Exhibit 10.7
OPTION AGREEMENT
Option agreement dated as of March 5, 1999 between B. TWELVE, INC., a
corporation existing under the laws of the State of Florida (the "Corporation")
and XX. XXX XXXXXX, an individual residing in the Province of Ontario (the
"Optionee").
WHEREAS the Optionee is an employee of the Corporation and plans to
render faithful and efficient service to the Corporation in that capacity;
AND WHEREAS the Corporation desires to continue to receive the benefit
of the services of the Optionee and to more fully identify his interest with the
Corporation's future and success;
AND WHEREAS the Corporation desires to grant to the Optionee an option
to purchase shares of common stock of the Corporation in the event the Optionee
achieves certain anticipated corporate/scientific milestones upon and subject to
the terms and conditions hereinafter provided;
AND WHEREAS the corporate milestones for the Corporation are correlated
with the anticipated progress in the scientific research and corporate
development of the Corporation. Specifically, the scientific objectives of the
Corporation are aligned with the planned research and development of the
following three (3) scientific platforms (each a "Scientific Platform" and
collectively, the "Scientific Platforms"):
1. VITAMIN B 12 ANALOGUES - these are chemically modified Vitamin B12 molecules
that are targeted to the Vitamin B12 receptor with potential applications for
the treatment of patients with either cancer or some forms of arthritis or
potentially other diseases of the immune system.
2. ANTIBODIES TO TRANSCOBALAMIN II - TRANSCOBALAMIN II ("XX XX") is a protein
that is found in the blood stream. Vitamin B 12 combines with XX XX in the blood
stream and in turn the Vitamin B12 and XX XX complex combines with the Vitamin
B12 receptor on the cell surface. Monoclonal antibodies to XX XX are aimed at
inhibiting the binding of XX XX alone or combined with Vitamin B 12 to bind to
the Vitamin B12 receptor.
3. ANTIBODIES TO THE VITAMIN B,2 RECEPTOR - THE Vitamin B12 receptor is a cell
surface protein that is the target for Vitamin B,, and XX XX complex. Monoclonal
antibodies to the Vitamin 13,2 receptor are aimed at inhibiting the binding of
the Vitamin B1z and XX XX complex to Vitamin B12 receptor.
The milestones outlined below (each a "Milestone" and collectively, the
"Milestones") describe the anticipated achievements of the scientific and
corporate effort of the Corporation with regard to the Scientific Platforms
above described.
With respect to the "Vitamin B,1 analogue" Scientific Platform, there
are two (2)Milestones described as follows:
FIRST MILESTONE
Demonstration that new Vitamin B,1 analogues are active in cell culture
bioassays. New Vitamin B,2 analogues are to be developed based on the
understanding and characterization of existing analogues already developed and
available to the Corporation. Existing or new Vitamin B12 analogues are to be
characterized by their ability to alter the biological activity (i.e. apoptosis)
of either cancer cells, cells of the immune system or other appropriate cell
culture bioassays.
SECOND MILESTONE
Demonstration that new Vitamin B11 analogues are active in animal models.
Selected candidates (Vitamin B12 analogues) obtained in sufficient quantities
(i.e. scale-up) are to be tested in animal models for biological activity
against cancer, for modulation of the immune system or other appropriate
standard systems.
With respect to the "Antibodies to Transcobalamin II" Scientific
Platform, there are three (3) Milestones described as follows:
Third Milestone
Alteration of selected murine monoclonal antibody candidate to the XX XX protein
or to the TCII - Vitamin Bl2 complex to a form suitable for human
administration. Specific type(s) of monoclonal antibodies already developed are
to be selected and characterized in preparation for altering the mouse
antibodies to a form suitable for administration to humans. Selected murine
monoclonal antibody(ies) are to be altered (chimerization or humanization) to
form a product suitable for administration to humans.
Fourth Milestone
Determination of the biological activity of the new humanized monoclonal(s).
Chimeric or humanized antibody(ies) specific to the XX XX and/or to the XX XX
Vitamin B12 complex, obtained are to be assayed for its cell in vitro biological
activity in cell culture bioassays.
Fifth Milestone
Demonstration that new monoclonal antibody(ies) to TCII is (are) active in
animal models. Once developed and produced in sufficient amounts monoclonal
antibody(ies) to XX XX are to be tested in suitable (i.e. human graft-model)
animal models for biological activity.
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With respect to the "Antibodies to the Vitamin B12 Receptor" Scientific
Platform, there are three (3) Milestones described as follows:
Sixth Milestone
Cloning and expression of the gene responsible for the Vitamin B12 receptor. In
order to develop monoclonal antibodies to the Vitamin B12 receptor, a pure form
of the receptor is required. Accordingly, the process of isolating the Vitamin
B12 receptor is to be obtained by cloning and by sequencing the gene for the
receptor.
SEVENTH MILESTONE
Obtaining the Vitamin B12 receptor in pure and sufficient quantity for
characterization. The Vitamin B12 receptor is to be available in pure form and
sufficient amount from either the expression of the Vitamin B12 gene product
(i.e. gene product) or from isolation and purification of the receptor from cell
membrane lysates.
EIGHTH MILESTONE
Obtaining monoclonal antibody production to the Vitamin B12 receptor. Purified
form of the Vitamin B12 receptor is to be used to develop monoclonal antibodies
to the Vitamin B12 receptor using standard hybridoma and/or appropriate cloning
technology.
The above milestones are hereinafter referred to as the "First Milestone",
"Second Milestone", Third Milestone", "Fourth Milestone", "Fifth Milestone",
"Sixth Milestone", "Seventh Milestone" and "Eighth Milestone", respectively.
NOW THEREFORE in consideration of the foregoing, the sum of $10.00 and
the mutual agreements contained herein and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the parties
hereto agree as follows:
1. OPTION TO PURCHASE. The Corporation hereby grants to the Optionee, on
and subject to the terms and conditions hereinafter set forth, the
irrevocable right and option (the "Option") exercisable in accordance
with the terms of this Agreement to purchase from the Corporation a
maximum of 1,200,000 authorized and unissued common shares in the
capital of the Corporation (the "Optioned Shares") at purchase price of
$.0001 per Optioned Share (the "Option Price").
2. VESTING OF THE OPTION.
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(a) The Option shall vest with respect to 300,000 of the Optioned
Shares (the "First Milestone Optioned Shares"), upon the
achievement by the Optionee of all parts of the First
Milestone, which the Optionee is to use his best efforts to
achieve on or before May 31, 2001.
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(b) The Option shall vest with respect to 300,000 of the Optioned
Shares (the "Second Milestone Optioned Shares"), upon the
achievement by the Optionee of the Second Milestone, which the
Optionee is to use his best efforts to achieve on or before
May 31, 2001.
(c) The Option shall vest with respect to 100,000 of the Optioned
Shares (the "Third Milestone Optioned Shares"), upon the
achievement by the Optionee of all parts of the Third
Milestone, which the Optionee is to use his best efforts to
achieve on or before May 31, 2001.
(d) The Option shall vest with respect to 100,000 of the Optioned
Shares (the "Fourth Milestone Optioned Shares"), upon the
achievement by the Optionee of the Fourth Milestone, which the
Optionee is to use his best efforts to achieve on or before
May 31, 2001.
(e) The Option shall vest with respect to 100,000 of the Optioned
Shares (the "Fifth Milestone Optioned Shares"), upon the
achievement by the Optionee of the Fifth Milestone, which the
Optionee is to use his best efforts to achieve on or before
May 31, 2001.
(f) The Option shall vest with respect to 150,000 of the Optioned
Shares (the "Sixth Milestone Optioned Shares"), upon the
achievement by the Optionee of the Sixth Milestone, which the
Optionee is to use his best efforts to achieve on or before
May 31, 2001.
(g) The Option shall vest with respect to 75,000 of the Optioned
Shares (the "Seventh Milestone Optioned Shares"), upon the
achievement by the Optionee of the Seventh Milestone, which
the Optionee is to use his best efforts to achieve on or
before May 31, 2001.
(h) The Option shall vest with respect to 75,000 of the Optioned
Shares (the "Eighth Milestone Optioned Shares"), upon the
achievement by the Optionee of the Eighth Milestone, which the
Optionee is to use his best efforts to achieve on or before
May 31, 2001.
(i) Notwithstanding the vesting requirements set out in
subsections 2(a) through (h) above, all Optioned Shares not
already vested shall vest immediately in the event of the
following:
(i) the sale of all or substantially all of the
Corporation's assets for net proceeds to the
Corporation of $9,000,000;
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(ii) the sale of all the shares of the Corporation; and
(iii) the termination without Cause (as defined below) of
Xxxxxx as an employee of the Corporation.
In this agreement, "Cause" shall mean:
(i) fraud, embezzlement or gross insubordination on the
part of the Optionee;
(ii) conviction or the entry of a plea of nolo contendere
by the Optionee for any felony or indictable offence;
(iii) a material breach of, or the willful failure or
refusal by the Optionee to perform and discharge, his
duties, responsibilities or obligations under any
agreement with the Corporation or any of its
subsidiaries or affiliates that is related to the
Optionee's employment with the Corporation (other
than by reason of disability or death) that is not
corrected within thirty (30) days immediately
following written notice to the Optionee by the
Corporation, such notice to state with specificity
the nature of the breach, failure or refusal;
provided that if such breach, failure or refusal
cannot reasonably be corrected within thirty (30)
days of written notice thereof, correction shall be
commenced by the Optionee within such thirty (30) day
period and completed within a reasonable period
thereafter; or
(iv) any act of willful misconduct by the Optionee which
(A) is intended to result in substantial personal
enrichment of the Optionee at the expense of the
Corporation or any of its subsidiaries or affiliates,
or (B) has a material adverse impact on the business
or reputation of the Corporation or any of its
subsidiaries or affiliates (such determination to be
made by the Board in its reasonable judgment).
(j) Notwithstanding the dates prescribed for vesting set out in
subsectiona 2(a) through (h) above, the Optionee shall still
have the right to exercise the Optioned Shares pertaining to
the achievement of a specific Milestone if such Milestone is
achieved on or before December 31, 2001.
3. EXERCISE OF OPTION. The Option with respect to vested Optioned Shares
shall be exercisable prior to the end of the Term.
4. Term.
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(a) Subject to Subsection 4(b) below, the Option shall be
exercisable until five (5) years from the date the Option is
granted (the "Term"). At the end of the Term, all vested or
unvested Options granted hereunder shall expire and shall no
longer be exercisable.
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(b)
(i) If the Optionee ceases to be an employee of the
Corporation by reason of his death or voluntary
resignation:
(A) Any vested Options shall be exercisable by
the Optionee or his estate, as the case may
be, until the first (1St) anniversary of the
date of the Optionee's death or voluntary
resignation.
(B) The vesting of Options held by the Optionee
automatically shall cease on the date of the
Optionee's death or voluntary resignation.
(ii) If the Optionee is terminated for Cause, any vested
Options held by the Optionee shall be exercisable by
the Optionee for a period of three (3) months from
termination; provided however, if the Optionee is
dismissed for Cause and the Corporation achieves one
or Milestones in the three (3) month period
subsequent to his dismissal, the Optionee shall be
entitled to exercise the Optioned Shares relating to
such Milestone(s) for a further period of thirty (30)
days from the date in which the Optionee is informed
that such Milestone(s) was achieved.
(iii) If the Optionee is terminated otherwise than for
Cause, any vested Options held by the Optionee shall
be exercisable by the Optionee for a period of three
(3) months from termination.
5. MANNER OF EXERCISE OF OPTION. During the Term, the Optionee, subject to
the provisions of this Agreement, may exercise the Option to purchase
on a cumulative basis, to the extent hereinafter provided, all or any
part of the number of Shares subject to the Option which have vested in
accordance with Section 2 until the total number of Optioned Shares
subject to the Option stated in Section 1 has been purchased; provided,
however, that the Option may only be exercised (in each case to the
nearest full Optioned Share) during the Term and in units of 25,000
Optioned Shares or such fewer number of Optioned Shares as may remain
subject to this Option.
6. NOTICE OF EXERCISE OF OPTION. This Option shall be exercised upon
providing notice in writing to the Corporation addressed to Corporation
at such place as the Corporation's executive office may then be located
(the "Notice"), which Notice shall indicate the number of Optioned
Shares (which have vested) for which the Option is being exercised, and
which Notice shall be accompanied by payment in full to the Corporation
of the Option Price for such Optioned Shares in cash or by certified
cheque.
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7. RIGHT OF A SHAREHOLDER. After receipt of (i) a Notice, and (ii) payment
in full of the Option Price for the Optioned Shares for which the
Option is being exercised, the Corporation shall, within five (5)
business days, take all actions necessary to issue such Optioned Shares
to the Optionee and to prepare and deliver share certificates
representing such Optioned Shares so issued and register such Optioned
Shares in the name of the Optionee. The Optionee shall have no right as
a shareholder with respect to such Optioned Shares until the issuance
of such share certificates, and no adjustment shall be made for
dividends or other rights for which the record date is prior to the
time such share certificates are issued. The Corporation shall deliver
share certificates in respect of such Optioned Shares within five (S)
business days after receipt of items (i) and (ii) above. The issuance
of the Optioned Shares is conditional upon the Optionee entering into
an agreement with the other shareholders of the Corporation agreeing to
be bound by the provisions of the unanimous shareholders agreement
dated June 2, 1999 among the Corporation and its shareholders in
respect of the Optioned Shares.
8. TRANSFER OF OPTION. The Option granted pursuant to this Agreement shall
not be assignable or transferable by the Optionee, except to members of
the Optionee's immediate family provided that the Optionee continues to
be bound by the provisions of this Agreement.
9. ADJUSTMENT. In the event that prior to the exercise of the Option,
there is any change in the number of outstanding common shares of the
Corporation as a result of (i) the consolidation, merger or
amalgamation of the Corporation with or into another body corporate;
(ii) the conversion, exchange, redesignation, reclassification,
consolidation or subdivision of the common shares; or (iii) any other
capital reorganization of the Corporation whether by reorganization,
arrangement, stock dividend, transfer, sale, continuance or otherwise,,
then the number of the Optioned Shares subject to the Option and the
Option Price thereof shall be adjusted appropriately.
10. NECESSARY APPROVALS. The obligation of the Corporation to sell and
deliver the Optioned Shares on the exercise of the Option is subject to
the approval of any governmental authority or stock exchanges on which
the shares in the capital of the Corporation are listed for trading
which may be required in connection with the authorization, issuance or
sale of the Optioned Shares by the Corporation. If any of the Optioned
Shares cannot be issued to any Optionee after the exercise of the
Option therefor for any reason including, without limitation, the
failure to obtain such approval, then the obligation of the Corporation
to issue such Optioned Shares shall terminate and any Option Price paid
to the Corporation shall be returned to the Optionee.
11. CHANGES TO MILESTONES OR SCIENTIFIC PLATFORMS. The Milestones described
in this Agreement have been defined for the Scientific Platforms
described in this Agreement. The parties to this Agreement recognize,
however, that it is conceivable that the Scientific Platforms and/or
the Milestones described in this Agreement may have to be altered or
adjusted, from time to time, based on the actual results of the
scientific research conducted by the Corporation or as new approaches
to scientific research evolve. The parties to this Agreement agree that
any new approaches and changes in direction of the Corporation's
Scientific Platforms, Milestones and related research must be approved
by the Board of Directors.
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In the event one or more new Milestones or one of the existing
Scientific Platforms should be altered or discontinued by the
Corporation, the parties further acknowledge that the Board of
Directors of the Corporation shall have the power and discretion to
vest, substitute or cancel any or all of the options allocated to
existing Milestones.
12. Currency. All monetary amounts in this Agreement refer to lawful money
of the United States of America.
13. Governing Law. This Agreement and the Option shall be governed by and
interpreted and enforced in accordance with the laws of the State of
Florida and the federal laws of the Unites States of America applicable
therein.
14. Enurement. This Agreement shall enure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors,
successors and permitted assigns.
IN WITNESS WHEREOF the parties have caused this option agreement to be
executed by their respective duly authorized officers.
B. TWELVE, INC.
Per: /s/ Xxxx-Xxx Xxxxxx
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Xxxx-Xxx Xxxxxx, Director
[Illegible] /s/ DR. URI SAGMA
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Witness: DR. URI SAGMA
BY SIGNING, XX. XXXXXX ACKNOWLEDGES THAT HE UNDERSTANDS THE CONTENTS OF THIS
AGREEMENT AND THAT HE HAS BEEN GIVEN THE OPPORTUNITY TO OBTAIN INDEPENDENT LEGAL
ADVICE AND HAS EITHER DONE SO OR HAS CHOSEN NOT TO OBTAIN SUCH ADVICE.
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