claims of Dominion against the Company for breach of any representation or warranty against the Company set forth in Section 6 of the March Purchase Agreement, and (iii) the rights, as a holder of Securities under Section 9 of the March Purchase Agreement, to registration of the shares under the Securities Act of 1933, as amended. 10. Covenants of the Company. The Company covenants and agrees with the Seller and the Purchasers as follows: 10.1 Consent to Assignment of the Rights. The Company herewith consents to the assignment of the Rights and agrees that such Rights shall be enforceable by the Purchasers as set forth in Section 9.1 hereof. 11. Miscellaneous. 11.1 Survival of Representations, warranties and Covenants. All representations, warranties, covenants and agreements contained in this Agreement, or in any document, exhibit, schedule or certificate by any party delivered in connection herewith shall survive the execution and delivery of this Agreement and the date of each Closing and the consummation of the transactions contemplated hereby, regardless of any investigation made by any party or on its behalf, provided that, such representations and warranties shall survive until December 31, 1996. 11.2 Expenses. The Seller agrees to pay, and save Purchasers harmless against liability for the payment of (a) fees and expenses (including, without limitation, attorneys' fees) incurred with respect to any amendments or waivers (whether or not the same shall become effective) under or with respect to this Agreement and the transactions contemplated hereby, (b) stamp and other taxes which may be payable in respect of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby including the issuance, delivery and acquisition of the Shares, and (c) fees and expenses (including, without limitation, reasonable attorneys' fees) incurred in respect of the enforcement of the rights granted under this Agreement and the transactions contemplated hereby. 11.3 Amendments and Waivers. This Agreement and all exhibits and schedules hereto set forth the entire agreement and understanding among the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Agreement may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of (a) Purchasers, if the amendment, action, omission or waiver is one which affects their rights or obligations under this Agreement and (b) the holders of 51% of the Shares then outstanding if the amendment, action, omission or waiver is one which affects their rights or obligations under this Agreement. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. 11.4 Successors and Assigns. This Agreement may not be assigned by the Company except with the prior written consent of the holders of 51% of the Shares then outstanding. This Agreement shall be binding upon and inure to the benefit of each of the Company and Seller and their respective permitted successors and assigns and Purchasers and their successors and assigns. The provisions hereof which are for Purchasers, benefit as purchasers or holders of the Shares, are also for the benefit of, and enforceable by, any subsequent holder of such Shares. 11.5 Notices. All notices, demands and 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 personally or when mailed by certified or registered mail, return receipt requested and postage prepaid, and addressed to the addresses of the respective parties set forth below or to such changed addresses as such parties may have fixed by notice; provided, however, that any notice of change of address shall be effective only upon receipt: To the Purchasers: Aries Financial Services, inc. 375 Park Avenue - Suite 1501 New York, New York 10152 With a Copy to: David Walner, Esquire 375 Park Avenue - Suite 1501 New York, New York 10152 To the Company: ImmunoTherapeutics, Inc. 3233 Fifteenth Street South Fango, North Dakota 58104 Attention: Dr. Gerald Vesica With a Copy to: William S. Clarke, P.A. 5 Independence way Princeton, New Jersey 08540 To the Seller: Dominion Resources, inc. The Abbey 355 Madison Avenue Morristown, New Jersey 07960 With a Copy to: William E. McManus, III, Esquire Spencer's Corner 90 Main Street - Suite 211 Centerbrook, Connecticut 06409-1058 11.6 Governing Law. The validity, performance, construction and effect of this Agreement shall be governed by the internal laws of the State of New Jersey without giving effect to principles of conflicts of law. 11. 7 Counterparts. This Agreement may be executed in any number of counterparts and, notwithstanding that any of the parties did not execute the same counterpart, each of such counterparts shall, for all purposes, be deemed an original, and all such counterparts shall constitute one and the same instrument binding on all of the parties thereto. 11.8 Headings. The headings of the Sections hereof are inserted as a matter of convenience and for reference only and in no way define, limit or describe the scope of this Agreement or the meaning of any provision hereof. 11.9 Severability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless the provision held invalid shall substantially impair the benefit of the remaining portion of this Agreement. EXHIBIT "B" The ARIES Fund, 3,000,000 A Series of the ARIES TRUST The Aries Domestic Fund, L.P. 1,000,000 EX-10.9 10 EXHIBIT 10.9 PURCHASE AGREEMENT AGREEMENT dated as of June 26, 1996 by and among ImmunoTherapeutics, Inc., a Delaware corporation (the "Company"), the Aries Fund, a Series of the Aries Trust, a Cayman Island Trust (the "Trust") and the Aries Domestic Fund, L.P., a Delaware limited partnership (the "Partnership, and collectively with the Trust, the "Purchasers"). WITNESSETH: WHEREAS, the Company desires to issue and sell to Purchasers, at a price of $.20 per share, 5,000,000 shares of the Company's Common Stock (the "Shares"); and WHEREAS, Purchasers desire to purchase the Shares upon and subject to the terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto hereby agree as follows: 1. Purchase and Sale of the Shares. Subject to the terms and conditions set forth herein, the Company hereby agrees to issue and sell to Purchasers, and Purchasers hereby agree to purchase from the Company, the Shares at the Closing (as such term is defined in Section 2.1 hereof). The purchase price for the Shares sold pursuant to this Agreement shall be $.20 per Share. 2. Closing; Termination. 2.1. Closing. The closing of the purchase and sale of the Shares will take place at the offices of Purchasers at 375 Park Avenue, Suite 1501, New York, New York. Such closing (the "Closing") will take place at 10:00 A.M., local time, on June 17, 1996. Such Closing may take place at such other time and place or on such later date as may be mutually agreeable to the parties hereto. At such Closing, the Company will deliver to Purchasers certificates for the Shares purchased as set forth in Section 1 hereof, against payment of the purchase price therefor by Purchasers, by wire transfer or check payable to the Company. The Shares shall be registered in Purchasers' name or the name of the nominee of Purchasers in such denominations as Purchasers shall request according to their instructions delivered to the Company not less than two (2) days prior to the Closing. 2.2. Termination. In the event that the transactions contemplated by this Agreement to take place at or prior to the Closing have not been consummated by June 29, 1996, this Agreement shall, at the option of Purchasers, terminate and be of no further force and effect, any amounts paid by Purchasers to the Company will be immediately refunded to Purchasers, and there shall be no further liability on the part of any party hereto except for breaches of this Agreement prior to the time of such termination. 3. Conditions to the Obligations of Purchasers at the Closing. The obligation of Purchasers to purchase and pay for the Shares to be purchased by Purchasers at the Closing is subject to the satisfaction on or prior to the date of the Closing of the following conditions, which may only be waived by written consent of Purchasers: 3.1. Opinion of Counsel to the Company. Purchasers shall have received from William S. Clarke, P.A., counsel for the Company, its opinion dated the date of the Closing substantially in the form of Exhibit A hereto. 3.2. Representations and Warranties. All of the representations and warranties of the Company contained in this Agreement shall be true and correct at and as of the date of the Closing with the same effect as if made on the date of the Closing, except to the extent of changes caused by the transactions contemplated hereby. 3.3. Performance of Covenants. All of the covenants and agreements of the Company contained in this Agreement and required to be performed on or prior to the date of the Closing shall have been performed in a manner reasonably satisfactory in all respects to Purchasers. 3.4. Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 3.5. Consents. The Company shall have obtained in writing all consents required to enable it to observe and comply with all of its obligations under this Agreement and to consummate the transactions contemplated hereby. 3.6. Closing Documents. The Company shall have delivered to Purchasers (a) a certificate executed by the President of the Company dated the date of the Closing stating that the conditions set forth in Sections 3.2 through 3.5 hereof have been satisfied and (b) such certificates, other documents and instruments as Purchasers may reasonably request in connection with, and to effect, the transactions contemplated by this Agreement. 3.7. Proceedings. All corporate and other proceedings taken or to be taken in connection with the transactions contemplated hereby to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to Purchasers. 4. Conditions to the Obligations of the Company at the Closing. The obligation of the Company to issue and sell the Shares to Purchasers as set forth herein at the Closing is subject to the satisfaction on or prior to the date of the Closing of the following conditions, any of which may be waived by the Company: 4.1. Representations and Warranties. The representations and warranties of Purchasers contained in this Agreement shall be true and correct at and as of the date of the Closing with the same effect as if made on the date of the Closing, except to the extent of changes caused by the transactions contemplated hereby. 4.2. Legal Action. No action or proceeding before any court or governmental body shall be pending or threatened wherein an unfavorable judgment, decree or order would prevent the carrying out of this Agreement or any of the transactions contemplated hereby, declare unlawful the transactions contemplated by this Agreement or cause such transactions to be rescinded. 4.3. Proceedings. All proceedings taken or to be taken by Purchasers in connection with the transactions contemplated hereby to be consummated at the Closing and all documents incident thereto shall be reasonably satisfactory in form and substance to the Company. 4.4. Redemption of Poison Pill. The Company's Shareholder Rights Plan dated as of September 23, 1994 between the Company and American Stock Transfer and Trust Company shall have been redeemed by the Board of Directors and satisfactory evidence of such redemption shall have been provided to counsel for Purchasers. 5. Representations and Warranties of the Company. The Company hereby represents and warrants to Purchasers as follows: 5.1. 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 all requisite corporate power and authority, and holds all licenses, permits and other required authorizations from governmental authorities, necessary to conduct its business as it is now being conducted or proposed to be conducted and to own or lease the properties and assets it now owns or holds under lease. The Company is duly qualified or licensed and in good standing as a foreign corporation in each jurisdiction wherein the character of its properties or the nature of the activities conducted by it makes such qualification or licensing necessary. 5.2. Charter Documents. The Company has heretofore delivered to Purchasers true, correct and complete copies of the Company's Certificate of Incorporation and By-Laws as in full force and effect on the date hereof. Except as expressly contemplated by this Agreement, there will be no changes or amendments to such Certificate of Incorporation or By-laws between the date hereof and the date of the Closing. 5.3. Capitalization. As of the date hereof and the Closing, the Company's authorized capitalization consists of 50,000,000 shares of Common Stock, of which 9,122,047 shares are presently issued and outstanding and 2,089,140 shares are reserved for issuance upon the conversion or exercise of presently outstanding convertible securities, options, warrants or other rights to purchase Common Stock. All outstanding shares of the Company are validly issued, fully paid and nonassessable. No stockholder of the Company is, or as of the Closing will be, entitled to any preemptive rights with respect to the purchase or sale of any securities by the Company. Except as has been set forth in Schedule 5.3 hereto, there are no outstanding options, warrants or other rights, commitments or arrangements, written or oral, to purchase or otherwise acquire any authorized but unissued shares of capital stock of the Company or any security directly or indirectly convertible into or exchangeable for any capital stock of the Company or under which any such option, warrant or convertible security may be issued in the future. None of the shares of Common Stock is reserved for any purpose, and the Company is neither subject to any obligation (contingent or otherwise), nor has any option to repurchase or otherwise acquire or retire any shares of its capital stock. 5.4. Subsidiaries. The Company has no wholly or partially owned subsidiaries and does not control, directly or indirectly, any other corporation, business trust, firm, partnership, association, joint venture, entity or organization. The Company does not own any shares of stock, partnership interest, joint venture interest or any other security or interest in any other corporation or other organization or entity. 5.5. Authorization; No Breach. The Company has the full corporate power and authority to enter into this Agreement and to perform its obligations hereunder, and the execution, delivery and performance of this Agreement and all other transactions contemplated hereby have been duly authorized by the Company, and this Agreement constitutes a legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except as the enforceability hereof may be limited by (a) bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally and (b) the availability of remedies under general equitable principles. The execution and delivery by the Company of this Agreement, the offering, sale and issuance of the Shares pursuant to this Agreement, and the performance and fulfillment of the Company, do not and will not (i) conflict with or result in a breach of the terms, conditions or provisions of, (ii) constitute a default under, or event which, with notice or lapse of time or both, would constitute a breach of or default under, (iii) result in the creation of any lien, security interest, charge or encumbrance upon the capital stock or assets of the Company pursuant to, (iv) give any third party the right to accelerate any obligation under or terminate, (v) result in a violation of, (vi) result in the loss of any license, certificate, legal privilege or legal right enjoyed or possessed by the Company under, or (vii) require any authorization, consent, approval, exemption or other action by or notice to any court or administrative or governmental body pursuant to or require the consent of any other person under, the Certificate of Incorporation or By-Laws of the Company or any law, statute, rule or regulation to which the Company is subject or by which any of its properties are bound, or any agreement, instrument, order, judgment or decree to which the Company is subject or by which its properties are bound. 5.6. Financial Statements. Annexed hereto as Schedule 5.6 are (a) the audited financial statements of the Company for the fiscal year ended January 31, 1996, including balance sheet as at the end of such fiscal year and the related statements of income and cash flow statements for such fiscal year, reported on by Mortenson & Associates, and (b) the unaudited financial statements of the Company for the three (3) month period ended April 30, 1996, including a balance sheet as at the end of such period (together with any related notes, the "Company Balance Sheet") and the related statements of income and retained earnings and cash flow statements for such three (3) month period (the financial statements referred to in Clauses (a) and (b) collectively, the "Financial Statements"). For purposes of this Agreement, April 30, 1996, shall be hereinafter referred to as the "Balance Sheet Date." The Financial Statements have been prepared in accordance with generally accepted accounting principles, applied consistently with the past practices of the Company (except as otherwise noted in such Financial Statements), reflect all known liabilities of the Company, including all known contingent liabilities, as of their respective dates, and present fairly the financial position of the Company and the results of its operations as of the time and for the period indicated therein. 5.7. No Material Adverse Changes. Except as set forth on Schedule 5.7 hereto, since the Balance Sheet Date there has not at any time been (a) any material adverse change in the financial condition, operating results, business prospects, employee relations or customer relations of the Company, or (b) other adverse changes, which in the aggregate have been materially adverse to the Company. 5.8. Absence of Certain Developments. Except as contemplated by this Agreement, and except as set forth in Schedule 5.8 hereto, since the Balance Sheet Date, the Company has not, nor will have prior to the Closing; (a) issued any corporate securities; (b) borrowed any amount or incurred or became subject to any liabilities (absolute or contingent), other than liabilities incurred in the ordinary course of business and liabilities under contracts entered into in the ordinary course of business, none of which are or shall be material; (c) discharged or satisfied any lien or encumbrance or paid any obligation or liability (absolute or contingent), other than current liabilities paid in the ordinary course of business; (d) declared or made any payment or distribution of cash or other property to the stockholders of the Company with respect to the Common Stock or purchased or redeemed any shares of Common Stock; (e) mortgaged, pledged or subjected to any lien, charge or any other encumbrance, any of its properties or assets, except for liens for taxes not yet due and payable; (f) sold, assigned or transferred any of its assets, tangible or intangible, except in the ordinary course of business, or disclosed any proprietary confidential information to any person, firm or entity; (g) suffered any extraordinary losses or waived any rights of material value; (h) made any capital expenditures or commitments therefor; (i) entered into any other transaction other than in the ordinary course of business or entered into any material transaction, whether or not in the ordinary course of business; (j) made any charitable contributions or pledges; (k) suffered damages, destruction or casualty loss, whether or not covered by insurance, affecting any of the properties or assets of the Company or any other properties or assets of the Company which could have a material adverse effect on the business or operations of the Company; or (l) made any change in the nature or operations of the business of the Company. 5.9. Properties. The Company has good and marketable title to all of the real property and good title to all of the personal property and assets it purports to own, including those reflected as owned on the Company Balance Sheet or acquired thereafter, and a good and valid leasehold interest in all property indicated as leased on the Company Balance Sheet, whether such property is real or personal, free and clear of all liens, charges, encumbrances or restrictions of any nature whatsoever, except (a) such as are reflected on the Company Balance Sheet or described in Schedule 5.9 hereto and (b) for receivables and charges collected in the ordinary course of business. Except as disclosed in Schedule 5.9 hereto, the Company owns or leases all such properties as are necessary to its operations as now conducted and as presently proposed to be conducted and all such properties are, in all material respects, in good operating condition and repair. 5.10. Taxes. Except as referred to in Schedule 5.10 hereto, the Company has filed all federal, state, local and foreign tax returns and reports required to be filed, and all taxes, fees, assessments and governmental charges of any nature shown by such returns and reports to be due and payable have been paid except for those amounts being contested in good faith and for which appropriate amounts have been reserved in accordance with generally accepted accounting principles and are reflected on the Company Balance Sheet. There is no tax deficiency which has been, or, to the knowledge of the Company might be, asserted against the Company which would adversely affect the business or operations, or proposed business or operations, of the Company. All such tax returns and reports were prepared in accordance with the relevant rules and regulations of each taxing authority having jurisdiction over the Company and are true and correct. The Company has neither given nor been requested to give any waiver of any statute of limitations relating to the payment of federal, state, local or foreign taxes. The Company has not been, nor is it now being, audited by any federal, state, local or foreign tax authorities. The Company has made all required deposits for taxes applicable to the current tax year. 5.11. Litigation. Except as set forth on Schedule 5.11 hereto, there are no actions, suits, proceedings, orders, investigations or claims pending or threatened against or affecting the Company, at law or in equity or before or by any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality; there are no arbitration proceedings pending under collective bargaining agreements or otherwise; and, to the knowledge of the Company, there is no basis for any of the foregoing. 5.12. Compliance with Law. The Company has complied in all respects with all applicable statutes and regulations of the United States and of all states, municipalities and agencies in respect of the conduct of its business and operations, and the failure, if any, by the Company to have fully complied with any such statute or regulation does not and will not materially adversely affect the business or operations of the Company. 5.13. Trademarks and Patents. Schedule 5.13 annexed hereto contains a true and correct list of all trademarks, trade names, patents and copyrights (and applications therefor) if any, heretofore or presently used or required to be used by the Company in connection with its business; and each such trademark, trade name, patent and copyright (and application therefor) listed in Schedule 5.13 as being owned by the Company is not subject to any license, royalty arrangement or dispute. To the knowledge of the Company, none of the trademarks, trade names, patents or copyrights used by the Company in connection with its business infringe any trademark, trade name, patent or copyright of others in the United States or in any other country, in any way which materially adversely affects or which in the future may materially adversely affect the business or operations of the Company. Except as set forth in Schedule 5.13, no stockholder, officer or director of the Company or any other person owns or has any interest in any trademark, trade name, patent, copyright or application therefor, or trade secret, invention or process, if any, used by the Company in connection with its business. To the knowledge of the Company, the business of the Company does not and will not cause the Company to violate any trademark, trade name, patent, copyright, trade secret, license or proprietary interest of any other person, in any way which materially adversely affects or which in the future may materially adversely affect the business or operations of the Company. Except as disclosed in Schedule 5.13 hereto, the Company possesses all proprietary technology necessary for the conduct of business by the Company, both as presently conducted and as presently proposed to be conducted. 5.14. Insurance. Schedule 5.14 annexed hereto contains a brief description of each insurance policy maintained by the Company with respect to its properties, assets and business; each such policy is in full force and effect; and the Company is not in default with respect to its obligations under any of such insurance policies. The insurance coverage of the Company is in amounts not less than is customarily maintained by corporations engaged in the same or similar business and similarly situated, including, without limitation, insurance against loss, damage, fire, theft, public liability and other risks. The activities and operations of the Company have been conducted in a manner so as to conform to all applicable provisions of these insurance policies and the Company has not taken or failed to take any action which would cause any such insurance policy to lapse. 5.15. Agreements. Except as set forth in Schedule 5.15 hereto, the Company is neither a party to nor bound by any agreement or commitment, written or oral, which obligates the Company to make payments to any person, or which obligates any person to make payments to the Company, in the case of each such agreement in an amount exceeding $5,000, or in the aggregate in an amount exceeding $10,000, or which is otherwise material to the conduct and operation of the Company's business or proposed business or any of its properties or assets, including, without limitation, all shareholder, employment, non-competition and consulting agreements and employee benefit plans and arrangements and collective bargaining agreements to which the Company is a party or by which it is bound. All such agreements are legal, valid and binding obligations of the Company, in full force and effect, and enforceable in accordance with their respective terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, moratorium, and similar laws affecting creditors' rights generally and (b) the availability of remedies under general equitable principles. The Company has performed all obligations required to be performed by it, and is not in default, or in receipt of any claim, under any such agreement or commitment, and the Company has no present expectation or intention of not fully performing all of such obligations, nor does the Company have any knowledge of any breach or anticipated breach by the other parties to any such agreement or commitment. The Company is not a party to any contract, agreement, instrument or understanding which materially adversely affects the business, properties, operations, assets or condition (financial or otherwise) of the Company. Purchasers has been furnished with a true and correct copy of each written agreement referred to in Schedule 5.15, together with all amendments, waivers or other changes thereto. 5.16. Undisclosed Liabilities. Except as set forth on Schedule 5.16 hereto, the Company has no obligation or liability (whether accrued, absolute, contingent, unliquidated, or otherwise, whether or not known to the Company, whether due or to become due) arising out of transactions entered into at or prior to the Closing of this Agreement, or any action or inaction at or prior to the Closing of this Agreement, or any state of facts existing at or prior to the Closing of this Agreement, except (a) liabilities reflected on the Company Balance Sheet; (b) liabilities incurred in the ordinary course of business since the Balance Sheet Date (none of which is a liability for breach of contract, breach of warranty, torts, infringements, claims or lawsuits); and (c) liabilities or obligations disclosed in the schedules hereto. 5.17. Conflicting Agreements. Except as set forth on Schedule 5.17, no stockholder, director, officer or key employee of the Company is a party to or bound by any agreement, contract or commitment, or subject to any restrictions in connection with any previous or current employment of any such person, which adversely affects, or which in the future may adversely affect, the business or the proposed business of the Company. 5.18. Disclosure. Neither this Agreement nor any of the schedules, exhibits, written statements, documents or certificates prepared or supplied by the Company with respect to the transactions contemplated hereby contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained herein or therein not misleading. Except as disclosed in Schedule 5.18 hereto, there exists no fact or circumstance which, to the knowledge of the Company, materially adversely affects, or which could reasonably be anticipated to have a material adverse effect on, the existing or expected financial condition, operating results, assets, customer relations, employee relations or business prospects of the Company. 5.19. Closing Date. The representations and warranties of the Company contained in this Agreement, and all information contained in any exhibit, schedule or attachment hereto or in any writing delivered by the Company to Purchasers, will be true and correct in all material respects on the date of the Closing as though then made and as though the date of the Closing were substituted for the date of this Agreement throughout this Agreement, except as affected by the transactions expressly contemplated by this Agreement. 5.20. Compliance with the Securities Laws. Except as set forth on Schedule 5.20 hereto, neither the Company nor anyone acting on its behalf has directly or indirectly offered the Shares or any part thereof or any similar security of the Company (or any other securities convertible or exchangeable for the Shares or any similar security), for sale to, or solicited any offer to buy the same from, anyone other than Purchasers. All securities of the Company heretofore sold and issued by it were sold and issued, and the Shares were offered and will be sold and issued, in compliance with all applicable federal and state securities laws. 5.21. Brokers. No finder, broker, agent, financial person or other intermediary has acted on behalf of the Company in connection with the offering of the Shares or the consummation of this Agreement or any of the transactions contemplated hereby. 6. Representations and Warranties of Purchasers. Purchasers hereby severally represent and warrant to the Company as follows: 6.1. Investment Intent. Purchasers are acquiring the Shares for their own account and not with a present view to, or for sale in connection with, any distribution thereof in violation of the registration requirements of the Securities Act. Purchasers consent to the placing of a legend on the certificates representing the Shares to the effect that such shares of Common Stock have not been registered under the Securities Act and may not be transferred unless (a) a registration statement under such Act shall have become effective with respect thereto, (b) a written opinion of William S. Clarke, P.A., or counsel for the holder reasonably acceptable to the Company, has been obtained to the effect that no such registration is required or (c) a no-action letter or its equivalent has been issued by the staff of the Securities and Exchange Commission to the effect that registration under such Act is not required in connection with such proposed transfer. 6.2. Authorization. Each of Purchasers has the power and authority to execute and deliver this Agreement and to perform all of its obligations hereunder, having obtained all required consents, if any. 6.3. Brokers. No finder, broker, agent, financial person or other intermediary has acted on behalf of Purchasers in connection with the offering of the Shares or the consummation of this Agreement or any of the transactions contemplated hereby. 6.4. Closing Date. The representations and warranties of Purchasers contained in this Agreement or in any writing delivered by Purchasers to the Company will be true and correct on the date of the Closing as though then made and as though the date of the Closing were substituted for the date of this Agreement throughout this Agreement, except as affected by the transactions expressly contemplated by this Agreement. 7. Covenants of the Company. The Company covenants and agrees with Purchasers as follows: 7.1. Books and Accounts. The Company will and will cause each Subsidiary hereafter formed or acquired to: (a) make and keep books, records and accounts, which, in reasonable detail, accurately and fairly reflect its transactions and dispositions of its assets; and (b) devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management's general or specific authorization, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and in accordance with the Company's past practices or any other criteria applicable to such statements, and to maintain accountability for assets, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. 7.2. Periodic Reports. (a) The Company will furnish to Purchasers as soon as practicable, and in any event within ninety (90) days after the end of each fiscal year of the Company (commencing with the fiscal year ended January 31, 1996), a consolidated and consolidating annual report of the Company and its Subsidiaries, including a consolidated and consolidating balance sheet as at the end of such fiscal year and consolidated and consolidating statements of income and retained earnings, and changes in consolidated financial position for such fiscal year, together with the related notes thereto, setting forth in each case in comparative form corresponding figures for the preceding fiscal year, all of which will be correct and complete and will present fairly the consolidated financial position of the Company and its Subsidiaries and the consolidated results of their operations and changes in their financial position as of the time and for the period then ended. The consolidated portions of such financial statements shall be accompanied by an unqualified report (other than qualifications contingent upon the Company's ability to obtain additional financing), in form and substance reasonably satisfactory to Purchasers, of independent public accountants reasonably satisfactory to Purchasers to the effect that such financial statements have been prepared in accordance with generally accepted accounting principles applied on a basis consistent with prior years (except as otherwise specified in such report), and present fairly the consolidated financial position of the Company and its Subsidiaries and the consolidated results of their operations and changes in their consolidated financial position as of the time and for the period then ended. The Company will use its best efforts to conduct its business so that such report of the independent public accountants will not contain any qualifications as to the scope of the audit, the continuance of the Company and its Subsidiaries, or with respect to the Company's compliance with generally accepted accounting principles consistently applied, except for changes in methods of accounting in which such accountants concur. (b) The Company will furnish to Purchasers, as soon as practicable and in any event within forty-five (45) days after the end of each of the first three (3) fiscal quarters of the Company, a quarterly report of the Company and its Subsidiaries consisting of an unaudited consolidated and consolidating balance sheet as at the end of such quarter and an unaudited consolidated and consolidating statement of income and retained earnings and changes in consolidated financial position for such quarter and the portion of the fiscal year then ended, setting forth in each case in comparative form corresponding figures for the preceding fiscal year. All such reports shall be certified by the chief financial officer of the Company to be correct and complete, to present fairly the consolidated financial position of the Company and its Subsidiaries and the consolidated results of their operations and changes in their consolidated financial position as of the time and for the period then ended and to have been prepared in accordance with generally accepted accounting principles. 7.3. Certificates of Compliance. Concurrently with the furnishing of the reports pursuant to Sections 7.2(a) and 7.2(b) hereof, the Company will furnish to Purchasers an Officer's Certificate stating that neither the Company nor any Subsidiary is in default under, or has breached, any material agreement or obligation, including, without limitation, this Agreement, or if any such default or breach exists, specifying the nature thereof and what actions the Company has taken and proposes to take with respect thereto. The Company covenants that promptly after the occurrence of any default hereunder or any default under or breach of any material agreement, or any other material adverse event or circumstance affecting the Company or any of its Subsidiaries, it will deliver to Purchasers an Officers' Certificate specifying in reasonable detail the nature and period of existence thereof, and what actions the Company has taken and proposes to take with respect thereto. 7.4. Other Reports and Inspection. The Company will furnish to Purchasers (a) as soon as practicable after issuance, copies of any financial statements or reports prepared by the Company or its Subsidiaries for, or otherwise furnished to, its stockholders or the Securities and Exchange Commission and (b) promptly, such other documents, reports and financial data as Purchasers may reasonably request. In addition the Company will, upon reasonable prior notice, make available during regular business hours to Purchasers or its representatives or designees (a) all assets, properties and business records of the Company and its Subsidiaries for inspection and/or copying and (b) the directors, officers and employees of the Company and its Subsidiaries for interviews concerning the business, affairs and finances of the Company and its Subsidiaries, provided, however, nothing herein shall require the Company to provide Purchasers with copies of or access to its scientific data. 7.5. Insurance. The Company will at all times maintain valid policies of worker's compensation insurance and such insurance with respect to its properties and business and the properties and business of its Subsidiaries of the kinds and in amounts not less than is customarily maintained by corporations engaged in the same or similar business and similarly situated, including, without limitation, insurance against fire, loss, damage, theft, public liability and other risks. 7.6. Use of Proceeds. After the date of each respective Closing, the Company will use the proceeds from the sale of the Shares for the general corporate purposes. 7.7. Material Changes. The Company will promptly notify Purchasers of any material adverse change in the business, properties, assets or condition, financial or otherwise, of the Company or any of its Subsidiaries, or any other material adverse event or circumstance affecting the Company or any of its Subsidiaries, and of any litigation or governmental proceeding pending or, to the knowledge of the Company or any Subsidiary, threatened against the Company or any of its Subsidiaries or against any director or officer of the Company or any of its Subsidiaries. 7.8. Transactions with Affiliates. Except for the transactions contemplated by this Agreement, neither the Company nor any Subsidiary shall (a) engage in any transaction with, (b) make any loans to, nor (c) enter into any contract, agreement or other arrangement (i) providing for (x) the employment of, (y) the furnishing of services by, or (z) the rental of real or personal property from, or (ii) otherwise requiring payments to, any officer, director or key employee of the Company or any Subsidiary or any relative of such persons or any other "affiliate" or "associate" of such persons (as such terms are defined in the rules and regulations promulgated under the Securities Act), without the prior approval of the Company's Board of Directors. 7.9. Corporate Existence, Licenses and Permits; Maintenance of Properties; New Businesses. The Company will at all times conduct its business in the ordinary course and cause to be done all things necessary to maintain, preserve and renew its existence and the corporate existence of each of its Subsidiaries and will preserve and keep in force and effect, and cause each Subsidiary to preserve and keep in force and effect, all licenses, permits and authorizations necessary to the conduct of its and their respective businesses. The Company will also maintain and keep, and cause each Subsidiary to maintain and keep, its and their respective properties in good repair, working order and condition, and from time to time, to make all needful and proper repairs, renewals and replacements, so that the business carried on in connection therewith may be properly conducted at all times. 7.10. Other Material Obligations. The Company will comply with, and will cause each Subsidiary to comply with, (a) all material obligations which it or its Subsidiaries are subject to, or become subject to, pursuant to any contract or agreement, whether oral or written, as such obligations are required to be observed or performed, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and the Company and its Subsidiaries have set aside on their books adequate reserves with respect thereto, and (b) all applicable laws, rules, and regulations of all governmental authorities, the violation of which could have a material adverse effect upon the business of the Company or any Subsidiary. 7.11. Amendment to the Certificate of Incorporation and the By-Laws. The Company will perform and be in compliance with and observe all of the provisions set forth in its Certificate of Incorporation and By-Laws to the extent that the performance of such obligations is legally permissible; provided that the fact that performance is not legally permissible will not prevent such nonperformance from constituting an event of default under this Agreement. The Company will not amend its Certificate of Incorporation or By-Laws so as to adversely affect the rights of Purchasers under this Agreement, the Certificate of Incorporation or the By-Laws. 7.12. Merger; Sale of Assets. Neither the Company nor any Subsidiary will become a party to any merger or consolidation, or sell, lease or otherwise dispose of any of its assets, other than sales and leases of assets in the ordinary course of business, without the prior approval of Purchasers, except that (a) any Subsidiary may merge or consolidate with any other Subsidiary or Subsidiaries, (b) any Subsidiary may merge or consolidate with the Company so long as the Company is the surviving entity of such merger or consolidation, and (c) any Subsidiary may lease, sell, transfer or otherwise dispose of all or any part of its properties and assets to the Company or any other Subsidiary. 7.13. Acquisition. The Company will not acquire, or permit any Subsidiary to acquire, any interest in any business from any person, firm or entity (whether by a purchase of assets, purchase of stock, merger or otherwise) without the prior approval of Purchasers, except the acquisition of 1% or less of any class of outstanding securities of a company whose securities are listed on a national securities exchange or which has not fewer than 1,000 stockholders and except as otherwise specifically permitted pursuant to the provisions of this Agreement. 7.14. Dividends; Distributions; Repurchases of Common Stock; Treasury Stock. The Company shall not declare or pay any dividends on, or make any other distribution with respect to, its capital stock, whether now or hereafter outstanding, other than dividends payable in shares of such stock, or purchase, acquire, redeem or retire any shares of its capital stock, without the consent of Purchasers, provided, however, the foregoing shall not prohibit the Company from repurchasing any shares of its Common Stock from any present or former officer, Director or employee of the Company. 7.15. Consents. Prior to the Closing the Company shall obtain all consents needed to enable it to perform all of its obligations under this Agreement and the transactions contemplated hereby. 7.16. Taxes and Liens. The Company will duly pay and discharge, and will cause each of its Subsidiaries to duly pay and discharge, when payable, all taxes, assessments and governmental charges imposed upon or against the Company or its Subsidiaries or their respective properties, or any part thereof or upon the income or profits therefrom, in each case before the same become delinquent and before penalties accrue thereon, as well as all claims for labor, materials or supplies which if unpaid might by law become a lien upon any of its property or any property of any Subsidiary, unless and to the extent that the same are being contested in good faith and by appropriate proceedings and the Company and its Subsidiaries have set aside on their books adequate reserves with respect thereto. 7.17. Restrictive Agreement. The Company covenants and agrees that subsequent to the Closing, neither it nor any of its Subsidiaries will be a party to any agreement or instrument which by its terms would restrict the Company's performance of its obligations pursuant to this Agreement. 8. Registration of Common Stock. 8.1. Demand Registration. Upon the written request of one or more registered holders of Securities, which request will state the intended method of disposition by such holders and will request that the Company effect the registration under the Securities Act of all or part of the Registrable Common Stock (as defined in Section 9.5 hereof) of such holders, the Company will, within ten (10) days after the receipt of such request give written notice of such requested registration to all registered holders of Securities and thereupon (except as expressly provided herein) will use reasonable efforts to effect the registration ("Demand Registration") under the Securities Act of (x) the shares of Registrable Common Stock included in the initial request for registration (for disposition in accordance with the intended method of disposition stated in such request) and (y) all other shares of Registrable Common Stock the holders of which have made written request to the Company for registration thereof within 15 days after the receipt of such written notice from the Company, provided that: (a) the Company shall be required to effect only two Demand Registrations hereunder, each of which shall have been initially requested by holders of at least 60% of the Securities outstanding at the time of such request, except that, upon request of any holder of Securities (regardless of the number of Securities held by such holder), the Company shall be required to effect an unlimited number of registrations on Form S-3, or a similar short form registration statement, which registrations (hereinafter referred to as "Short Form Registrations") shall not be included for purposes of this Section 8.1(a) in the total of two Demand Registrations which the Company is required to effect; (b) if a Demand Registration is in connection with an underwritten public offering, the underwriters will be selected by holders of a majority of Registrable Common Stock being included in such offering, subject to the approval of the Company (which approval shall not be unreasonably withheld), and each holder of Securities agrees by acquisition of such Securities not to effect any public sale or distribution of such Securities or Registrable Common Stock (other than as part of such underwritten public offering) during the period commencing seven days prior to, and expiring ninety (90) days after, such underwritten public offering has become effective; (c) the Company shall not include and shall not permit third parties to include additional securities in any Demand Registration without the consent of the holders of a majority of the shares of Registrable Common Stock sought to be included in such Demand Registration; (d) if a Demand Registration is in connection with an underwritten public offering, and if the managing underwriters advise the Company in writing that in their opinion the amount of Registrable Common Stock requested to be included in such registration exceeds the amount of such Registrable Common Stock which can be sold in such offering, the Company will nevertheless include such Registrable Common Stock in such registration prior to the inclusion of any securities which are not Registrable Common Stock (notwithstanding any consent obtained in accordance with Section 8.1(c) hereof) pro rata among the holders of Registrable Common Stock requesting inclusion on the basis of the number of shares of Registrable Common Stock of such holders; and (e) registrations under this Section 8.1 will be on a form permitted by the rules and regulations of the Securities and Exchange Commission selected by the underwriters if the Demand Registration is in connection with an underwritten public offering or otherwise by the Company. 8.2. Incidental Registrations. (a) If the Company at any time proposes to register any of its securities under the Securities Act (other than pursuant to Section 8.1) whether of its own accord or at the demand of any holder of such securities pursuant to an agreement with respect to the registration thereof, and if the form of registration statement proposed to be used may be used for the registration of Registrable Common Stock, the Company will give notice to all holders of Securities not less than fifteen (15) days prior to the filing of such registration statement of its intention to proceed with the proposed registration (the "Incidental Registration"), and, upon the written request of any such holder made within ten (10) days after the receipt of any such notice (which request will specify the Registrable Common Stock intended to be disposed of by such holder and state the intended method of disposition thereof), the Company will use reasonable efforts to cause all Registrable Common Stock as to which registration has been requested to be registered under the Securities Act, provided that if such registration is in connection with an underwritten public offering, such holder's Securities to be included in such registration shall be offered upon the same terms and conditions as apply to any other securities included in such registration. (b) If an Incidental Registration is a primary registration on behalf of the Company and is in connection with an underwritten public offering, and if the managing underwriters advise the Company in writing that in their opinion the amount of securities requested to be included in such registration (whether by the Company, the holders of Securities pursuant to Section 8.2(a) or other holders of its securities pursuant to any other rights granted by the Company to demand inclusion of any such securities in such registration) exceeds the amount of such securities which can be sold in such offering, the Company will include in such registration the amount of securities requested to be included which in the opinion of such underwriters can be sold, in the following order (i) first, all of the securities the Company proposes to sell, (ii) second, subject to the terms of any other agreement to which the Company is a party, all of the Registrable Common Stock requested to be included in such registration, pro rata among the holders thereof on the basis of the number of shares of Registrable Common Stock then owned by such holders, and (iii) third, any other securities requested to be included in such registration, pro rata among the holders thereof on the basis of the amount of such securities then owned by such holders. (c) If an Incidental Registration is a secondary registration on behalf of holders of securities of the Company and is in connection with an underwritten public offering, and if the managing underwriters advise the Company in writing that in their opinion the amount of securities requested to be included in such registration (whether by such holders, by holders of Securities pursuant to Section 8.2(a) or by holders of its securities pursuant to any other rights granted by the Company to demand inclusion of securities in such registration) exceeds the amount of such securities which can be sold in such offering, the Company will include in such registration, the amount of securities requested to be included which in the opinion of such underwriters can be sold, in the following order (i) first, all of the securities requested to be included by holders demanding or requesting such registration, (ii) second, subject to the terms of any other agreement to which the Company is a party, all of the Registrable Common Stock requested to be included in such registration, pro rata among the holders thereof on the basis of the number of shares of Registrable Common Stock then owned by such holders; and (iii) third, any other securities requested to be included in such registration, pro rata among the holders thereof on the basis of the amount of such securities then owned by such holders. 8.3. Registration Procedures. If and whenever the Company is required to use reasonable efforts to effect or cause the registration of any Registrable Common Stock under the Securities Act as provided in this Section 8, the Company will, as expeditiously as possible: (a) prepare and file with the Securities and Exchange Commission a registration statement with respect to such Registrable Common Stock and use reasonable efforts to cause such registration statement to become effective; (b) prepare and file with the Securities and Exchange Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than nine (9) months or such shorter period in which the disposition of all securities in accordance with the intended methods of disposition by the seller or sellers thereof set forth in such registration statement shall be completed, and to comply with the provisions of the Securities Act (to the extent applicable to the Company) with respect to such dispositions; (c) furnish to each seller of such Registrable Common Stock such number of copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus), in conformity with the requirements of the Securities Act, and such other documents, as such seller may reasonably request, in order to facilitate the disposition of the Registrable Common Stock owned by such seller; (d) use its reasonable efforts to register or qualify such Registrable Common Stock covered by such registration statement under such other securities or blue sky laws of such jurisdictions as any seller reasonably requests, and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller to consummate the disposition in such jurisdictions of the Registrable Common Stock owned by such seller, except that (i) the Company will not be required to register or qualify such Registrable Common Stock in any jurisdiction in which the officers or Directors of the Company would be required by the relevant securities commission or its equivalent in such jurisdiction to enter into an agreement restricting their rights to transfer their shares of Common Stock, and (ii) the Company will not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it would not, but for the requirements of this Section 8.3(d) be obligated to be qualified, to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; (e) provide a transfer agent and registrar for all such Registrable Common Stock covered by such registration statement not later than the effective date of such registration statement; (f) notify each seller of such Registrable Common Stock at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such seller, the Company will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Common Stock, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading; (g) cause all such Registrable Common Stock to be listed on each securities exchange or automated over-the-counter trading system on which similar securities issued by the Company are then listed; (h) enter into such customary agreements (including an underwriting agreement in customary form) and take all such other actions as reasonably required in order to expedite or facilitate the disposition of such Registrable Common Stock; and (i) make available for inspection by any seller of Registrable Common Stock, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller and/or representative of such seller or underwriter, all financial and other records, pertinent corporation documents and properties of the Company, and cause the Company's officers, directors and employees to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement, provided, however, nothing herein shall require the Company to provide Purchasers with copies of or access to its scientific data. 8.4. Registration and Selling Expenses. (a) All expenses incurred by the Company in connection with the Company's performance of or compliance with this Section 8, including, without limitation (i) all registration and filing fees (including all expenses incident to filing with the National Association of Securities Dealers, Inc.), (ii) blue sky fees and expenses, (iii) all necessary printing and duplicating expenses and (iv) all fees and disbursements of counsel and accountants for the Company (including the expenses of any audit of financial statements), retained by the Company (all such expenses being herein called "Registration Expenses"), will be paid by the Company except as otherwise expressly provided in this Section 8.4. (b) The Company will, in any event, in connection with any registration statement, pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal, accounting or other duties in connection therewith and expenses of audits of year-end financial statements), the expense of liability insurance and the expenses and fees for listing the securities to be registered on one or more securities exchanges or automated over-the-counter trading systems on which similar securities issued by the Company are then listed. (c) The Company shall bear the Registration Expenses of the first Demand Registration (which is not a Short Form Registration) and of each Short Form Registration hereunder. Nothing herein shall be construed to prevent any holder or holders from retaining such counsel as they shall choose, the expenses of which shall be borne by such holder or holders. (d) The holders of Registrable Common Stock covered by the second Demand Registration (which is not a Short Form Registration) shall pay or reimburse the Company for the Registration Expenses in connection therewith, provided that they shall not be liable for expenses which would otherwise have been incurred by the Company in the ordinary course of business or in excess of an aggregate of $60,000; and provided further that to the extent securities of the Company or third parties are included in such registration, the Registration Expenses of such registration shall be borne pro rata by the Company and selling security holders in proportion to the dollar value of the securities being sold by each such person. (e) The holders of Registrable Common Stock covered by any Incidental Registration shall pay or reimburse the Company for any incremental Registration Expenses incurred by reason of the inclusion of such Registrable Common Stock in such registration. (f) Notwithstanding any of the foregoing, all underwriting discounts, selling commissions and stock transfer taxes applicable to sales of Registrable Common Stock in connection with any Demand Registration or Incidental Registration shall be borne by all persons who are selling Registrable Common Stock pursuant to such Registration Statement in proportion to the dollar value of the securities being sold by each such person, or in such other proportion as they may agree. (g) All fees and expenses required to be paid by the holders of Registrable Common Stock in connection with any Demand Registration or Incidental Registration hereunder shall be borne by said holders in proportion to the dollar value of the securities of such holder covered by such Demand Registration or Incidental Registration. 8.5. Other Public Sales and Registrations. The Company agrees that if it has previously filed a registration statement with respect to Registrable Common Stock in connection with a Demand Registration or Incidental Registration hereunder, and if such previous registration has not been withdrawn or abandoned, the Company will not file or cause to become effective any other registration of any of its securities under the Securities Act or otherwise effect a public sale or distribution of its securities (except pursuant to registration on Form S-8 or any successor form relating to a special offering to the employees or security holders of the Company or any Subsidiary), whether on its own behalf or at the request of any holder of such securities, until at least ninety (90) days have elapsed after the effective date of such previous registration. 8.6. Transferees of Securities. Notwithstanding anything else set forth in this Section 8, no person to whom Securities are transferred shall have any rights under this Section 9 as a holder of such Securities unless such person agrees to be bound by the terms and conditions of this Agreement. 8.7. Indemnification. (a) The Company hereby agrees to indemnify, to the extent permitted by law, each holder of Registrable Common Stock, its officers and directors, if any, and each person, if any, who controls such holder within the meaning of the Securities Act, against all losses, claims, damages, liabilities and expenses (under the Securities Act or common law or otherwise) caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus (and as amended or supplemented if the Company has furnished any amendments or supplements thereto) or any preliminary prospectus, which registration statement, prospectus or preliminary prospectus shall be prepared in connection with a Demand Registration or Incidental Registration, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by any untrue statement or alleged untrue statement contained in or by any omission or alleged omission from information furnished to the Company by such holder in connection with a Demand Registration or Incidental Registration, provided the Company will not be liable pursuant to this Section 8.7 if such losses, claims, damages, liabilities or expenses have been caused by any selling security holder's failure to deliver a copy of the registration statement or prospectus, or any amendments or supplements thereto, after the Company has furnished such holder with a sufficient amount of copies of the same. (b) In connection with any registration statement in which a holder of Registrable Common Stock is participating, each such holder shall furnish to the Company in writing such information as is reasonably requested by the Company for use in any such registration statement or prospectus and shall indemnify, to the extent permitted by law, the Company, its directors and officers and each person, if any, who controls the Company within the meaning of the Securities Act, against any losses, claims, damages, liabilities and expenses resulting from any untrue statement or alleged untrue statement of a material fact or any omission or alleged omission of a material fact required to be stated in the registration statement or prospectus or any amendment thereof or supplement thereto or necessary to make the statements therein not misleading, but only to the extent such losses, claims, damages, liabilities or expenses are caused by an untrue statement or alleged untrue statement contained in or by an omission or alleged omission from information so furnished by such holder in connection with the Demand Registration or Incidental Registration. If the offering pursuant to any such registration is made through underwriters, each such holder agrees to enter into an underwriting agreement in customary form with such underwriters and to indemnify such underwriters, their officers and directors, if any, and each person who controls such underwriters within the meaning of the Securities Act to the same extent as hereinabove provided with respect to indemnification by such holder of the Company. (c) Promptly after receipt by an indemnified party under Section 8.7(a) or Section 8.7(b) of notice of the commencement of any action or proceeding, such indemnified party will, if a claim in respect thereof is made against the indemnifying party under such Section, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under such Section. In case any such action or proceeding is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and, to the extent that it wishes, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel approved by such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under such Section for any legal or any other expenses subsequently incurred by such indemnified party in connection with the defense thereof (other than reasonable costs of investigation) unless incurred at the written request of the indemnifying party. Notwithstanding the above, the indemnified party will have the right to employ counsel of its own choice in any such action or proceeding if the indemnified party has reasonably concluded that there may be defenses available to it which are different from or additional to those of the indemnifying party, or counsel to the indemnified party is of the opinion that it would not be desirable for the same counsel to represent both the indemnifying party and the indemnified party because such representation might result in a conflict of interest (in either of which cases the indemnifying party will not have the right to assume the defense of any such action or proceeding on behalf of the indemnified party or parties and such legal and other expenses will be borne by the indemnifying party). An indemnifying party will not be liable to any indemnified party for any settlement of any such action or proceeding effected without the consent of such indemnifying party. (d) If the indemnification provided for in Section 8.7(a) or Section 8.7(b) is unavailable under applicable law to an indemnified party in respect of any losses, claims, damages or liabilities referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities in such proportion as is appropriate to reflect the relative fault of the Company on the one hand and of the holders of Registrable Common Stock on the other in connection with the statements or omissions which resulted in such losses, claims, damages, or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the holders of Registrable Common Stock on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the Company or by the holders of Registrable Common Stock and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages and liabilities referred to above shall be deemed to include, subject to the limitations set forth in Section 9.7(c), any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. (e) Promptly after receipt by the Company or any holder of Securities of notice of the commencement of any action or proceeding, such party will, if a claim for contribution in respect thereof is to be made against another party (the "contributing party"), notify the contributing party of the commencement thereof; but the omission so to notify the contributing party will not relieve it from any liability which it may have to any other party other than for contribution hereunder. In case any such action, suit, or proceeding is brought against any party, and such party notifies a contributing party of the commencement thereof, the contributing party will be entitled to participate therein with the notifying party and any other contributing party similarly notified. 9. Certain Definitions. For the purposes of this Agreement the following terms have the respective meanings set forth below: 9.1. "Affiliate" means any person, corporation, firm or entity which directly or indirectly controls, is controlled by, or is under common control with the indicated person, corporation, firm or entity. 9.2. "Common Stock" means the Company's Common Stock. 9.3. "Generally Accepted Accounting Principles" means generally accepted accounting principles consistently applied. 9.4. "Officers' Certificate" means a certificate executed on behalf of the Company by its President, Chairman of the Board, Chief Financial Officer, Secretary or one of its Vice- Presidents. 9.5. "Registrable Common Stock" means any Common Stock owned by, or any Common Stock issuable upon exercise of any options, warrants or other rights to purchase Common Stock owned by, a holder of Securities. 9.6. "Securities" means the Shares, whether issued at the Closing or thereafter, but shall not include any such Shares or Common Stock sold or distributed by the Company in any public offering. 9.7. "Securities Act" means, as of any given time, the Securities Act of 1933, as amended, or any similar federal law then in force. 9.8. "Securities Exchange Act" means, as of any given time, the Securities Exchange Act of 1934, as amended, or any similar federal law then in force. 9.9. "Securities and Exchange Commission" includes any governmental body or agency succeeding to the functions thereof. 9.10. "Subsidiary" means any person, corporation, firm or entity at least the majority of the equity securities (or equivalent interest) of which are, at the time as of which any determination is being made, owned of record or beneficially by the Company, directly or indirectly, through any Subsidiary or otherwise. 10. Miscellaneous. 10.1. Survival of Representations, Warranties and Covenants. All representations, warranties, covenants and agreements contained in this Agreement, or in any document, exhibit, schedule or certificate by any party delivered in connection herewith shall survive the execution and delivery of this Agreement and the date of the Closing and the consummation of the transactions contemplated hereby, regardless of any investigation made by Purchasers or on their behalf, provided that, except as otherwise provided herein, the obligations of the Company to perform the covenants and agreements set forth in Section 7 hereof will continue only so long as any Purchaser owns in excess of 10% of the Securities or until the Securities have been registered under the Securities Act and distributed to the public, and, further provided that, such representations and warranties shall survive until December 31, 1996. 10.2. Expenses. The Company agrees to pay, and save Purchasers harmless against liability for the payment of (a) fees and expenses (including, without limitation, attorneys' fees) incurred with respect to any amendments or waivers (whether or not the same shall become effective) under or with respect to this Agreement and the transactions contemplated hereby, (b) stamp and other taxes which may be payable in respect of the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby including the issuance, delivery and acquisition of the Shares, and (c) fees and expenses (including, without limitation, reasonable attorneys' fees) incurred in respect of the enforcement of the rights granted under this Agreement and the transactions contemplated hereby. 10.3. Amendments and Waivers. This Agreement and all exhibits and schedules hereto set forth the entire agreement and understanding among the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Agreement may be amended, the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of (a) Purchasers, if the amendment, action, omission or waiver is one which affects its rights or obligations under this Agreement and (b) the holders of 51% of the Securities then outstanding if the amendment, action, omission or waiver is one which affects their rights or obligations under this Agreement. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. 10.4. Successors and Assigns. This Agreement may not be assigned by the Company except with the prior written consent of the holders of 51% of the Securities then outstanding. This Agreement shall be binding upon and inure to the benefit of the Company and its permitted successors and assigns and Purchasers and their successors and assigns. The provisions hereof which are for Purchasers' benefit as purchasers or holders of the Shares, are also for the benefit of, and enforceable by, any subsequent holder of such Shares. 10.5. Notices. All notices, demands and 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 personally or when mailed by certified or registered mail, return receipt requested and postage prepaid, and addressed to the addresses of the respective parties set forth below or to such changed addresses as such parties may have fixed by notice; provided, however, that any notice of change of address shall be effective only upon receipt: To the Company: Immunotherapeutics, Inc. 3233 Fifteenth Street South Fargo, North Dakota 58104 Attention: Dr. Gerald Vosika With a Copy to: William S. Clarke, P.A. 5 Independence Way Princeton, New Jersey 08540 To Purchasers: Aries Financial Services, Inc. 375 Park Avenue, Suite 1501 New York, New York 10152 With a Copy to: David R. Walner, Esquire Aries Financial Services, Inc. 375 Park Avenue, Suite 1501 New York, New York 10152 10.6. Governing Law. The validity, performance, construction and effect of this Agreement shall be governed by the internal laws of the State of New York without giving effect to principles of conflicts of law. 10.7 Counterparts. This Agreement may be executed in any number of counterparts and, notwithstanding that any of the parties did not execute the same counterpart, each of such counterparts shall, for all purposes, be deemed an original, and all such counterparts shall constitute one and the same instrument binding on all of the parties thereto. 10.8 Headings. The headings of the Sections hereof are inserted as a matter of convenience and for reference only and in no way define, limit or describe the scope of this Agreement or the meaning of any provision hereof. 10.9. Severability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless the provision held invalid shall substantially impair the benefit of the remaining portion of this Agreement. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Immunotherapeutics, Inc. By: /s/ Gerald Vosika ___________________________________ Name: Gerald Vosika Title: Chairman The Aries Fund, a Series of the Aries Trust By its Investment Manager, Aries Financial Services, Inc. By: /s/ Lindsay Rosenwald ____________________________________ Name: Lindsay Rosenwald Title: President The Aries Domestic Fund, L.P. By its General Partner, Aries Financial Services, Inc. By: /s/ Lindsay Rosenwald __________________________________ Name: Lindsay Rosenwald Title: President EX-10.11 11 EXHIBIT 10.1 LEASE THIS INDENTURE OF LEASE, dated the 28th day of April 1993, by and between: Landmark Investors, a partnership, (hereinafter referred to as the "Landlord"), and ImmunoTherapeutics, Inc. (Hereinafter referred to as the "Tenant"). WITNESSETH In consideration of the sum of Ten and no/100ths Dollars ($10.00), and other good and valuable consideration, and the mutual covenants contained herein, Landlord and Tenant hereby agree with each other as follows: ARTICLE I - DEMISE OF PREMISES Section 1.01. Landlord hereby leases to Tenant, and Tenant hereby hires from Landlord, upon and subject to the terms, conditions, covenants and provisions hereof, that certain building and land known as 3233 South 15th Street, Fargo, North Dakota, which consists of a free-standing building of approximately 7,500 square feet on the east side of real estate more specifically described on Exhibit "A" attached hereto and made a part hereof, together with any and all improvements, appurtenances, rights, privileges and easements benefitting, belonging to or pertaining thereto (all of the foregoing hereinafter referred to as the "Premises"). ARTICLE II - TERM Section 2.01. The term of this lease shall be for three (3) years to commence upon substantial completion of improvements by Tenant and the commencement by Tenant of doing business from the premises, but in no event shall the commencement date be later than August 1, 1993 (Tenant shall be given possession on or about April 16, 1993, for the purpose of constructing Tenant improvements and will pay and discharge all utilities from May 1, 1993, through the commencement date), unless sooner terminated as hereinafter provided. The lease term by be renewed in accordance with Article XXIII of this lease. Tenant will pay rent July 15 to August 1, 1993 in the amount of $1,328.13. ARTICLE III - RENT Section 3.01. Tenant covenants and agrees to pay Landlord for the Premises, without offset or deduction provided Landlord is in full compliance with this agreement, and without previous notice or demand therefore, rent as follows: For a period commending on the commencement date of the term of this lease and terminating three (3) years thereafter, annual rent as follows: 1. Annual rent during the first year in the amount of $31,875.00 2. For a period commencing one year from the commencement date of the term of this lease and terminating two years thereafter, annual rent in the amount of $39,375.00. Section 3.02. Rent, as set forth in Section 3.01, shall be payable by Tenant in equal monthly installments, in advance, commencing on the first day of the period set forth in Section 3.01 and on the same day of each and every calendar month thereafter during the term hereof in the sum of $2,656.25 in the first year, and $3,281.25 during the second and third year of the term of this lease. All payments of rent shall be made by Tenant to Landmark Investors, at 3341 15th Street South, Box 7189, Fargo, North Dakota, 58109, or such other place as Landlord may, from time to time designate. In the event that the commencement date of this Lease is on a date other than the 1st day of the month, any resulting partial month's lease payment shall be calculated and paid by Tenant to Landlord for said partial month. Said partial month shall not be included in determining the commencement date for annual rent pursuant to Section 3.01 or the monthly rent set forth in this Section. Section 3.03. Monthly payments as set forth in Section 3.02 shall be subject to a late payment charge of 10% of the monthly rent, or the maximum rate allowable by law, whichever is less. ARTICLE IV - NET LEASE CONSTRUCTION: TAXES, UTILITY EXPENSES AND OTHER CHARGES Section 4.01. It is the intention of the parties that the rent payable hereunder shall be net to the Landlord, so that this lease shall yield to Landlord the rent per annum specified in Section 3.01 during the term of this lease. The Landlord shall receive the rent free from, and Tenant shall pay, all costs, expenses and obligations of every kind and nature whatsoever relating to the Premises except as specified under this Lease. Section 4.02. Landlord shall be responsible for the "base amount" of all real estate taxes, special and general assessments (including assessments for benefits for public works or improvements, whether or not commenced or completed prior to the term of this lease) and building insurance. The "base amount" equals the taxes, specials and insurance for the year 1992. Any increase over the "base amount" from year to your shall be paid by the Tenant. In determining increases to the "base amount", it is understood that Tenant shall be responsible only for a percentage of the increases. The percentage of the increases Tenant shall be responsible for shall equal 28% of the total increases to the base amount. In the event the Landlord fails to pay the amounts required of him, Tenant, at his option, may pay said amounts and shall be entitled offset said amounts, with 10% interest, or the maximum rate allowed by law, from future rent payments. Failure by Tenant to pay amounts due to Landlord, after thirty (30) days written notice to Tenant, notifying Tenant of the amount and date due shall constitute a default under this Lease. Said additional amounts shall be treated as additional rent and shall be subject to the same late payment charge as set forth in Section 3.03 above. Tenant shall, during the term of this Lease, pay and discharge punctually, as and when the same shall become due and payable, and before any fine, penalty, interest or cost may be added thereto for the nonpayment thereof, and before the same shall become a lien upon the Premises, to the public officers or others charged with the collection thereof, all water rents, rates and charges, sewer rents, rates and charges; charges for heat, gas, hot water, electricity, light and power and other services furnished to the Premises, and other governmental impositions and charges of every kind and nature whatsoever, extraordinary and ordinary, unforeseen as well as foreseen. ARTICLE V - USE OF PREMISES COMPLIANCE WITH LAW Section 5.01. Tenant may use or suffer the use of the Premises for its general business purposes, and other purposes, but shall not use the premises for the operation of a retail food and/or liquor establishment. Section 5.02. Except to the extent of Landlord's responsibility under this Lease, during the term of this lease, Tenant shall, at its own cost and expense, promptly observe and comply with all present and future laws, ordinances, requirements, orders, directives, rules and regulations of the Federal, State, County and Municipal Governments and of all other governmental authorities affecting the Premises or appurtenances thereto, or any part thereof, of the use thereof, whether the same are in force at the commencement of the term of this lease or may in the future be passed, enacted or directed. Tenant shall pay all costs, expenses, liabilities, losses, damages, fines, penalties, claims and demands, including reasonable counsel fees, that may in any manner arise out of or be imposed because of the failure of Tenant to comply with the covenants herein. Section 5.03. Tenant shall comply with and execute all rules, requirements and regulations of the Board of Fire Underwriters, and all insurance companies with policies of insurance at any time in force with respect to the Premises. ARTICLE VI - IMPROVEMENTS, REPAIRS, ADDITION, REPLACEMENTS Section 6.01. Tenant shall have the right, at its own cost and expense, to construct on any part or all of the Premises, at any time and from time to time during the term of this lease, buildings and other improvements, and to make alterations, changes, improvements and additions thereto (hereinafter referred to as the "Work"), provided that the written consent of the Landlord therefor shall be first obtained, which consent shall not be unreasonably withheld. Section 6.02. Landlord shall be responsible for the maintenance of roof structure, parking lot and all other major components of the building as well as parking lot maintenance and yard maintenance and Tenant will be allocated parking spaces by the Landlord on the west side of the structure, for Tenant's exclusive use. Landlord agrees that it will clean up the lot surrounding the building and keep the parking lot and property in presentable condition. Tenant shall be responsible for sidewalk snow removal. Section 6.03. Except as provided in Section 6.02, Tenant shall, at Tenant's own cost and expense, put, keep and maintain in thorough repair and good order and safe condition (reasonable wear and tear excepted) the Premises, and any improvements thereon, at the commencement of the term hereof or thereafter erected upon the Premises, or forming part of the Premises, and their full equipment and appurtenances, and each and every part thereof, both inside and outside, and shall repair the whole and each and every part thereof in order to keep the same at all times during the term hereof in thorough repair and good order and safe condition (reasonable wear and tear excepted), howsoever the necessity or desirability therefore may occur, and shall use all reasonable precaution to prevent waste, damage or injury. Tenant shall also, at Tenant's own cost and expense, put, keep and maintain the Premises in thorough repair and good order and safe condition (reasonable wear and tear excepted), and free from dirt, rubbish and other obstructions or encumbrances. Tenant shall indemnify and save harmless Landlord from and against all costs, expenses, claims, losses, damages, fines or penalties, including reasonable counsel fees which Landlord is obligated to incur in the event of litigation, because or due to Tenant's failure to comply with the foregoing, and Tenant shall not call upon Landlord for any disbursement or outlay or money whatsoever except as provided in Section 6.02, and hereby expressly releases and discharges Landlord of and from any liability or responsibility whatsoever in connection therewith. Section 6.04. Landlord shall not be required to furnish any services or facilities or, except as provided in Section 6.02, to made any improvements, repairs or alterations of any kind on, in or to the Premises during the term of this Lease, or any option term. Section 6.05. Consent given by Landlord for any work to be dome by Tenant shall in no event make Tenant the agent of Landlord for any purpose whatsoever. ARTICLE VII - COVENANT AGAINST LIENS Section 7.01. If, because of any act or omission of Tenant, or any of Tenant's agents, employees or contractors, any instrument which may form the basis for any mechanic's lien or other lien, charge or oder for the payment of money, shall be filed against Landlord or any portion of the Premises, Tenant shall, at its own cost and expense, cause the same to be discharged of record within thirty (30) days after written notice from Landlord to Tenant thereof, and Tenant shall indemnify and save harmless Landlord against and from all costs, liabilities, suits, penalties, claims and demands, including reasonable counsel fees, resulting therefrom. Section 7.02. Nothing contained in this lease shall be construed as a consent on the part of Landlord to subject the estate of the Landlord in the Premises to liability under the North Dakota Mechanic's Lien Law, it being expressly understood that the Landlord's estate shall not be subject to such liability. Section 7.03. Prior to commencement of any work or the delivery of any materials to the premises by a contractor, subcontractor or materialman (hereinafter collectively called "contractor"), Tenant shall deliver to the Landlord a recordable Waiver of Lien Affidavit (hereinafter called "Contractor's Waiver of Lien") from each such contractor in the form attached hereto as Exhibit "B". The Contractor's Waiver of Lien provides, among other things, that the Contractor waives any and all lien rights that it may have against Landlord's interest in the premises or any portion thereof. ARTICLE VIII - INDEMNIFICATION: NO LIABILITY OF LANDLORD Section 8.01 Tenant shall indemnify and save harmless Landlord from and against any and all liability, damage, penalties or judgments arising from any breach, non-performance or violation by the Tenant, or Tenant's agents, employees, contractors or invitees of any covenant or provision of this lease, or arising from injury to person or property sustained by anyone on or about the Premises resulting from any act or acts or omission or omissions or the carelessness, negligence or improper conduct or Tenant or Tenant's agents, employees, contractors or invitees, or arising from or out of any occurrence in, upon, at or from the Premises, or the occupancy, condition or use of the Premises. Tenant shall, at its own cost and expense, defend any and all suits or actions (just or unjust) which may be brought against Landlord or in which Landlord may be impleaded with others upon any such above-mentioned matter. Section 8.02. Except as otherwise provided in this lease, Tenant agrees to take such steps as it may deem necessary and adequate for the protection of itself, and its agents, employees and invitees, and the property of each of them, against injury, damage or loss by insurance, as a self-insurer or otherwise. The Landlord, its agents and employees shall not be liable or responsible for any damage or injury to any property, or any person, including without limitation any damage or injury to any person, including without limitation any damage or injury to the property or person of Tenant, or any of Tenant's agents, employees or invitees, at any time on or about the Premises, or arising from or out of any occurrence in, upon, at or from the Premises, or the occupancy, condition or use of the Premises, or any causes whatsoever. ARTICLE IX - ASSIGNMENT AND SUBLETTING Section 9.01. The Premises shall not be sublet in whole or in part, without the written consent of the Landlord, which consent shall not be unreasonably withheld, and such consent having been given, the Tenant shall, nevertheless, remain primarily liable to perform all covenants and conditions hereof and to guaranty such performance by its subtenant. This Lease may be assigned to a purchaser, or successor in interest, provided such purchaser or successor in interest is in a financial condition equal to, or better than, Tenant, as reflected by Tenant's financial statement upon the execution of this Lease. In such an event, Tenant shall not be released from further liability under this Lease unless released, in writing, by the Landlord. At least ten (10) days prior to the effective date thereof, Tenant shall furnish Landlord with a conformed copy of each such assignment or sublease, together with an agreement in writing executed by any such assignee or subtenant to assume the obligations imposed by this lease upon the Tenant and to perform the same in accordance with the terms hereof. ARTICLE X - SURRENDER OF PREMISES BY TENANT: HOLDOVER Section 10.01. Except as otherwise provided in this lease, Tenant shall on the last day of the term, or sooner termination, of this lease peaceably and quietly surrender the Premises to the Landlord, including any buildings and other improvements then thereon. Any buildings and other improvements shall be surrendered in good condition and repair, reasonable wear and tear excepted. Before surrendering the Premises, Tenant shall remove all its personal property therefrom. Tenant may remove any equipment, cabinets or other installations made by Tenant, commonly known as "trade fixtures", provided Tenant shall repair any damage to the Premises resulting from such removal. At the option of the Landlord all property not so removed shall be deemed abandoned by the Tenant and shall thereupon become the property of the Landlord, or Landlord may remove the property in any manner that the Landlord shall choose and store the said property without liability to Tenant for loss thereof, and the Tenant agrees to pay to Landlord on demand any and all expenses incurred in such removal, including court costs and attorney's fees and storage charges on such property for any length of time the same shall be in the Landlord's possession, or the Landlord, at its option, without notice, may sell said property or any part of the same at private sale and without legal process for such price as the Landlord may obtain and apply the proceeds of such sale upon any amount due under this lease and upon the expense incident to the removal and sale of said property. Section 10.02. If Tenant shall remain on the Premises after the expiration or sooner termination of the term of this lease, such holder over shall not constitute a renewal or extension of this lease. Landlord may elect, at its option, to construe such holding over as a tenancy from month to month on the terms and conditions of this lease, or Landlord may elect to treat Tenant as one who has not removed at the end of its term, and thereupon be entitled to all the remedies against Tenant provided by law. ARTICLE XI - INSURANCE Section 11.01. Tenant shall provide at its own expense and keep in force during the term of this lease, general liability insurance insuring against and saving harmless the Landlord and Tenant, as their respective interests may appear, from all liability arising from any injury or damage sustained by any person, or the property of any person, occurring on or about the Premises in the amount of at least One Million Dollars with respect to injury or death to any one person and any one accident or occurrence, and One Hundred Thousand Dollars with respect to damages to property. Section 11.02. All policies of insurance required hereunder shall be issued by insurance companies of recognized responsibility and duly authorized to transact business in the State of North Dakota. Tenant agrees to deliver to Landlord, prior to the commencement of the term of this lease, and thereafter not less than thirty (30) days prior to the expiration of any such policy, the originals or copies certified by the insurance companies, of all such policies of insurance, together with proof of the payment of the premiums therefor. Such insurance shall be non-cancelable without ten (10) days' written notice to Landlord. All policies of insurance shall, to the extent obtainable, provide that any loss payable shall be payable notwithstanding any act or negligence of Tenant. Section 11.03. All insurance policies carried by Tenant and Landlord covering the Premises or in any manner relating thereto, including but not limited to the insurance required hereunder, shall expressly waive any right or subrogation on the part of the insurer against the Landlord. Tenant agrees that its policies will include such waiver clause or endorsement so long as the same shall be obtainable without extra cost, or if extra cost shall be charged therefor, so long as the Landlord pay such extra cost after notice thereof. Section 11.04. Tenant shall not violate or permit to be violated any of the conditions or provisions or any of the within policies, and Tenant shall so perform and satisfy the requirements of the companies writing such policies that at all times companies of good standing shall be willing to write and continue such insurance. ARTICLE XII - DESTRUCTION Section 12.01. The complete or partial destruction or damage by fire or other casualty, or any building or improvement now or hereafter on the Premises shall not terminate this lease, nor entitle Tenant to surrender possession of the Premises, or to terminate this lease. Tenant shall be entitled to an abatement of rent for any period during which the Premises are uninhabitable because of such casualty described above. Section 12.02. In the event that, at any time during the term of this lease, the buildings and improvements now or hereafter on the Premises shall be destroyed in whole or in part by fire or other cause, Landlord shall decide within sixty (60) days whether to rebuild said buildings and improvements. In the event Landlord does not rebuild, this lease shall terminate. If Landlord decides to rebuild, it shall give Tenant written notice of that decision and the building shall be rebuilt within six (6) months of the decision to rebuild or, the Lease shall terminate. Subject to the above, in the event that Landlord does rebuild, the terms of this lease shall remain as set forth under this Lease, and any period of uninhabitability shall not change the term of this lease. ARTICLE XIII - DEFAULT Section 13.01. If the Tenant shall fail to pay any installment of monthly rent by the 10th of the month, or any other charges payable by Tenant here- under when the same shall be due and payable, or if the Tenant shall fail to perform any of the other covenants, conditions and agreements herein contained on Tenant's part to be kept or performed and shall continue such failure without curing the same for a period of thirty (30) days (except for such default with due diligence not susceptible of being cured within such thirty (30) day period, in which event the time permitted to the Tenant to cure such default shall be extended for as long as shall be necessary to cure such default, provided Tenant commences promptly to cure such default, and provided further that such period of time shall not be so extended to jeopardize the interest of the Landlord in the Premises), or if the Tenant or any one of them shall be adjudicated as bankrupt or adjudged to be insolvent, or a receiver or trustee shall be applied for or appointed for the Tenant's property or affairs, or if there shall be filed a petition in bankruptcy or insolvency, or for an arrangement or reorganization by or against Tenant, or if the Tenant or any one of them shall make an assignment for the benefit of creditors or shall compound its debts and such adjudication, appointment, petition or assignment shall not be set aside, vacated or discharged within thirty (30) days thereafter, then in any one or more of such events, Landlord may, at Landlord's option, have the immediate right to sole and exclusive possession of the Premises, and Landlord, in addition to any other remedy which Landlord may have by law, shall have the immediate right to recover possession of the Premises by any lawful means, with or without legal process, and remove Tenant and/or all occupants of the Premises and their effects. Section 13.02. In any case where Landlord has recovered possession of the Premises by reason of Tenant's default, Tenant shall nevertheless remain liable to the Landlord as hereinafter provided in this Section 13.02 and Section 13.02, unless Landlord has by written notice specifically elected to terminate this Lease. Landlord may, at Landlord's option, occupy the Premises, or may re-let the Premises or any part thereof as agent of Tenant, for a term or terms to expire prior to, at the same time as or subsequent to the original expiration date of this lease, at Landlord's option, and receive the rent therefor, applying the same first to the payment of such expenses as Landlord may have incurred in connection with the recovery of possession, repair necessary because of the condition in which the Premises were left by Tenant or otherwise necessary for re-letting, and the re-letting, including brokerage and attorney's fees, and then to the payment of damages in an amount equal to the rent hereunder and to the cost and expense of performance of the other covenants of Tenant as herein provided. In re-letting the Premises as aforesaid, Landlord may grant rent concessions, and Tenant shall not be credited therewith. No such re-letting shall constitute a surrender and acceptance or be deemed evidence thereof. If Landlord elects, pursuant hereto, to occupy and use the Premises or any part thereof during any part of the balance of the term as originally fixed, there shall be allowed against Tenant's obligation for rent or damages as herein defined, during the period of Landlord's occupancy, the reasonable value of such occupancy, not to exceed in any event the rent herein reserved and such occupancy shall not be construed as a release of Tenant from liability hereunder. Section 13.03. Upon recovery of possession by Landlord on default, the Tenant and the Tenant's creditors and representatives shall thereafter have no right, legal or equitable, in or to the Premises or any part thereof, or in or to the repossession of same, or in or to the lease, and the Tenant hereby waives all right of redemption which is or may hereafter be provided by statute. Section 13.04. If the Tenant shall fail to perform any condition or covenant in this lease required to be performed by Tenant, the Landlord may, at its option, perform such condition or covenant for the account and at the expense of the Tenant. If the Landlord shall incur any such expense on behalf of the Tenant, such expense, together with interest thereon at the highest legal rate then permitted, shall be paid by Tenant to Landlord within ten (10) days after demand therefor, and Landlord shall have the remedies for default in the payment thereof provided herein. Section 13.05. Anything contained hereinabove to the contrary notwithstanding, in the event Tenant shall fail by pay any installment of rent or any other charge required hereunder when due, Landlord shall have the right to bring an action in the Courts in the State of North Dakota having jurisdiction for the recovery of any such sums, in which event Landlord shall be entitled to recover, in addition to such sums required to be paid, interest at t he then highest legal rate from the date such payments were due, together with Landlord's reasonable attorney's fees. Section 13.06. The rights and remedies given Landlord in this lease are distinct, separate and cumulative remedies, and no one of them, whether or not exercised by Landlord, shall be deemed to be in exclusive of any of the others herein or by law or equity provided. ARTICLE XIV - SECURITY DEPOSIT Section 14.01. The Tenant shall deposit with the Landlord on or before the commencement date hereof one month's rent in the sum of $3,282.00. Said deposit shall be held by Landlord as security for the faithful performance of all the terms of this lease by Tenant to be performed. Section 14.02. The Landlord may, but shall not be obligated to, use, apply or retain the whole or any part of the security so deposited to the extent required for the payment of any rent, or other charge as to which Tenant is in default, or for any sum which Landlord may expend by reason of Tenant's default in respect of any of the terms of this lease, and Tenant shall, upon demand, deposit with Landlord the amount so used, applied or retained, so that Landlord shall have the full deposit on hand during the term of this lease. If the Tenant shall comply with all of the terms of this Lease, the security shall be returned to the Tenant, with interest at five percent (5%) per annum, upon termination of this lease and delivery of possession of the Premises to the Landlord. Section 14.03. Landlord may deliver the funds deposited hereunder by Tenant to the purchaser of Landlord's interest in the Premises in the event that such interest be sold and thereupon Landlord shall be discharged from any further liability with respect to such deposit. ARTICLE XV - NOTICES Section 15.01. Every notice, approval, consent or other communication required by this lease shall be in writing and shall be sent postage prepaid by United States registered or certified mail, return receipt requested, directed to the other party, at its address hereinabove first mentioned, or such other address as either party may designate by notice given from time to time in accordance with this Section 15.01, other alternative personal service. ARTICLE XVI - NO REPRESENTATIONS BY LANDLORD Section 16.01. The Tenant has examined the Premises and accepts them in their present "as is" condition with full knowledge as to their character and quality, except that Landlord agrees that the roof, HVAC, water lines, sewer system, electrical, and parking lot lights will be in working order prior to the commencement of the Lease; and Tenant shall notify Landlord of any defects therein within thirty (30) days after the execution of this Lease, and shall have accepted any defects as to which could not reasonably be ascertained by Tenant. Landlord shall have a continuing obligation to maintain the roof and structure in thorough repair and good order and safe condition. No other representations, warranties or promises of any nature have been made by Landlord, and Tenant has not entered into this Lease in reliance on any representations, warranties or promises made by Landlord. ARTICLE XVII - ACCESS TO PREMISES Section 17.01. Tenant shall permit Landlord, and Landlord's agents or employees to enter the Premises at all reasonable hours for the purpose of inspecting the same, or of making repairs that Tenant may neglect or refuse to make in accordance with the terms, covenants and conditions of this lease. This provision isnot to be construed as a increase of Landlord's obligations under this lease; it being expressly agreed that the right and authority hereby reserved does not impose, nor does Landlord assume, by reason thereof, any responsibility or liability whatsoever for the repair, care or supervision of the Premises, or any building equipment or appurtenance of the Premises. Section 17.02. Landlord and Landlord's agents or employees shall have the right to enter the Premises to exhibit the Premises to prospective purchasers, prospective mortgagees and prospective tenants, but as to prospective tenants, only during the last three (3) months of the term of this lease. Landlord shall be permitted to place a "To Let" and "For Sale" sign on the Premises during the last three (3) months of the term of this lease. ARTICLE XVIII - CONDEMNATION Section 18.01. If the Premises, or any portion thereof, shall be taken or condemned by any governmental authority, or any other entity having powers of eminent domain, the parties agree to cooperation in applying for and in prosecuting any claim for such taking. All damages awarded for taking under the power of eminent domain, whether for the whole or a part of the premises, shall belong to and be the property of the Landlord, whether such damages shall be awarded as compensation for diminution of value to the leasehold estate hereby created or to the fee of the leasehold premises; provided, however, that landlord shall not be entitled to any award made to Tenant for loss of business, fair value of, and the cost of removal of stocks and fixtures; nor shall the Landlord be entitled to any portion of such a award attributable to improvements made upon the premises and paid for by the Tenant. Amounts, if any, awarded for the stocks and fixtures, or for the taking of improvements paid for by the Tenant, shall be paid over and the property of the Tenant. Section 18.02. If the entire Premises shall be so taken or condemned, this Lease shall terminate effective as of the date of the actual taking by the condemning authority and all rents shall be apportioned as of that date. Proceeds of the award shall be disbursed pursuant to the provisions of Section 18.01 of this Article. Section 18.03. If more than twenty-five percent (25%) of the Premises shall be so taken or condemned, or so much of the said Premises shall be taken or condemned as shall substantially interfere with the use of the Premises at the time of the taking (which shall be submitted to arbitration by the American Arbitration Association in the event Landlord and Tenant do not agree thereon), the Tenant may elect to cancel this Lease by giving thirty (30) days notice, which cancellation shall be effective as of the date of the actual taking by the condemning authority and all rents shall be apportioned as of that date. Section 18.04. Except as provided in Section 18.03, in the event of the taking or condemnation of a part of the Premises, this Lease shall continue in full force and effect as to the part of the Premises not so taken or condemned. The net award shall be applied to the restoration of the premises to as near the condition which existed immediately prior to the date of taking as reasonably possible, and the rent shall abate during such period of time as the Premises are untenable in the proportion that the untenable portion of the Premises bears to the entire Premises. Section 18.05. Tenant reserves to itself all rights to damages accruing as the result of any such taking payable for trade fixtures or improvements installed by Tenant, for moving expenses and for loss of business. Section 18.06. The Premises, or any part thereof, shall be deemed condemned or taken in condemnation within the meaning of this Lease if, after the institution of condemnation proceedings in respect of the Premises or any part thereof or the promulgating or official filing of any notice or declaration serving a similar purpose, the Premises or the part sought or intended to be condemned is sold and transferred by Landlord and Tenant to the condemnor or its designee in or as part of a negotiated sale, and in such event title to the Premises or such part thereof (unless previously divested) shall be deemed divested when such transfer takes place. ARTICLE XIX - CONSTRUCTION OF LEASE Section 19.01. This lease shall be governed by, construed and enforced in accordance with the laws of the State of North Dakota. Section 19.02. In construing this lease, masculine or feminine pronouns shall be substituted for those neuter in form and vice versa, and plural terms shall be substituted for singular and singular for plural, in any place in which the context so requires. Section 19.03. The article headings in this lease are inserted only as a matter of convenience and for reference and in no way define, limit or describe the scope or intent of this lease, nor in any way affect this lease. Section 19.04. This lease contains the entire agreement between the parties and can only be modified by an agreement in writing and signed by the parties hereto or their respective successors in interest. Section 19.05. If any provision of this leases hall be declared invalid or unenforceable, the remainder of the lease shall continue in full force and effect. Section 19.06. The waiver by Landlord or Tenant of any breach of any term, covenant or condition herein contained, shall not be deemed a waiver of such term, covenant or condition of any subsequent breach of the same or any other term, covenant or condition herein contained. No covenant, term or condition of this lease shall be deemed to have been waived by Landlord or Tenant, unless such waiver shall be in writing signed by the Landlord or Tenant, as the case may be. Section 19.07. The terms, covenants and conditions contained in this lease shall bind and inure to the benefit of Landlord and Tenant and their respective legal representatives, successors and assigns. ARTICLE XX - RECORDING CERTIFICATION OF LEASE STATUS. Section 20.01. For the purpose of recording some of the basic terms, covenants and conditions of this lease, the Landlord and Tenant shall execute, acknowledge and deliver a memorandum of lease after the commencement of the term, setting forth the commencement date of the term. This memorandum of lease is not intended and shall not in any way modify, amend, supersede or otherwise affect this lease. Section 20.02. Each party shall, within ten (10) days after written request by the other, certify by written instrument duly executed and acknowledged: (a) as to whether this lease is in full force and effect; (b) as t o whether this lease has been supplemented or amended, and if so, the substance and manner of such supplement or amendment; (c) as to the existence of any default hereunder; (d) as to the existence of any offsets, counterclaims or defenses hereto on the part of either party; and (e) as to the commencement and expiration dates of the term of this lease. ARTICLE XXI - POSSESSION: QUIET ENJOYMENT Section 21.01. Landlord shall deliver sole and exclusive possession of the Premises to the Tenant at the commencement of the term hereof, free and clear of any other lease or tenancy. Section 21.02. Tenant, upon paying rent and performing all of the terms on its part to be performed, shall peaceably and quietly enjoy the Premises, subject, nevertheless, to the terms of this lease and to any mortgage or agreement to which this lease is subordinated. ARTICLE XXII - SIGNS Section 22.01. The Tenant shall have the right to erect signs upon the Premises provided such signs comply with all applicable laws, ordinances, rules and regulations of any governmental organization having jurisdiction. The size, location and type of sign shall be subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld. ARTICLE XXIII - TENANT'S OPTION TO RENEW TERM Section 23.01. Landlord hereby grants Tenant three (3) successive options to extend the term of this lease for three (3) years for each option, upon the terms and conditions set forth herein. Tenant shall exercise such options by giving written notice to Landlord not later than six (6) months prior to the expiration of the initial term hereof or in the case of additional option periods, or each renewal term. Any attempted exercise of such options(s) if the Tenant was in default under any of the terms and conditions of this Lease during the initial term, whether or not such defaults were cured, shall, at Landlord's option, be null and void and of no force or effect. Section 23.02. Each of such renewal terms shall commence upon the expiration of the preceding term and all of the terms, covenants and conditions of this lease shall apply to such renewal term with the exception that the rent rate shall be proportionately adjusted for the option periods so that Base Rate will be increased for each option period according to the percentage increase of the Consumer Price Index for all urban consumers for the north central region for small metropolitan areas as prepared by the Bureau of Statistics, United States Department of Labor, for the prior three (3) year term of this lease, provided that no such increase shall exceed ten percent (10%) from the previous base rent. Base rent, for purposes of the first renewal period, if Tenant renews this Lease, if defined as $39,375.00 annually. It is further agreed that if the Index shall no longer be published, then another index generally recognized as authoritative shall be substituted. IN WITNESS WHEREOF, the undersigned have executed this agreement the day and year first above written. LANDMARK INVESTORS, A PARTNERSHIP By: Thomas M. Lavelle, Partner By: Joyce Johnson, Partner EX-10.12 12 EXHIBIT 10.12 O F F I C E L E A S E BETWEEN AMERICAN NATIONAL BANK & TRUST COMPANY OF CHICAGO, AS SUCCESSOR TRUSTEE TO COMERICA BANK, F/K/A AFFILIATED BANK, & F/K/A STATE BANK OF LAKE ZURICH, UNDER TRUST #90-0020, THE BETH CORPORATION AS AGENT, LANDLORD AND ENDOREX CORP. TENANT DATED: SEPTEMBER 18, 1996 LAKE BLUFF OFFICE CENTER This Lease made this 18th day of September 1996, between The Beth Corporation, Agent for American National Bank & Trust Company of Chicago, as Successor Trustee to Comerica Bank, F/K/A Affiliated Bank, & F/K/A State Bank of Lake Zurich, under Trust Agreement dated April 6, 1990, Trust No. 90-0020, referred to as "Landlord" and ENDOREX CORP. hereinafter referred to as "Tenant": SCHEDULE NAME OF TENANT: MICHAEL S. ROSEN TENANT'S BUSINESS: BIOTECHNOLOGY PRINCIPAL OR MANAGER'S NAME: MICHAEL S. ROSEN PRINCIPAL OR MANAGER'S HOME PHONE: (847) 604-9458 TENANT'S BUSINESS NAME: ENDOREX CORP. BUSINESS TELEPHONE: (847) 604-7555 PREMISES: 900 NORTH SHORE DRIVE SUITE 224 , 685.5 SQ. FT. LAKE BLUFF, ILLINOIS 60044 TENANT'S PERCENTAGE: 1.542% TERM OF LEASE: ONE YEAR COMMENCEMENT DATE: OCTOBER 1, 1996 OCCUPANCY: OCTOBER 1, 1996 TERMINATION DATE: SEPTEMBER 30, 1997 OPTIONS TO RENEW: TWO/ONE YEAR OPTIONS @ CURRENT SQUARE FOOTAGE BASE RENT SCHEDULE: FROM 10-1-96 TO 9-30-97 ANNUAL $11,653.50 MONTH $971.13 DAILY HOLDOVER RENT: $ 64.72 SECURITY DEPOSIT: $ 1942.26 TENANT'S BROKER (if any): COMMISSION AGREEMENT DATED: Initials: LANDLORD TENANT The foregoing Schedule is an integral part of this Lease. TABLE OF CONTENTS Page Preliminary Statement..................................... 1 1. Demised Premises and Term................................. 1 2. Construction of Improvements.............................. 1 3. Failure to Give Possession................................ 2 4. Condition of Premises..................................... 2 5. Base Rent................................................. 2 6. Tax and Expense Escalation................................ 3 7. Services.................................................. 6 8. Use of Premises........................................... 8 9. Care and Maintenance...................................... 10 10. Alterations............................................... 10 11. Insurance................................................. 11 12. Untenantability........................................... 12 13. Eminent Domain............................................ 13 14. Assignment and Subletting................................. 13 15. Waiver of Claims/Indemnification.......................... 13 16. Subordination of Superiority.............................. 14 17. Access and Other Rights Reserved to Landlord.............. 14 18. Holding Over.............................................. 16 19. Default by Tenant......................................... 16 20. Surrender of Possession................................... 18 21. Notices................................................... 18 22. Relocation of Tenant...................................... 18 23. Security Deposit.......................................... 19 24. Brokerage................................................. 19 25. Waiver, Remedies, Expenses, Etc........................... 19 26. Estoppel Certificate...................................... 20 27. Landlord Defined.......................................... 20 28. Separability.............................................. 21 29. Binding Effect and Survival............................... 21 30. Interpretation and Amendments............................. 21 31. Time and Payment; Interest................................ 21 32. Early Occupancy........................................... 21 33. Quiet Enjoyment........................................... 22 34. Mortgagee Modifications................................... 22 35. Signatures................................................ 22 36. Personal Guarantee........................................ 23 37. Exhibit "A" (Legal Description)........................... 24 38. Exhibit "B" (Floor Plan).................................. 25 29. Exhibit "C" (Work Letter)................................. 26 OFFICE LEASE This Lease is made as of the 18th day of September, 1996, by and between American National Bank & Trust Company of Chicago, as Successor Trustee to Comerica Bank, F/K/A Affiliated Bank, & F/K/A State Bank of Lake Zurich, under Trust~#90-0020 ("Landlord" herein), by its agent, The Beth Corporation, an Illinois Corporation, having an address in care of: Lake Bluff Office Center 900 North Shore Drive Suite 190 Lake Bluff, IL 60044 and ENDOREX CORP. ("Tenant" herein) having an address as follows: 900 North Shore Drive Suite 224 Lake Bluff, IL 60044 ("Tenant's Address" herein) PRELIMINARY STATEMENT Landlord owns a fee simple in the following described real estate legally described as follows: See Exhibit "A" attached The land is improved by an office building ("the Office Building" herein). Tenant desires to lease from Landlord, and Landlord desires to lease to Tenant, a portion of the Office Building on the terms hereinafter provided. Now, THEREFORE, the parties hereby mutually agree as follows: 1. Demised Premises and Term. Landlord hereby agrees to lease to the Tenant and Tenant hereby agrees to lease from Landlord, upon the terms and conditions herein provided, that portion of the Office Building outlined in red on the floor plans affixed hereto as Exhibit~"B", ("the Premises" herein) for a term ("the Term" herein) commencing on October 1, 1996, ("the Commencement Date") and ending, unless sooner terminated as provided herein, on September 30, 1997. This Lease does not demise or grant any rights to light or air over the Land. 2. Construction of Improvements. (a) Landlord shall cause the Premises to be improved substantially in accordance with the Tenant work letter affixed hereto as Exhibit "C" ("Landlord's Improvements"). Landlord agrees to cause Landlord's improvements to be diligently constructed in an orderly manner and agrees to substantially complete the same on or before the Commencement Date; provided, however, if construction of Landlord's improvements is delayed directly or indirectly as a result of changes, deletions or additions requested by Tenants in submitting plans, supplying information, approving plans, specifications or estimates or other delays or failures or defaults of Tenant, or by strikes, lockouts, casualties, extraordinary weather conditions, acts of God, war, material or labor shortages, interruptions in transportation, governmental regulations or control, or by other causes beyond the control of Landlord, said date for substantial completion of Landlord's improvements and the Commencement Date shall be deferred by the duration of such delay or delays caused as aforesaid. (b) The Premises shall be considered substantially complete when the Premises are ready for beneficial use and occupancy by Tenant. Neither completion of minor or insubstantial details of construction, decoration and mechanical adjustments, nor completion of work by Tenant shall be required as a condition of substantial completion. (c) Upon the Commencement Date, possession of the Premises shall be tendered to Tenant. Concurrently with the tender of possession, Landlord and Tenant shall agree upon a punch list of incomplete items of Landlord's improvements. Landlord will cause all unfinished Landlord's improvements reflected on such punch list to be provided with due diligence under the weather condition and other circumstances then prevailing. 3. Failure to Give Possession. Landlord shall not be subject to any liability if Landlord shall be unable to give possession of the Premises on the Commencement Date, (as that date may be deferred pursuant to Section 2 of this Lease) by reason of the failure or inability of Landlord to substantially complete Landlord's improvements or otherwise, and no such failure to give possession on said date shall affect the validity of this Lease or the obligations of Tenant hereunder, nor shall the same extend the Term. The forgoing notwithstanding, in the event that Landlord fails or is unable to substantially complete Landlord's improvements and tender possession of the Premises within 60 days of the Commencement Date (as that date may be deferred pursuant to Section 2 of this Lease), then either Tenant or Landlord may elect by notice to the other, at any time thereafter, to terminate this Lease, without liability on the part of either Landlord or Tenant effective 60 days following service of such notice if the Premises are not substantially complete and tendered to Tenant for possession prior to such effective date of termination. 4. Condition of Premises. Tenant's taking possession of the Premises shall be conclusive evidence as against Tenant that Premises were in good order and satisfactory condition when Tenant took possession, subject only to the items identified on the punch list referred to in Section 2 (c). No promise of Landlord to alter, remodel, decorate, clean or improve the Premises, the Land or the Office Building and no representation respecting the condition of any of the foregoing have been made by Landlord to Tenant unless same are contained herein, or made a part hereof, or are contained in a written document signed by the Landlord. 5. Base Rent. (a) Tenant shall pay to The Beth Corporation at 900 North Shore Drive, Lake Bluff, Illinois 60044, as agent for Landlord or to such other person or at such other place as Landlord may from time to time designate in writing, Annual Base Rent in an amount per year equal to the product obtained by multiplying the number of square feet of Rentable Area within the Premises by the Annual Base Rent Per Square Foot. For purposes hereof (i) Rentable Area within the Premises shall be 685.5 square feet; and (ii) the Annual Base Rent Per Square Foot shall be Seventeen dollars and no/100. (b) Annual Base Rent shall be payable without notice or demand, and without offset, counter claim or deduction in advance in equal monthly installments each in the amount of one-twelfth (1/12) of the Annual Base Rent on the first day of each month of the Term; provided, however, that if the Term shall commence or end on a day other than the first or last day of a month, concurrently with the commencement or end of the Term, as the case may be, Tenant shall pay to Landlord or Landlord shall refund (if paid) to Tenant Base Rent for such first or last partial month of the Term the per diem Annual Base Rent for the number of days of such month within or without the Term, respectively. 6. Tax and Expenses Escalation. A. Definitions. (a) "Rentable Area", with reference to the area being calculated, shall be computed by measuring from the inside surface of the exterior glass walls to the office side of corridors and/or other permanent partitions, and to the center of the partitions that separate the Premises from adjoining Rentable Areas and shall include a proportionate share of public corridors, public toilets, air conditioning rooms, fan rooms, janitors' closets, electrical closets and telephone closets on each floor, but shall not include stairs, elevator shafts, flues, stacks, pipe shafts and vertical ducts with their enclosing walls. In computing Rentable Area, no deduction shall be made for columns and projections necessary to the support or design of the Office Building. (b) The First Lease Year shall be the period commencing on the Commencement Date and ending on the immediately following December 31, and succeeding Lease Years shall be succeeding calendar years (or portion thereof) with the Term. (c) "Taxes" shall mean real estate taxes, assessments, sewer rents, rates and charges, transit taxes, taxes based upon the receipt of rent, and any other federal, state or local governmental charge, general, special, ordinary or extraordinary, which may now or hereafter be levied or assessed in respect to the Land and the Office Building. In case of special Taxes or assessments which may be payable in installments, only the amount of each installment paid during a Lease Year shall be included in Taxes for that year. Taxes shall also include any personal property taxes (attributable to the year in which paid) imposed upon the furniture, fixtures, machinery, equipment, apparatus systems and appurtenants used in connection with the management, maintenance, operation or repair of the Land and the Office Building. Taxes which are solely attributable to extraordinary improvements (i.e., those which are materially above building standard) that benefit a particular tenant rather than all tenants of the Office Building, and which are, or can be segregated in the County Assessor's records shall be excluded from Taxes. Nothing herein contained shall be construed to include as a Tax which shall be the basis of real estate taxes, any inheritance, estate, succession, transfer, gift, franchise, corporation, income or profit tax or capital levy that is, or may be, imposed upon Landlord; provided, however, that, if at any time during the Lease Term the methods of taxation prevailing at the commencement of the Lease Term shall be altered so that in lieu of, in addition to, or as a substitute for the whole or any part of the real estate taxes now levied, assessed or imposed on real estate as such, there shall be levied, assessed or imposed (i) a tax or taxes on the rents received from such real estate, or (ii) a license fee measured by the rents receivable by Landlord from the Property or any portion thereof, or (iii) a tax or license fee imposed upon Landlord which is otherwise measured by or based in whole or in part upon the Property or any portion thereof, then the same shall be included in the computation of real estate taxes hereunder, to be computed as if the amount of such tax or fee so payable where that due if the Property were the only property of Landlord subject thereto. (d) "Expenses" shall mean and include those costs and expenses paid or incurred by Landlord for managing, maintaining, operating and repairing the Land and the Office Building and the personal property used in conjunction therewith including, but not limited to, electricity, oil, gas, and other energy and fuel sources, steam, water and water treatment, sewer, heating, lighting, air conditioning, ventilation, window cleaning, janitorial service, insurance (including, but not limited to, fire, extended coverage, all-risk, rent loss, liability, workers compensation, elevator, pressurized vessel, machinery or any other insurance carried in good faith by Landlord), painting, uniforms, customary management fees, supplies, sundries, sales or use taxes on supplies or services, equipment and plant maintenance and rental, landscaping, sign maintenance, snow removal, security, scavenger, wages and salaries of all persons engaged in such management, operation, maintenance and repair, employment taxes and fringe benefits (including, but not limited to social security taxes, unemployment insurance taxes, payroll taxes, vacation and holiday pay, jury duty and funeral leave pay, disability and hospitalization benefits, health and welfare benefits and contributions, pension and retirement benefits and contributions, other employee bargaining agreement, and any other cost or expense which Landlord pays or incurs to provide benefits for employees), amount paid to independent contractors, legal and a ccounting expenses (including, but not limited to, such expenses as relate to seeking or obtaining reductions in and refunds of Taxes) and any other expense or charge, whether or not accounting and management principles would be considered as an expense of managing, maintaining, operating, or repairing the Land and the Office Building. If any Expense, though paid in one calendar year, relates to more than one calendar year, such Expense shall be fairly allocated by Landlord among such related calendar years. Expenses shall not include the cost of alterations to the Premises, depreciation, interest and principal payments on mortgages and other debt costs, ground rent, cost of capital, real estate brokers' leasing commissions or compensation, and any cost or expenditure or portion thereof for which Landlord has been reimbursed by insurance proceeds. Landlord may engage affiliates of Landlord, its beneficiary, or persons interested in its beneficiary, to provide labor, material or services in connection with the management, maintenance, operation and/or repair of the Land, the Office Building and the personal property used in conjunction therewith, provided that in the engagement of such affiliates, Landlord shall secure or purchase such labor, material or services at cost comparable to those charged by other independent reputable purveyors or like labor, material or services in the metropolitan Chicago area, and Expenses arising therefrom shall be limited to such amounts generally charged by such other purveyors. (e) The Rentable Area in the Office Building is 44,445.0 sq. ft. B. Tax and Expense Escalation. (a) In the event that the aggregate amount of Taxes and Expenses attributable to any Lease Year shall exceed Five and 00/100 Dollars per square foot of Rentable Area of the Office Building, then Tenant shall pay to Landlord, as additional rent, an amount for such Lease Year determined in accordance with the following formula: Taxes for Lease Year plus No. of Square of Feet ($5.00 x No. of Expenses for Lease Year X of Rentable Area - Sq. Ft. of No. of Square Feet of in Premises Rentable Area Rentable Area in Office (Lessee's Percentage) in Premises) Building (b) The amount of Taxes and Expenses attributable to any Lease Year shall initially be based upon the amount of Taxes and Expenses payable during such Lease Year regardless of the Lease Year for which such Taxes and Expenses were levied or assessed, subject to readjustment on the basis of the actual Taxes and Expenses levied or assessed for such Lease Year, when known. (c) The foregoing notwithstanding, for the first and last Lease Years, if the same are less than 12 months in duration, the aggregate Taxes and Expenses per square foot of Rentable Area of the Office Building attributable to such Lease Year and the aforesaid $5.00 amount shall each be reduced to an amount equal to the product obtained by multiplying each of said amounts by a fraction, the numerator of which is the number of calendar days within the first of last Lease Year (as the case may be) and the denominator of which is 360. (d) Tenant shall further pay to Landlord, as additional rent, all Taxes which are solely attributable to its extraordinary leasehold improvements (i.e., those which are materially above the initial improvements to the Premises included in Landlord's improvements) and which are, or can be, segregated in the County Assessor's records. (C) Billing and Payment. (a) As soon as reasonably feasible after the expiration of each Lease Year, Landlord will furnish to Tenant a statement showing the Expenses and Taxes for said Lease Year and the amount of additional rent due to Landlord on account thereof for said Lease Year. Said statement may be amended by Landlord to reflect actual Taxes for said Lease Year when known. Tenant shall pay said additional rent as follows: (i) Tenant shall pay to Landlord the entire amount of said additional rent for the preceding Lease Year, less all payments theretofore made by Tenant on account thereof, within 30 days following receipt of such statement or amendment thereto; (ii) Tenant shall pay to Landlord an amount equal to one-twelfth of said additional rent for the preceding Lease Year for each month (or portion thereof) of the current Lease Year then elapsed, within 30 days following receipt of such statement or amendment thereto, less all payments theretofore made on account thereof, to apply towards anticipated additional rent for the current Lease Year; (iii) Tenant shall pay to Landlord an amount equal to one-twelfth of such additional rent for the preceding Lease Year on the first day of each month following issuance of such statement or amendment thereto, until the statement for the current Lease Year is issued and the amount of such monthly payment is adjusted in accordance therewith, to apply towards anticipated additional rent for the current Lease Year; and (iv) Tenant shall pay to Landlord an amount equal to Landlord's reasonable estimate of such additional rent for the last Lease Year (which may not be finally determined until after termination of the Lease) within 30 days of being billed therefore during the last Lease Year, subject to adjustment between the parties when the additional rent for the last Lease Year is determinable. (b) Tenant or its representative shall have the right to examine Landlord's books and records at Landlord's principal offices with respect to the items in the foregoing statement of Expenses and Taxes during normal business hours at any time within thirty (30) days following the furnishing by Landlord to Tenant of such statement. Unless Tenant shall take written exception to any item within sixty (60) days after the furnishing of the foregoing statement, such statement shall be considered as final and accepted by Tenant. 7. Services. (a) Provided that this Lease is in effect and Tenant's right to possession of the Premises has not been terminated pursuant to Section 19 or otherwise, Landlord shall furnish the services described in this Section. (i) Heating and air-conditioning when in the judgment of Landlord it may be necessary for the comfortable occupancy of the Premises from 8:00 a.m. to 6:00 p.m., Monday through Friday (except for all days observed by State or Federal Government as legal holidays). Tenant will be charged for all heating and air-conditioning requested and furnished prior to or following these hours at rates to be established by Landlord. Any such charge shall be deemed to be additional rental. (ii)Electricity provided by Landlord is for common areas and heating of office suites. Tenant shall be responsible for its own separately metered, incidental use electricity, as under the following conditions. (iii) Electricity shall not be furnished by Landlord, but shall be furnished by the approved electric utility company serving the area. Landlord shall permit the Tenant to receive such service direct from such public utility company at Tenant's cost, and shall permit Landlord's wire and conduits, to the extent available, suitable and safely capable, to be used for such purposes. Landlord shall not be held liable for the lack of quality or quantity of electrical services furnished by any third party, including the utilities companies nor shall Landlord be held responsible for any interruption in any such service for the operation of the Office Building's air conditioning and heating systems at times other than as provided in paragraph (i) hereof, or the operation of any special air conditioning systems which may be required for data processing equipment or for other special equipment or machinery installed by Tenant shall be paid for by Tenant. Tenant shall make no alterations or additions to the electric equipment and/or appliances without the prior written consent of the Landlord in each instance. Tenant also agrees to purchase from Landlord or its agents all lamps, bulbs, ballasts and starters used in Premises after the initial installation thereof. Tenant covenants and agrees that at all times its use of electric current shall never exceed the capacity of the feeders to the Office Building or the risers or wiring installed thereon. (iv) Cold water in common with other tenants for drinking, lavatory and toilet purposes drawn through the fixtures installed with Landlord's prior written consent, and hot water in common with other tenants for lavatory purposes from regular Office Building supply. Tenant shall pay to Landlord an additional rent at rates fixed by Landlord (not to exceed rates for like uses charged by the Village of Lake Bluff) for water furnished for any other purpose. Tenant shall not waste or permit the waste of water, and shall not tie, wedge or otherwise fasten open any faucets. (v) Janitor service and customary cleaning in and about the Premises, Saturdays, Sundays and holidays excepted. Tenant shall not provide or employ any janitor services or cleaning without Landlord's written consent and then only subject to supervision of Landlord and Tenant's sole responsibility, and by a janitor or cleaning contractor or employees at all times satisfactory to Landlord. (vi) Passenger elevator service in common with Landlord and other tenants, daily. Operatorless automatic elevator service shall be deemed "elevator service" within the meaning of this subsection. (vii) Window washing of all windows in the Premises, both inside and out, at such times as shall be required in Landlord's sole judgment. (b) Landlord does not warrant that any of the services mentioned in paragraph (a) above will be free from interruptions caused by war, insurrection, civil commotion, riots, casualties, acts of God or enemy, governmental action, repairs, renewals, improvements, alterations, strikes, lockouts, picketing, whether legal or illegal, accidents, inability of Landlord to obtain energy or supplies of any other cause or causes beyond the reasonable control of Landlord. Any such interruption of service shall never be deemed an eviction, constructive or otherwise, or disturbance of Tenant's use and possession of the Premises or any part thereof, or render Landlord liable to Tenant for damages, or relieve Tenant from performance of Tenant's obligations under this Lease; provided, however, in the event that one or more of the foregoing services which are essential to the continued beneficial use and occupancy of the Premises shall be interrupted, other than as a result of the default of Tenant, for a continuous period of 60 days or more, Tenant shall have the right (as its sole and exclusive remedy), after notice thereof from Tenant to Landlord and any mortgagee of the Office Building designated to receive notice for this purpose, to terminate this Lease effective 60 days following notice of its election to terminate on account thereof unless such essential service is restored within such 60-day period. If Tenant fails to pay within five (5) days Landlord's proper charges for any of the foregoing services chargeable to Tenant then Landlord, upon not less than ten (10) days notice, may, in addition to any other remedy provided in this Lease or given by law, discontinue furnishing that service and no such discontinuance shall be deemed an eviction or disturbance of Tenant's use of the obligations under this Lease. 8. Use of Premises. (a) Tenant shall use and occupy the Premises for general office purposes and for no other purpose. (b) Tenant will not make or permit to be made any use of the Premises which, directly or indirectly, is forbidden by law, ordinance or governmental regulation or which may be dangerous to persons or property, or which may invalidate or increase the premium cost of any policy of insurance carried on the Office Building or covering its operations. Tenant shall not do, or permit to be done, any act or thing within the Premises which will be in conflict with fire and other insurance policies covering the Office Building. Tenant, at its sole expense, shall comply with all rules, regulations or requirements of the Illinois Inspection and Rating Bureau, or any similar body, and shall not do, or permit anything to be done within the Premises, or bring or keep anything therein in violation of, the rules, regulations or requirements of the Village of Lake Bluff Fire Department, the Illinois Inspection and Rating Bureau, the Fire Insurance Rating Organization or other similar authority. (c) Tenant shall not install or erect any sign or lettering in or upon the Office Building or the Land without the prior written consent of Landlord, and any sign or lettering which is installed with Landlord's consent shall be installed by Landlord at Tenant's cost and in such manner, character and style as Landlord may designate. (d) Tenant shall not advertise the business, profession or activities of Tenant conducted in the Office Building in any manner which violates the letter or spirit of any code of ethics adopted by any recognized association or organization pertaining to such business, profession or activities, and shall not use the name of the Office Building for any purposes other than that of business address of Tenant, and shall never use any picture or likeness of the Office Building in any circulars, notices, advertisements or correspondence without Landlord's express consent in writing. (e) Tenant shall not obstruct, or use for storage, or for any purposes other than ingress and egress, the sidewalks, entrances, passages, courts, corridors, vestibules, halls, elevators and stairways of the Office Building. Tenant shall not use for storage any janitor closets or electrical closets. (f) Tenant shall not suffer or permit any bicycle or other vehicle or any dog or other animal or bird to be brought or permitted to be in the Office Building or any part thereof. (g) Tenant shall not make or permit any noise or odor that is objectionable to the Landlord or other occupants of the Office Building to emanate from the Premises, and shall not create or maintain a nuisance thereon, and shall not disturb, solicit or canvass any occupant of the Office Building, and shall not do any act tending to injure the reputation of the Office Building. (h) Tenant shall not install any musical instrument or equipment in the Office Building, or any antennae, aerial wires or other equipment inside or outside the Office Building, without, in each and every instance, prior approval in writing by Landlord, and the use thereof, if permitted, shall be subject to control by Landlord to the end that others shall not be disturbed or annoyed. (i) Tenant shall not install or attach any additional locks or similar devices to any door of the Premises. No keys for any door other than those provided by Landlord shall be made. If more than two keys for one lock are desired by Tenant, Landlord may provide same upon payment of the cost thereof by Tenant. Upon termination of this Lease or of Tenant's right to possession, Tenant shall surrender all keys of all locks on safes, cabinets and vaults remaining in the Premises. (j) Tenant shall be responsible for the locking of doors in and to the Premises, and Tenant assumes full responsibility for any damage, theft, robbery, pilferage and vandalism resulting from neglect of this duty. (k) If Tenant desires telegraphic, telephonic, burglar alarm or signal service, Landlord will, upon request, direct where and how connections and all wiring for such service shall be introduced and run, and no boring, cutting or installation of wires or cables are or shall be permitted in the absence of or contrary to such directions. (l) The shape, color and material of all shades, draperies or other form of inside window covering must be approved in advance by Landlord in writing. (m) Tenant shall not overload any floor of the Office Building. Safes, furniture and all large articles shall be brought through the Office Building and into the Premises at such times and in such manner as Landlord shall direct and at Tenant's sole risk and responsibility. Tenant shall list all furniture, equipment and similar articles to be removed from the Office Building, and the list must be approved at the Office of the Building before removal. (n) Unless Landlord gives advance written consent in each and every instance, Tenant shall not install or operate any steam or internal combustion engine, boiler or other pressurized vessel, machinery, refrigerating or heating device or air conditioning apparatus in or about the Premises, or carry on any manufacturing or assembly operations therein, or use the Premises for housing accommodations or lodging or sleeping purposes, or do any cooking therein or install or permit the installation of any vending or video game machines, or use any illumination other than electric light, or use or permit to be brought into the Office Building any inflammable oils or fluids such as gasoline, kerosene, naphtha and benzine, or any explosive or other articles hazardous to persons or property. (o) Tenant shall not place or allow anything to be against or near the windows or the glass of partitions or doors of the Premises which may diminish the light in, or be unsightly from public halls or corridors or the exterior of the Office Building. (p) Landlord reserves and shall have the right to make such other reasonable rules and regulations in respect to the use, occupancy and operation of the Office Building as Landlord or its agent may from time to time adopt on reasonable notice, and Tenant agrees to comply therewith. (q) In addition to all other liabilities for breach of any covenant of this Section, Tenant shall pay to Landlord all direct damages caused by such breach and shall also pay to Landlord on demand, as additional rent, an amount equal to any increase in insurance premium or premiums under the fire and other insurance policies covering the Office Building caused by such breach. Any violation of this Section may be restrained by injunction. 9. Care and Maintenance. (a) Subject to the provisions of Section 12, Tenant shall, at Tenant's sole expense, keep the interior of the Premises and all electrical, plumbing and mechanical equipment and conduits which solely service the Premises and Tenant's appliances, equipment and installations therein in good order, appearance, condition and repair throughout the Term. If Tenant does not make repairs within 10 days and, to Landlord's satisfaction, Landlord may, but shall not be required to, make repairs, and Tenant shall pay or reimburse on demand all costs incurred by Landlord in connection therewith, including overtime incurred in the event such repairs are not made during ordinary business hours. Any such costs shall be considered additional rent payable from the Tenant within 10 days from Landlord's billing. Landlord may enter the Premises at all reasonable times to make such repairs. (b) Landlord shall maintain and make all necessary repairs to electrical, plumbing, mechanical equipment and conduits of the Office Building, except such equipment and conduits which solely serve the Premises or Tenant's equipment or installations herein. Landlord shall also maintain the common areas of the Office Building and parking areas (including snow removal), landscaping and the exterior and structure of the Office Building. 10. Alterations. (a) Tenant shall not do any painting or decorating, or erect any partitions, make any alterations in the Premises or do any nailing, boring or screwing into the ceilings, walls or floors thereof, without Landlord's prior written consent in each and every instance. Unless otherwise agreed by Landlord and Tenant in writing, all such work shall be performed either by or under the direction of Landlord, but at the cost of Tenant. If Landlord consents to such alterations, before commencement of the work or delivery of any materials onto the Premises or into the Office Building, Tenant shall furnish to Landlord for approval: (i) plans and specifications; (ii) names and addresses of contractors; (iii) copies of contracts; (iv) necessary governmental permits; (v) indemnification in form and amount reasonably satisfactory to Landlord; and (vi) certificates of insurance from all contractors performing labor or furnishing materials, insuring against any and all claims, costs, damages, liabilities and expenses which may arise in connection with the alterations or additions. (b) Whether the Tenant furnished Landlord the foregoing or not, Tenant hereby agrees to hold Landlord, its beneficiaries, and their respective agents and employees harmless from any and all liabilities of every kind and description which may arise out of or be connected in any way with said alterations or additions. Any mechanic's lien filed against the Premises, the Office Building or the Land, for work claimed to have been furnished by Tenant shall be discharged of record by Tenant within ten (10) days thereafter, at Tenant's expense. Upon completing any alterations, Tenant shall furnish Landlord with contractors' affidavits and full and final waivers of lien and receipted bills covering all labor and materials expended and used in connection herewith. (c) All alterations shall comply with the requirements of all insurance policies covering the Office Building and of the issuing insurance companies and with all ordinances and regulations of the Village of Lake Bluff or any department or agency thereof having jurisdiction of the Premises and with the requirements of all laws, statutes and regulations of Lake County, the State of Illinois and the United States Government and any department or agency thereof having jurisdiction of the Premises. All alterations and additions shall be constructed in a good and workmanlike manner with good grades of new materials. (d) Except as otherwise provided in Section 20, all additions (including drapes and blinds), decorations, hardware, non-trade fixtures and all improvements, temporary or permanent, in or upon the Premises, whether placed there by Tenant or by Landlord, shall, unless Landlord requests their removal, become Landlord's property and shall remain upon the Premises at the termination of this Lease by lapse of time or otherwise without compensation or allowance or credit to Tenant. If, upon Landlord's request, Tenant does not remove said additions, decorations, hardware, non-trade fixtures and improvements, Landlord may remove the same and Tenant shall pay to Landlord, upon demand, the cost of such removal and the cost of repairing any damage to the Premises occasioned by such removal. 11. Insurance. (a) Tenant shall maintain insurance of the following character throughout the Term and any extensions thereof; (i) comprehensive general public liability insurance against claims for bodily injury, death or property damage occurring on, in or about the Premises and the adjoining and related common areas, including parking areas, docks, streets, sidewalks and passageways, such insurance to provide for limits of liability reasonably approved by Landlord but in no event less than $1,000,000 with respect to bodily injury or death to persons and $500,000 with respect to property damage; (ii) casualty insurance (on a replacement cost basis) with respect to all personal property of Tenant in or upon the Premises against loss or damage by fire, lighting, theft and other risks from time to time included under "extended coverage" or "all risk" policies in an amount not less than the full replacement cost thereof; (iii) worker's compensation insurance, covering all persons employed by Tenant or its agents, employees and contractors in connection with any work done on or about the Premises with respect to which claims for death or bodily injury could be asserted against Landlord or the Office Building; and (iv) such other insurance on or in respect to the Premises in such amounts and against such other insurable hazards which at the time are commonly obtained by tenants of property similar to the Office Building. (b) The insurance referred to in subsection (a) shall be issued by insurance companies acceptable to Landlord authorized to issue such insurance in the State of Illinois, shall be in the form and contain the provisions generally used for like properties in the State of Illinois, and the public liability insurance to be maintained by Tenant, Landlord's agents and beneficiaries, and Tenant. Every insurance policy referred to in subsection (a) shall contain an agreement by the insurer that it will not cancel or amend such policy except after 30 days prior written notice to Landlord and Tenant, and shall provide that any loss otherwise payable thereunder shall be payable notwithstanding any act or negligence of Tenant which might, absent such agreement, result in a forfeiture of all or a part of such insurance and notwithstanding the occupation or use of the Office Building or the Premises for purposes more hazardous than permitted by the terms of such policy. (c) Tenant shall deliver to Landlord, on or before the commencement of the Term, the original or duplicate original policies and/or certificates of the insurers, evidencing all of the insurance which is then required to be maintained by Tenant hereunder together with evidence of the payment of all current premiums due therefor, and Tenant shall, within 30 days prior to the expirations of any such insurance, deliver other original or duplicate original policies and/or certificates of the insurers evidencing the renewal or replacement of such insurance together with evidence of the payment of all premiums therefor. Should Tenant fail to maintain or renew any insurance provided for in this Section, or to pay the premium therefor, or to deliver to the other any of such policies or certificates, then, and in any of said events, Landlord, at its option, but without obligation so to do, may procure such insurance and any sums expended therefor shall be reimbursed by Tenant to Landlord on demand. (d) Whenever (i) any loss, cost, damage or expense resulting from fire, explosion or any other casualty occurrence is incurred by either of the parties to this Lease in connection with the Premises, and (ii) such party is or should be covered in whole or in part by insurance with respect to such loss, cost, damage or expense, then the party so insured hereby releases the other party from any liability it may have on account of such loss, cost, damage or expense to the extent of any amount recovered by reason of such insurance and waives any right of subrogation which might otherwise exist in or accrue to any person on account thereof, provided that such release of liability and waiver of the right of subrogation shall not be operative in any case where the effect thereof is to invalidate such insurance coverage or increase the cost thereof (provided that in the case of increased cost, the other party shall have the right, within thirty (30) days following written notice, to pay such increased cost, thereupon keeping such release and waiver in full force and effect). 12. Untenantability. (a) Except as hereinafter otherwise provided, if the Premises are damaged by fire or other insured casualty, the damage shall be repaired by and at the expense of Landlord, and Base Rent, until such damaged Premises shall be rendered tenantable, shall abate on a per day basis in the same proportion that the quantum of damaged Rentable Area of the Premises bears to the entire Rentable Area of the Premises from time to time. (b) If the entire Premises or 50% or more of the Office Building are damaged or rendered untenantable by fire or other casualty, Landlord may, by notice to Tenant within sixty (60) days after the date of the fire or other casualty, elect to (i) terminate this Lease as of the date of the fire or other casualty, in which event Base Rent and additional rent payable hereunder shall be apportioned on a per diem basis and paid to the date of the fire or other casualty, or (ii) repair, restore and rehabilitate the Office Building and/or the Premises at Landlord's expense in which event this Lease shall not terminate. In the event Landlord elects to repair, restore, rehabilitate, Landlord shall undertake and prosecute such repair, restoration and rehabilitation with due diligence and Base Rent shall abate on a per diem basis during the period of untenantability in the same proportion that the quantum of untenantable Rentable Area of the Premises bears to the entire Rentable Area of the Premises from time to time. In the event Landlord elects to repair, restore and rehabilitate, as aforesaid, and fails or is unable to substantially complete such repair, restoration or rehabilitation within nine (9) months following the date of the fire or other casualty, either Landlord or Tenant may elect to terminate this Lease without further liability to either party at any time thereafter but prior to such substantial completion by notice to other, provided that said period allowed for repair, restoration and rehabilitation shall be extended by the duration of delays directly or indirectly resulting from causes beyond the control of Landlord of the nature referred to in Section~2~(a). (c) Under no circumstances shall Landlord be responsible for the repair, restoration or rehabilitation of any personal property of Tenant or any improvements or alterations made to the Premises by Tenant, or of any loss or damage caused by neglect or willful act of Tenant, anything herein to the contrary notwithstanding. 13. Eminent Domain. If all or a material portion of the Office Building shall be lawfully taken or condemned for any public or quasi-public use or purpose, the Term shall end upon, and not before, the date of the taking of possession by the condemning authority except with respect to obligations and liabilities of Tenant under this Lease, actual or contingent, which have arisen on or prior to such date, upon payment by Tenant of all installments of Base Rent, additional rent and all other sums then due and payable under this Lease to and including such termination date. Tenant hereby waives and assigns to Landlord any and all interest Tenant may have in and to any award and compensation payable on account of any such taking, and the entire award payable on account of any such taking shall be payable to and be the sole and exclusive property of Landlord. 14. Assignment and Subletting. (a) Tenant shall not, without the prior written consent of Landlord, (i) assign this Lease or any interest hereunder; (ii) permit any assignment of this Lease by operation of law; (iii) sublet the Premises or any part thereof; or (iv) permit the use of the Premises by any parties other than Tenant, its agents and employees. (b)No assignment of this Lease shall be effective unless Landlord shall consent thereto and unless the assignee shall execute an appropriate instrument assuming all of the obligations of Tenant hereunder and unless Tenant (and its guarantor) acknowledge therein its (or their) continued liability under this Lease. If Landlord consents to such assignment, Tenant (and its guarantor) shall remain primarily liable for the payment of Base Rent, additional rent and all other sums payable by Tenant hereunder and for the performance of all covenants of Tenant herein contained, notwithstanding any such assignment or subletting, to the same extent as if such assignment and subletting had not occurred. (c) A material change in the ownership or control of Tenant shall constitute an assignment of this Lease for purposes of this Section. 15. Waiver of Claims/Indemnification. (a) Tenant agrees that, to the extent not prohibited by law, Landlord and its beneficiaries, and their officers, agents and employees shall not be liable for any damage either to person or property or resulting from the loss of use thereof sustained by Tenant or by other persons due to the Office Building or any part thereof or any appurtenance thereof becoming out of repair, or due to the happening of any accident or event in or about the Office Building, or due to any act or neglect of any tenant or occupant of the Office Building or of any other person. This provision shall apply particularly (but not exclusively) to damage caused by gas, electricity, snow, frost, steam, sewage, sewer gas or odors, fire, water or by the bursting or leaking of pipes, faucets, sprinklers and plumbing fixtures, and shall apply without distinction as to the person whose act or neglect was responsible for the damage and whether the damage was due to any of the causes specifically enumerated above or to some other cause of an entirely different nature. Tenant further agrees that all personal property upon the Premises or upon loading docks, receiving and holding areas, elevators or other common areas of the Office Building shall be at the risk of Tenant only, and the Landlord shall not be liable for any loss or damage thereto or theft thereof. (b) Tenant agrees to defend, protect, indemnify and save harmless Landlord and its beneficiaries, and their respective agents and employees, of and from (i) all liability to third parties arising out of the acts of Tenant and its servants, agents, employees, contractors, suppliers, workmen or invitees, and (ii) any and all loss, damage, liability cost and expense, including reasonable attorneys' fees, arising from Tenant's use or occupation of the Premises or from any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of Tenant to be performed pursuant to the terms of this Lease, or from any act or negligence of Tenant, its agents, contractors, suppliers, workmen, servants, employees or invitees, in or about the Premises. In case of any action or proceeding brought against Landlord or its beneficiaries, or their respective agents or employees by reason of any such claim, upon notice from Landlord, Tenant covenants, at its expense, to defend such action or proceeding by counsel reasonably satisfactory to Landlord. 16. Subordination of Superiority. The rights and interests of Tenant under this Lease shall be subject and subordinate to any ground lease, mortgage, trust deed or other paramount encumbrance that may now or hereafter be placed upon the Land and/or the Office Building or any part thereof and to any and all advances to be made thereunder and to interest thereon and all renewals, replacements and extensions thereof, provided that the ground lessor, mortgagee, trustee or secured party named in such ground lease, mortgage, trust deed or other encumbrance shall elect to subject and subordinate the rights and interest of Tenant under this Lease to such ground lease or the lien of such mortgage, trust deed or other encumbrance. Any such ground lessor, mortgagee, trustee under a trust deed or secured party under any other encumbrance may elect to give the rights and interests of Tenant under this Lease priority over such ground lease or the lien of such mortgage, trust deed or other encumbrance. In the event of either such election and upon notification by such ground lessor, mortgagee, trustee or secured party to Tenant to that effect, the rights and interest of Tenant under this Lease shall be deemed to be subordinate to or to have priority over, as the case may be, such ground lease or the lien of said mortgage, trust deed or other encumbrance, whether this Lease is dated prior or subsequent to the date of said ground lease, mortgage, trust deed or other encumbrance. Tenant shall execute and deliver whatever instruments may be required for such purpose, including an agreement to attorn to any such ground lessor, mortgagee, trustee or other encumbrancer, and in the event Tenant fails so to do within 20 days after demand in writing, the same shall constitute an event of default hereunder. 17. Access and Other Rights Reserved to Landlord. Landlord, for itself and its agents, reserves and may exercise the following rights without affecting Tenant's obligations hereunder: (a) to change the name or street address of the Office Building; (b) to install and maintain any and all signs on the exterior and/or interior of the Office Building; (c) to reserve access for Landlord and the other tenants of the Office Building of any mail chutes located within the Premises according to the rules of the United States Post Office; (d) to designate all sources furnishing sign painting and lettering, ice, drinking water, towels, coffee cart service and toilet supplies used in the Office Building; (e) during the last 6 months of the Term, if Tenant has vacated the Premises, to decorate, remodel, repair or otherwise prepare the Premises for reletting; (f) to retain at all times pass keys to the Premises; (g)to grant anyone the exclusive right and privilege to conduct any particular business or undertaking in the Office Building; (h) to exhibit the Premises to others and, during the last three (3) months of the Term, to display "for rent" signs on the Premises; (i) to close the Office Building after regular working hours and on legal holidays subject, however, to Tenant's right to admittance, under such reasonable regulations as Landlord may prescribe from time to time, which may include by way of example but not of limitation, that persons entering or leaving the Office Building identify themselves to a watchman by registration or otherwise and that said persons establish their right to enter or leave the Office Building; (j) to approve the weight, size and location of safes, computers, copying and printing equipment or other heavy equipment or articles, which articles may be moved in, about, or out the Office Building or Premises only at such times and in such manner as Landlord shall direct and in all events, however, at Tenant's sole risk and responsibility; (k) to take any and all measures, including inspections, repairs, alterations, decorations, additions and improvements to the Premises or to the Office Building, as may be necessary or desirable for the safety, protection or preservation of the Premises or the Office Building or Landlord's interests, or as may be necessary or desirable in the operation of the Office Building; (l) to erect, use and maintain pipes, ducts, wiring and conduits in and through the Premises; (m) upon reasonable advance notice to Tenant (provided that no notice shall be required in an emergency), to enter the Premises, to inspect the same, to perform janitorial and cleaning services and to make such decorations, repairs, alterations, improvements or additions to the Premises or the Office Building as Landlord may deem reasonably necessary or desirable, and to take all material into and upon the Premises that may be required therefor and during the continuance of any said work, to temporarily close doors, entryways, public space and corridors in the Office Building and to interrupt or temporarily suspend services and facilities, provided that Landlord shall at all times use its best efforts to maintain reasonable accessibility to the Premises, to minimize any disruption of Tenant's business; if Tenant shall not be personally present to open and permit entry into the Premises, at any time, when for any reason an entry therein shall be necessary or permissible, Landlord or Landlord's agents may enter the same by a master key, or, in the cases of an emergency only, may forcibly enter the same, without rendering Landlord or such agents liable therefor (if during such entry Landlord or Landlord's agents shall accord reasonable care to Tenant's property), and without in any manner affecting the obligations, responsibility or liability whatsoever, for the care, supervision or repair of the Premises or the Office Building or any part thereof, other than as herein provided; and (n)to change the arrangement and/or location of entrances or passageways, doors and doorways, and corridors, elevators, stairs, toilets or other public parts of the Office Building, and to close entrances, doors, corridors, elevators or other facilities. Landlord may enter upon the Premises and may exercise any or all of the foregoing rights hereby reserved without being deemed guilty of an actual or constructive eviction or disturbance to Tenant's use or possession and without being liable in any manner to Tenant and without abatement of Base Rent and additional rent (except as provided in Section 12) or affecting any of Tenant's obligations hereunder; provided that in the exercise of any or all of the foregoing rights, Landlord shall use reasonable care to minimize damage to Tenant's property or interruption of Tenant's business. 18. Holding Over. If Tenant retains possession of the Premises or any part thereof after the termination of the Term, by lapse of time or otherwise, Tenant shall pay Landlord monthly rent, at double the rate payable for the month immediately preceding said holding over (including such additional rent for Expenses and Taxes which Landlord may reasonably estimate), computed on a per-month basis, for, and payable in advance on the first day of, each month or part thereof (without reduction for any such partial month) that Tenant thus remains in possession, and in addition thereto, Tenant shall pay Landlord all damages, consequential as well as direct, sustained by reason of Tenant's retention of possession. Alternatively, at the option and election of Landlord, expressed in written notice to Tenant and not otherwise, such retention of possession shall constitute an extension of the Term for one (1) year. The provisions of this paragraph are not exclusive and shall not preclude or impair Landlord's rights of re-entry or any other right of Landlord hereunder, at law or in equity. 19. Default by Tenant. (a) In addition to the other events of default mentioned elsewhere in this Lease, any of the following occurrences or acts shall constitute an event of default under this Lease: (i) if Tenant, at any time during the continuance of this Lease (and regardless of the pendency of any bankruptcy, reorganization, receivership, insolvency or other proceedings, in law, in equity, or before any administrative tribunal, which have or might have the effect of preventing Tenant from complying with the terms of this Lease), shall (x) fail to make any payment of Base Rent, additional rent or other sum required to be paid by Tenant hereunder and Tenant shall fail to make any such payment for a period of five (5) days after service by Landlord of written notice to Tenant that any such payment has become due, or (y) fail to observe or perform any other provision hereof for ten (10) days after Landlord shall have served on Tenant written notice of such failure, provided, that in the case of any default referred to in this clause which is curable but cannot be cured by the payment of money and cannot with diligence be cured within such 10-day period, if Tenant shall proceed promptly to cure the same and thereafter shall prosecute the curing of within which such failure may be cured shall be extended for such period as may be necessary to complete the curing of the same with diligence and continuity; or (ii) if Tenant shall file a petition in bankruptcy or for reorganization or for an arrangement pursuant to any present or future federal or state bankruptcy law or under any similar federal or state law, or shall be adjudicated a bankrupt or insolvent or shall make an assignment for the benefit of its creditors or shall admit in writing its inability to pay its debts generally as they become due, or if a petition or answer proposing the adjudication of Tenant as a bankrupt or its reorganization under any present or future federal or state bankruptcy law or any similar federal or state law shall be filed in any court and such petition or answer shall not be discharged or denied within thirty (30) days after the filing thereof, or (iii) of a receiver, trustee, custodian or liquidator of Tenant or of all or substantially all of the assets of Tenant or of the Premises or any portion thereof shall be appointed any proceeding brought by or against Tenant and shall not be discharged within thirty (30) days after such appointment, or if Tenant shall consent to or acquiesce in such appointment, or (iv) if the Premises shall have been abandoned, or (v) if Tenant shall be in default under any other lease of Premises in the Office Building or the complex. (b) If an event of default should have occurred and be continuing, Landlord shall have the right at its election, then or any time thereafter while such event of default shall continue, to give Tenant written notice of Landlord's intention to terminate the Term on a date specified in such notice. Upon the giving of such notice, the Term and the estate hereby granted shall expire and terminate on such date as fully and completely and with the same effect as if such date were the date hereinbefore fixed for the expiration of the Term, and all rights of Tenant hereunder shall expire and terminate, but Tenant shall remain liable as hereinafter provided. (c) If an event of default shall have occurred and be continuing, Landlord shall have the immediate right, whether or not the Term shall have been terminated pursuant to subsection (b), to re-enter and repossess the Premises or any part thereof by force, summary proceedings, ejection or otherwise and the right to remove all persons and property therefrom. Landlord shall be under no liability for, or by reason of, any such entry, repossession or removal. No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate the Term unless a written notice of such intention be given to Tenant pursuant to subsection (b), or unless the termination of this Lease be decreed by a court or competent jurisdiction. (d) At any time or from time to time after the repossession of the Premises or any part thereof pursuant to subsection (c), whether or not the Term shall have been terminated pursuant to subsection (b), Landlord may (but shall be under no obligation to) relet the Premises or any part thereof for the account of Tenant, in the name of Tenant or Landlord or otherwise, without notice to Tenant, for such term or terms (which may be greater or less than the period which would otherwise have constituted the balance of the Term) and on such conditions (which may include concessions or free rent) and for such uses as Landlord, in its absolute discretion, may determine, and Landlord may collect and receive any rents payable by reason of such reletting. Landlord shall not be responsible or liable for any failure to collect any rent upon any such reletting. (e) No expiration or termination of the Term pursuant to subsection (b), by operation of law or otherwise, and no repossession of the Premises or any part thereof pursuant to subsection (c) or otherwise, and no reletting of the Premises or any part thereof pursuant to subsection (d), shall relieve Tenant of its liabilities and obligations hereunder, all of which shall survive such expiration, termination, repossession or reletting. (f) In the event of any expiration or termination of this Lease or repossession of the Premises or any part thereof by reason of the occurrence of an event of default, Tenant will pay to Landlord the Base Rent, additional rent and other sums required to be paid by Tenant to and including the date of such expiration, termination or repossession; and, thereafter, until the end of what would have been the Term in the absence of such expiration, termination or repossession, and whether or not the Premises or any part thereof shall have been relet, Tenant shall be liable to Landlord for, and shall pay to Landlord the Base Rent, additional rent and other sums which would be payable under this Lease by Tenant in the absence of such expiration, termination or repossession, less the net proceeds, if any, of any reletting effected for the account of Tenant pursuant to subsection (d), after deducting from such proceeds all of Landlord's expenses in connection with such reletting (including, without limitation, all repossession costs, brokerage commissions, legal expenses, reasonable attorneys' fees, employees' expenses, alteration costs and expenses for preparation for such reletting). Tenant will pay said Base Rent, additional rent and other sums on the days on which the Base Rent, additional rent and such other sums would have been payable under this Lease in the absence of such expiration, termination, or repossession, and Landlord shall be entitled to recover the same from Tenant on each such day. 20. Surrender of Possession. Upon the expiration or other termination of the Term, Tenant shall quit and surrender to Landlord the Premises, broom clean, in good order and condition, ordinary wear expected, and Tenant shall remove all of its property therefrom. Prior to the end of the Term, Tenant may remove from the Premises such readily removable improvements to the Premises made and paid for by Tenant, provided that (i) Tenant shall not remove any improvements which shall result in the Premises being improved below building standard (defined as those improvements installed by Landlord in accordance with Exhibit "C" hereto), (ii) Tenant shall not remove any mechanical, electrical or plumbing fixtures or conduits providing heat, light, power, water, plumbing, air conditioning, ventilation or other essential services to the Premises (as distinguished from removable equipment therein) except for special or upgraded fixtures installed by Tenant which are replaced by Tenant with fixtures customarily and normally used in offices in other portions of the Office Building, and (iii) prior to the end of the Term, Tenant shall at its sole expense restore any damage to the Premises resulting from such removal. If Tenant does not remove its property of every kind and description from the Premises prior to the end of the Term, however ended, Tenant shall be conclusively presumed to have conveyed the same to Landlord under this Lease as a bill of sale without further payment or credit by Landlord to Tenant and Landlord may remove the same and Tenant shall pay the cost of such removal and the cost of repairing any damage caused thereby to Landlord upon demand and, (iv) Tenant when vacating the Premises shall do so after 6:00 p.m. so as not to disturb the use of the elevators for other tenants. 21. Notices. All notices required or permitted hereunder shall be in writing, and the same shall be considered delivered when personally serviced and receipted for by the intended recipient or when deposited in the United States certified or registered mail, postage prepaid, return receipt requested, and if directed to Landlord, addressed to Landlord at Landlord's Address, and if directed to Tenant, addressed to Tenant at Tenant's Address. Landlord and Tenant each reserve the right to change their respective addresses effective three (3) business days following notice thereof served upon the other in accordance herewith. 22. Relocation of Tenant. Landlord shall have the right, upon thirty (30) days written notice, to relocate Tenant in whole or in part, to another location in the Office Building at no cost or expense to Tenant and upon the condition that the new premises designated by Landlord shall be substantially as desirable as the Premises with respect to layout and location in the Office Building and shall not be smaller in area than the Premises. 23. Security Deposit. Tenant has deposited with Landlord a security deposit in the amount of $1942.26, the receipt whereof is hereby acknowledged. Said deposit shall be held by Landlord as security for the full and faithful performance by Tenant of each and every term, covenant and condition of this Lease on the part of Tenant to be observed and performed. Such security deposit shall not be mortgaged, assigned, transferred or encumbered by Tenant and any such act on the part of Tenant shall be without force and effect and shall not be binding upon Landlord. If any Base Rent or additional rent herein reserved or any other sums payable by Tenant shall be overdue and unpaid or should Landlord make payments on behalf of Tenant, or should Tenant fail to perform any of the terms of this Lease for the cure thereof, then Landlord may, at its option, and without prejudice to any other remedy which Landlord may have on account thereof, appropriate and apply said entire deposit or so much thereof as may be necessary to compensate Landlord toward the payment of the rents or other sums due from Tenant, or towards any loss, damage or reasonable expenses sustained by Landlord resulting from such default on the part of Tenant; and in such event Tenant shall forthwith upon demand restore said security to the original sum deposited. In the event Tenant shall fully and faithfully comply with all of the terms, covenants and conditions of this Lease and promptly pay all Base Rent and additional rent as they fall due and all other sums payable by Tenant to Landlord, said deposit shall be returned in full to Tenant within thirty (30) days from the date of the expiration of the Term and the surrender of the Premises by tenant in compliance with the provisions of this Lease without any allowance for interest thereon. In the event any bankruptcy, insolvency, reorganization or other creditor/debtor proceedings shall be instituted by or against Tenant or its successors or assigns, such security deposit shall be deemed to be applied first to the payment of any Base Rent, additional rent and/or other charges due Landlord for all periods prior to the institution of such proceedings and the balance, if any, of such security deposit may be retained by Landlord in partial liquidation of Landlord's damages. 24. Brokerage. Tenant hereby represents and warrants that it has not dealt with any broker or finder entitled to any compensation by reason of the execution of this Lease or the lease of the Premises pursuant hereto, except for The Beth Corporation and _________ whose commission shall be paid by Landlord pursuant to separate agreement). Tenant hereby agrees to indemnify and hold Landlord harmless from all damage, liability and expense (including reasonable attorneys' fees) Landlord may incur, suffer or sustain in respect to a claim by a broker or finder for such compensation, excluding brokers engaged by Landlord or named herein. 25. Waiver, Remedies, Expenses, Etc. (a) No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing at law or in equity or by statute. The failure of Landlord to insist at any time upon the strict performance of any covenant or agreement or to exercise any option, right, power or remedy contained in this Lease shall not be construed as a waiver or a relinquishment thereof for the future. No receipt of money by Landlord from Tenant after termination of the Term or after service of any notice of default or after the commencement of any suit, or after final judgment for possession of the Premises shall reinstate, continue or extend the Term or affect such notice or suit. A receipt by Landlord of any Base Rent, any additional rent or any other sum payable hereunder with knowledge of the breach of any covenant or agreement contained in this Lease shall not be deemed a waiver of such breach, and no waiver by Landlord of any provision of this Lease shall be deemed to have been made unless expressed in writing and signed by Landlord. In addition to other remedies provided in this Lease, Landlord shall be entitled to the extent permitted by applicable law, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the covenants, agreements, conditions or provisions of this Lease, or to a decree compelling performance of this Lease. (b) In the event Tenant shall be in default in the performance of any of its obligations under this Lease, and an action shall be brought for the enforcement thereof in which it shall be determined that Tenant was in default, Tenant shall pay Landlord all expenses incurred or paid by Landlord in connection therewith including reasonable attorneys' fees. In the event Landlord shall, without fault on its part, be made a party to any litigation commenced against Tenant, if Tenant, at its expense, shall fail to provide Landlord with counsel approved by Landlord, Tenant shall pay as additional rent all costs and reasonable attorneys' fees incurred or paid by Landlord in connection with such litigation. (c) Landlord may, but shall not be obligated to, cure any default by Tenant after complying with the notice provisions as herein provided, and whenever Landlord so elects, all costs and expenses paid or incurred by Landlord in curing such default, including, without limitation, reasonable attorneys' fees, shall be so much additional rent payable on demand. 26. Estoppel Certificate. Tenant, at any time and from time to time, upon not less than ten (10) days prior request by Landlord, shall execute, acknowledge and deliver to Landlord a statement in writing, executed by an executive officer of Tenant, certifying, among other reasonable assurances as may be requested by Landlord, Landlord's mortgagee or any prospective purchaser of the Office Building, that this Lease is unmodified and in full effect (or, if there have been modifications, that this lease is in full effect as modified, and setting forth such modifications) and the dates to which the Base Rent, additional rent and other sums payable hereunder have been paid, the amount of the existing security deposit, and either stating that to the knowledge of the parties executing such certificate no default exists hereunder or specifying each such default of which the executing party may have knowledge; it being intended that any such statement by Tenant may be relied upon by any prospective purchaser or mortgagee of the Office Building. 27. Landlord Defined. The term Landlord as used in this Lease, so far as the covenants or obligations on the part of the Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of the Office Building, and in the event of any transfer or transfers of title thereto, Landlord named herein (and in case of any subsequent transfer or conveyances, the then grantor) shall be automatically freed and relieved from and after the date of such transfer or conveyance of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease thereafter to be performed, provided that such transferee shall expressly assume the obligations of Landlord under this Lease and provided further that any funds in the hands of such Landlord or the then grantor at this time of such transfer in which Tenant has an interest shall be turned over or credited to the grantee and any amount then due and payable to Tenant by Landlord or then grantor under any provisions of this Lease, shall be paid to Tenant. 28. Separability. Except as otherwise herein expressly provided, each and every covenant and agreement contained in this Lease is, and shall be construed to be, a separate and independent covenant or agreement by Landlord shall not discharge or relieve Tenant from any of its obligations under this Lease. If any term or provision of this Lease or the application thereof to any person or circumstances shall to any extent be invalid and unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and shall be enforced to the extent permitted by law. 29. Binding Effect and Survival. All of the covenants, conditions and obligations contained in this Lease shall be binding upon and inure to the benefit of the respective successors and assigns of Landlord and Tenant to the same extent as if each successor and assign were in each case named as a party to this Lease. The covenants and agreements of this Lease shall survive termination of the Term. 30. Interpretation and Amendments. The headings to the various sections of this Lease have been inserted for convenient reference only and shall not to any extent have terms and provisions of this Lease. This Lease shall be governed by and interpreted under the laws of the State of Illinois. Time is of the essence of this Lease and all provisions herein relating thereto shall be strictly construed. This Lease may not be changed, modified or discharged except by a writing signed by Landlord and Tenant. The Preliminary Statement and the following exhibits hereto are incorporated in and made a part of this Lease: * Exhibit A Legal Description * Exhibit B Floor Plans * Exhibit C Work Letter 31. Time of Payment; Interest. All amounts (unless otherwise provided herein, and other than the Base Rent and current and final damages which shall be due as hereinbefore provided) owed by Tenant to Landlord hereunder shall be deemed additional rent and be paid within 30 days from the date Landlord renders statements of account therefor. All such amounts (including Base Rent and additional rent but excluding interest) which are not paid within 30 days shall bear interest from the date due until the date paid at the rate of two percent (2%) above the Prime Rate charges. For purposes hereof, Prime Rate shall be the rate of interest announced from time to time by First Chicago Bank as the rate of interest then being charged on short-term unsecured loans made in Chicago, Illinois to said Bank's most credit-worthy customers. Provision for and collection of interest as aforesaid shall not be in derogation of any other right or remedy of Landlord provided in this Lease, at law or in equity. 32. Early Occupancy. If Tenant shall occupy the Premises prior to the beginning of the Term with Landlord's consent, all the provisions of this Lease shall be in full force and effect from and after commencement of occupancy by Tenant. 33. Quiet Enjoyment. If, and so long as, Tenant shall observe and perform all covenants, agreements and obligations required by it to be observed and performed hereunder, Tenant shall have peaceful and quiet occupancy and enjoyment of the Premises by Tenant as contemplated by this Lease, provided that Landlord shall have access to the Premises as provided in this Lease. 34. Mortgagee Modifications. Should any prospective mortgagee or ground lessor require a modification or modifications of this Lease, which modification or modifications will not cause an increased cost or expense to Tenant or in any other way substantially change the rights and obligations of Tenant hereunder, then and in such event, Tenant agrees that this Lease may be so modified and agrees to execute whatever documents are required therefor within 10 days after receipt from Landlord. In the event Tenant does not execute any such document within said 10 days, Landlord may then execute the document on Tenant's behalf as Tenant's Attorney-in-Fact. IN WITNESS WHEREOF, Landlord and Tenant have signed and sealed this Lease as of the day and year first above written. Landlord: Tenant: BY: /s/ Brooks Kellogg BY: /s/ Michael S. Rosen Endorex Corp. December 9, 1996 Michael S. Rosen Lake Bluff Office Center 900 North Shore Drive Suite #224 Lake Bluff, IL 60044 Re: Lease Amendment, Suite #245 Effective January 1, 1997, the lease dated September 18, 1996, commencing on October 1, 1992 by and between Endorex Corporation, as Lessee, and Lake Bluff Office Center, L.L.C., Agent of the Lake Forest Bank and Trust Company, as Trustee under Trust #1138, dated 09/18/96, as successor to American Bank and Trust Company, as Lessor, for the premises at 900 North Shore Drive, Lake Bluff, Illinois is amended as follows: Premises: New Suite #245 Termination Date: December 31, 1998 Square Footage: 1501 Square Feet Target Occupancy: Friday, December 13, 1996 Rent Schedule: Date: per Sq. Ft. Monthly: Annual: 01/1/97 to 03/31/97 $08.16 $1,021.13 $16,753.56 04/1/97 to 06/30/97 $10.16 $1,271.13 $16,753.56 07/1/97 to 09/30/97 $12.16 $1,521.13 $16,753.56 10/1/97 to 12/31/97 $14.16 $1,771.13 $16,753.56 01/1/98 to 03/31/98 $16.16 $2,021.13 $24,638.31 04/1/98 to 12/31/98 $16.50 $2,063.88 $24,638.31 Carpet will be cleaned. Lake Bluff Office Center will move the furniture only. Lake Bluff Office Center will move all phone, fax and modem lines at our expense. Lake Bluff Office Center will build one wall and door for a small conference room. If Endorex Corp. wants a knee wall, we will build one - six foot long, four foot high with a finished oak top for $430.00. This knee wall, if desired, will be at Endorex's expense. All other terms and conditions of the Lease shall remain the same. /s/ BROOKS KELLOGG /s/ MICHAEL S. ROSEN MANAGING PARTNER 12/10/96 12/10/96 EX-21 13 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT 1. Orasomal Technologies, Inc. Incorporated in the State of Delaware Does business as Orasomal Technologies, Inc. -----END PRIVACY-ENHANCED MESSAGE-----