-----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, QrTvYy2vfYCB+T+FaxlJeIgDzsuDXeZtkCSFDwqzXxK43w3up2dZ2jY9aRIM1jn0 PPx6mbLzqhcv+ne3Y06N3g== 0000950168-96-001639.txt : 19960830 0000950168-96-001639.hdr.sgml : 19960830 ACCESSION NUMBER: 0000950168-96-001639 CONFORMED SUBMISSION TYPE: 10-K405/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EMBREX INC/NC CENTRAL INDEX KEY: 0000878725 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 561469825 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405/A SEC ACT: SEC FILE NUMBER: 000-19495 FILM NUMBER: 96622981 BUSINESS ADDRESS: STREET 1: 1035 SWABIA COURT CITY: MORRISVILLE STATE: NC ZIP: 27560 BUSINESS PHONE: 9199415185 MAIL ADDRESS: STREET 1: PO BOX 13989 CITY: RESEARCH TRIANGLE PK STATE: NC ZIP: 27709 10-K405/A 1 EMBREX, INC. 10-K405/A FORM 10-K/A (AMENDMENT NO. 1) SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1995 Commission file number 000-19495 ----------------- --------- ................................................................................ EMBREX, INC. (Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1469825 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
1035 SWABIA COURT, DURHAM, NORTH CAROLINA 27703 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (919) 941-5185 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, $.01 PAR VALUE PER SHARE (Title of class) REDEEMABLE WARRANTS (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ X ] As of March 22, 1996, the aggregate market value of the voting stock held by non-affiliates was $49.1 million. As of March 22, 1996, there were 6,886,419 shares of the registrant's common stock outstanding. DOCUMENTS INCORPORATED BY REFERENCE
DOCUMENT WHERE INCORPORATED Annual Report to Shareholders for the year ended December 31, 1995 Part II Proxy Statement to be filed with respect to the Annual Meeting of Shareholders Part III to be held on May 16, 1996
PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1). The financial statements listed below are included in the 1995 Annual Report to Shareholders, filed as Exhibit 13 to this report, and are incorporated by reference in Item 8 of this report. All financial statement schedules normally required under Regulation S-X are omitted as the required information is inapplicable.
Annual Report to Financial Statements Form 10-K Page Shareholders Page Consolidated Balance Sheets at December 31, 1994 and 1995 13 13 Consolidated Statements of Operations for each of the three fiscal years ended December 31, 1993, 1994 and 1995 13 14 Consolidated Statements of Cash Flows for each of the three fiscal years ended December 31, 1993, 1994 and 1995 13 15 Consolidated Statements of Shareholders' Equity for each of the three fiscal years ended December 31, 1993, 1994 and 1995 13 16 Notes to Consolidated Financial Statements 13 17 Report of Independent Auditors 13 23
(a)(2). The financial statements of the Company's Employee Stock Purchase Plan listed below are filed herewith. Financial Statements Form 10-K Page Report of Independent Auditors 21 Statement of Net Assets Available for Plan Benefits at December 31, 1994 and 1995 22 Statement of Changes in Net Assets Available for Plan Benefits for the Period June 1, 1993 (inception) to December 31, 1993 and for the fiscal year ended December 31, 1995 23 Notes to Financial Statements 24 -2- (a)(3). The exhibits listed below are filed as part of this report. Executive compensation plans and arrangements are listed in Exhibits 10.11 through 10.17 and 10.35 through 10.38.
Exhibit Description 3.1(1) Restated Articles of Incorporation 3.2 Articles of Amendment to Articles of Incorporation effective March 21, 1996 3.3(2) Bylaws of the Company 4.1 Reference is made to Exhibits 3.1 and 3.2 4.2(1) Warrant Agreement dated November 7, 1991 by and between the Company and Branch Banking & Trust Company 4.3(1) Specimen of Warrant Certificate 4.4(1) Specimen of Common Stock Certificate 4.5(3) Notices to holders of outstanding warrants regarding adjustments in warrant terms resulting from Regulation S private placement 4.6(4) Form of Registration Rights Agreement 4.7(3) Form of Regulation S Securities Subscription Agreement 4.8(3) Form of Embrex 8% Convertible Debenture due May 1, 1997 4.9(3) Warrant to Purchase Common Stock of Embrex issued to Schwartz Investments, Inc. 4.10(5) Rights Agreement dated as of March 21, 1996 between Embrex and Branch Banking and Trust Company, as Rights Agent 10.1(2) Exchange Agreement dated May 28, 1991, between Embrex and American Cyanamid Company, Advent First Limited Partnership A, Biotechnology Venture Fund S.A., Biotechnology Investments Limited, Domain Partners, L.P., Elf Technologies, Inc., Prince Venture Partners III, L.P., 3i Securities Corporation, and Charles E. Austin 10.2(2) Form of Stock Purchase Warrant exercisable for the purchase of 180,003 shares of Common Stock 10.3(2) License Agreement dated December 11, 1991, between Embrex and the National Technical Information Service, a primary operating unit of the United States Department of Commerce 10.4(2) Collaborative Research Agreement dated January 17, 1989 between Embrex and the University of Arkansas (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) -3- Exhibit Description 10.5(2) License Agreement dated October 1, 1988, between Embrex and the National Technical Information Service, a primary operating unit of the United States Department of Commerce (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.6(2) Lease Agreement dated December 9, 1986 between Embrex, as tenant, and Imperial Center Partnership and Petula Associates, Ltd., as landlord, as amended by First Amendment dated June 11, 1987, Second Amendment dated December 1, 1988 and Third Amendment dated May 2, 1989 10.7(2) Facility Agreement dated March 1, 1991, between Embrex and Mississippi Agriculture and Forestry Experiment Station, Mississippi State University 10.8(2) Unrestricted Grant Agreement dated April 1, 1988, between Embrex and North Carolina State University, as amended by Amendment dated September 15, 1989 and Amendment dated April 22, 1991 10.9(2) Unrestricted Grant Agreement dated November 1, 1986, between Embrex and North Carolina State University, as amended by Amendment dated May 3, 1989, Amendment dated September 15, 1989, and Amendment dated April 22, 1991 10.10(2) Basic Research Agreement dated October 24, 1989, between Embrex and University of Arkansas, as amended on October 23, 1990, February 1, 1991 and July 22, 1991 10.11(2) 1988 Incentive Stock Option Plan and form of Incentive Stock Option Agreement 10.12(2) 1989 Nonstatutory Stock Option Plan and form of Nonstatutory Stock Option Agreement 10.13(2) 1991 Nonstatutory Stock Option Plan and form of Nonstatutory Stock Option Agreement 10.14(6) Incentive Stock Option and Nonstatutory Stock Option Plan and forms of Stock Option Agreements - June 1993 10.15(6) Employee Stock Purchase Plan 10.16(2) Employment Agreement dated November 15, 1989, between Embrex and Randall L. Marcuson 10.17(2) Employment Agreement dated October 16, 1989, between Embrex and Catherine A. Ricks 10.18(2) Shareholders' Agreement dated August 14, 1991 by and among Embrex, Advent Euroventures Limited Partnership, and Plant Resource Venture Fund II Limited Partnership 10.19(7) INOVOJECT(R) Egg Injection System Lease, Limited License, Supply and Service Agreement dated May 4, 1993 between Embrex and Tyson Foods, Inc. (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.20(8) Master Lease Agreement dated December 3, 1993 between Embrex and Capital Associates International, Inc. with a form of equipment schedule and collateral assignment of lease attached 10.21(8) Master Lease Agreement dated January 28, 1994 between Embrex and Aberlyn Capital -4- Exhibit Description Management Limited Partnership with a form of lease schedule and collateral assignment of lease attached 10.22(8) Agreement to Issue Warrant dated January 28, 1994 between Embrex and Aberlyn Capital Management Limited Partnership 10.23(8) Common Stock Purchase Warrant issued to Aberlyn Capital Management Limited Partnership 10.24(8) Agreement to Issue Warrant dated January 28, 1994 between Embrex and Aberlyn Holding Company, Inc. 10.25(8) Common Stock Purchase Warrant issued to Aberlyn Holding Company, Inc. 10.26(9) Master Equipment Lease Agreement dated as of December 7, 1994 between Financing for Science International, Inc. and Embrex with a Consent to Assignment of Equipment Lease Agreement, Security Agreement and Rental Schedule attached 10.27(9) License Agreement dated as of December 7, 1994 between Financing for Science International, Inc. and Embrex with Sublicense Agreement attached 10.28(9) Common Stock Purchase Warrant dated January 17, 1995 issued to Financing for Science International, Inc. 10.29(9) Agreement for Sale of Equipment and Rights Under User Agreement dated as of December 7, 1994 between Financing for Science International, Inc. and Embrex 10.30(3) Letter of Agreement for $6.0 million Convertible Regulation S Private Placement by and between the Company and Swartz Investments, Inc., as placement agent 10.31 Limited License and Supply Agreement dated as of July 20, 1995 between Embrex and Webster (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.32 Agreement dated as of January 22, 1996 between Embrex and Select (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.33 Letter Agreement dated as of January 22, 1996 between Select and Embrex 10.34 License dated as of January 22, 1996 granted by Select to Embrex (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.35 Term Sheet and General Provisions to Employment Agreement between Embrex and Richard P. Gildersleeve 10.36 General Provisions to Employment Agreement between Embrex and Brian V. Cosgriff dated August 18, 1995 10.37 Terms and Conditions of Employment between Embrex Europe Limited and David M. Baines dated May 17, 1994 -5- 10.38 General Provisions to Employment Agreement between Embrex and John L. Bradley, Jr. dated March 30, 1995 10.39 Commitment letter accepted June 14, 1995 between Embrex and Financing for Science International, Inc. for $2.0 million capital lease financing facility 10.40 Stock Purchase Warrant dated June 9, 1995 issued to Financing for Science International, Inc. 10.41 Financing Agreement (Number 10783) dated as of October 30, 1995 between Lease Management Services, Inc. and Embrex, and Addendum thereto dated October 30, 1995 attached 10.42 License Agreement dated October 30, 1995 between Embrex and Lease Management Services, Inc. 10.43 Sublicense Agreement dated as of October 30, 1995 between Embrex and Lease Management Services, Inc. 10.44 Movable Hypothec on Equipment and Contracts dated as of October 30, 1995 between Embrex and Lease Management Services, Inc. 10.45 Warrant to Purchase 30,000 Shares of Common Stock dated October 30, 1995 issued to Lease Management Services, Inc. 10.46 Intercreditor Agreement dated as of October 31, 1995 among Financing for Science International, Inc., Lease Management Services, Inc., and Embrex. 13 Form of Annual Report to Shareholders for the year ended December 31, 1995 (with the exception of the information incorporated by reference into Items 5, 6, 7 and 8 of this Form 10-K, the 1995 Annual Report to Shareholders is not deemed filed as part of this report) 21 Subsidiaries 23 Consent of Ernst & Young LLP to the incorporation by reference of their report, included in the 1995 Annual Report to Shareholders, into this report on Form 10-K and into the Registration Statements under the Securities Act of 1933 on Form S-8 (Registration No. 33-51582 and No. 33-63318), as filed with the Securities and Exchange Commission on September 1, 1992 and May 25, 1993, respectively, and to the incorporation by reference in the Registration Statement (Form S-8 No. 33-63318) pertaining to the Employee Stock Purchase Plan of their report with respect to the financial statements of the Embrex, Inc. Employee Stock Purchase Plan included in this Form 10-K.
- ---------------------------- (1) Exhibit to the Company's Form 10-K as filed with the Securities and Exchange Commission for fiscal year ending December 31, 1991 and incorporated herein by reference (2) Exhibit to the Company's Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Registration No. 33-42482) effective November 7, 1991 and incorporated herein by reference (3) Exhibit to the Company's Form 10-Q as filed with the Securities and Exchange Commission for the three months ended June 30, 1995 and incorporated herein by reference (4) Exhibit to the Company's Form 10-Q as filed with the Securities and Exchange Commission for the three months ended March 31, 1995 and incorporated herein by reference -6- (5) Exhibit to the Company's Registration Statement on Form 8-A as filed with the Securities and Exchange Commission on March 22, 1996 and incorporated herein by reference. (6) Exhibit to the Company's Form 10-K as filed with the Securities and Exchange Commission for the fiscal year ending December 31, 1992 and incorporated herein by reference (7) Exhibit to the Company's Form 10-QSB, as amended, as filed with the Securities Exchange Commission for the three months ended March 31, 1993 and incorporated herein by reference (8) Exhibit to the Company's Form 10-KSB, as amended, as filed with the Securities and Exchange Commission for the fiscal year ending December 31, 1993 and incorporated herein by reference (9) Exhibit to the Company's Form 10-K as filed with the Securities and Exchange Commission for the fiscal year ending December 31, 1994 and incorporated herein by reference (b). No reports on Form 8-K were filed during the last quarter of the fiscal year ended December 31, 1995. -7- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EMBREX, INC. By:/s/ (Signature of Randall L. Marcuson appears here) Date: August 29, 1996 Randall L. Marcuson President and Chief Executive Officer -8- EXHIBIT INDEX
FORM 10-K SEQUENTIAL EXHIBIT DESCRIPTION PAGE NUMBER 3.1(1) Restated Articles of Incorporation 3.2 Articles of Amendment to Restated Articles of Incorporation effective March 21, 1996 3.3(2) Bylaws of the Company 4.1 Reference is made to Exhibits 3.1 and 3.2 4.2(1) Warrant Agreement dated November 7, 1991 by and between the Company and Branch Banking & Trust Company 4.3(1) Specimen of Warrant Certificate 4.4(1) Specimen of Common Stock Certificate 4.5(3) Notices to holders of outstanding warrants regarding adjustments in warrant terms resulting from Regulation S private placement 4.6(4) Form of Registration Rights Agreement 4.7(3) Form of Regulation S Securities Subscription Agreement 4.8(3) Form of Embrex 8% Convertible Debenture due May 1, 1997 4.9(3) Warrant to Purchase Common Stock of Embrex issued to Schwartz Investments, Inc. 4.10(5) Rights Agreement dated as of March 21, 1996 between Embrex and Branch Banking and Trust Company, as Rights Agent 10.1(2) Exchange Agreement dated May 28, 1991, between Embrex and American Cyanamid Company, Advent First Limited Partnership A, Biotechnology Venture Fund S.A., Biotechnology Investments Limited, Domain Partners, L.P., Elf Technologies, Inc., Prince Venture Partners III, L.P., 3i Securities Corporation, and Charles E. Austin 10.2(2) Form of Stock Purchase Warrant exercisable for the purchase of 180,003 shares of Common Stock FORM 10-K SEQUENTIAL EXHIBIT DESCRIPTION PAGE NUMBER 10.3(2) License Agreement dated December 11, 1991 between Embrex and the National Technical Information Service, a primary operating unit of the United States Department of Commerce 10.4(2) Collaborative Research Agreement dated January 17, 1989 between Embrex and the University of Arkansas (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.5(2) License Agreement dated October 1, 1988, between Embrex and the National Technical Information Service, a primary operating unit of the United States Department of Commerce (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.6(2) Lease Agreement dated December 9, 1986 between Embrex, as tenant, and Imperial Center Partnership and Petula Associates, Ltd., as landlord, as amended by First Amendment dated June 11, 1987, Second Amendment dated December 1, 1988 and Third Amendment dated May 2, 1989 10.7(2) Facility Agreement dated March 1, 1991, between Embrex and Mississippi Agriculture and Forestry Experiment Station, Mississippi State University 10.8(2) Unrestricted Grant Agreement dated April 1, 1988, between Embrex and North Carolina State University, as amended by Amendment dated September 15, 1989 and Amendment dated April 22, 1991 10.9(2) Unrestricted Grant Agreement dated November 1, 1986, between Embrex and North Carolina State University, as amended by Amendment dated May 3, 1989, Amendment dated September 15, 1989, and Amendment dated April 22, 1991 10.10(2) Basic Research Agreement dated October 24, 1989, between Embrex and University of Arkansas, as amended on October 23, 1990, February 1, 1991 and July 22, 1991 10.11(2) 1988 Incentive Stock Option Plan and form of Incentive Stock Option Agreement 10.12(2) 1989 Nonstatutory Stock Option Plan and form of Nonstatutory Stock Option Agreement 10.13(2) 1991 Nonstatutory Stock Option Plan and form of Nonstatutory Stock Option Agreement 10.14(6) Incentive Stock Option and Nonstatutory Stock Option Plan and forms of Stock Option Agreements - June 1993 10.15(6) Employee Stock Purchase Plan 10.16(2) Employment Agreement dated November 15, 1989, between Embrex and Randall L. Marcuson FORM 10-K SEQUENTIAL EXHIBIT DESCRIPTION PAGE NUMBER 10.17(2) Employment Agreement dated October 16, 1989, between Embrex and Catherine A. Ricks 10.18(2) Shareholders' Agreement dated August 14, 1991 by and among Embrex, Advent Euroventures Limited Partnership, and Plant Resource Venture Fund II Limited Partnership 10.19(7) INOVOJECT(R) Egg Injection System Lease, Limited License, Supply and Service Agreement dated May 4, 1993 between Embrex and Tyson Foods, Inc. (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.20(8) Master Lease Agreement dated December 3, 1993 between Embrex and Capital Associates International, Inc. with a form of equipment schedule and collateral assignment of lease attached 10.21(8) Master Lease Agreement dated January 28, 1994 between Embrex and Aberlyn Capital Management Limited Partnership with a form of lease schedule and collateral assignment of lease attached 10.22(8) Agreement to Issue Warrant dated January 28, 1994 between Embrex and Aberlyn Capital Management Limited Partnership 10.23(8) Common Stock Purchase Warrant issued to Aberlyn Capital Management Limited Partnership 10.24(8) Agreement to Issue Warrant dated January 28, 1994 between Embrex and Aberlyn Holding Company, Inc. 10.25(8) Common Stock Purchase Warrant issued to Aberlyn Holding Company, Inc. 10.26(9) Master Equipment Lease Agreement dated as of December 7, 1994 between Financing for Science International, Inc. and Embrex with a Consent to Assignment of Equipment Lease Agreement, Security Agreement and Rental Schedule attached FORM 10-K SEQUENTIAL EXHIBIT DESCRIPTION PAGE NUMBER 10.27(9) License Agreement dated as of December 7, 1994 between Financing for Science International, Inc. and Embrex with Sublicense Agreement attached 10.28(9) Common Stock Purchase Warrant dated January 17, 1995 issued to Financing for Science International, Inc. 10.29(9) Agreement for Sale of Equipment and Rights Under User Agreement dated as of December 7, 1994 between Financing for Science International, Inc. and Embrex 10.30(3) Letter of Agreement for $6.0 million Convertible Regulation S Private Placement by and between the Company and Swartz Investments, Inc., as placement agent 10.31 Limited License and Supply Agreement dated as of July 20, 1995 between Embrex and Cyanamid Websters, a subsidiary of Arthur Webster PTY, Ltd. (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.32 Agreement dated as of January 22, 1996 between Embrex and Select (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.33 Letter Agreement dated as of January 22, 1996 between Select and Embrex 10.34 License dated as of January 22, 1996 granted by Select to Embrex (asterisks located within the exhibit denote information which has been deleted pursuant to a confidential treatment application filed with the Securities and Exchange Commission) 10.35 Term Sheet and General Provisions to Employment Agreement between Embrex and Richard P. Gildersleeve 10.36 General Provisions to Employment Agreement between Embrex and Brian V. Cosgriff dated August 18, 1995 10.37 Terms and Conditions of Employment between Embrex Europe Limited and David M. Baines dated May 17, 1994 10.38 General Provisions to Employment Agreement between Embrex and John L. Bradley, Jr. dated March 30, 1995 10.39 Commitment letter accepted June 14, 1995 between Embrex and Financing for Science International, Inc. for $2.0 million capital lease financing facility 10.40 Stock Purchase Warrant dated June 9, 1995 issued to Financing for Science International, Inc. 10.41 Financing Agreement (Number 10783) dated as of October 30, 1995 between Lease Management Services, Inc. and Embrex, and Addendum thereto dated October 30, 1995 attached FORM 10-K SEQUENTIAL EXHIBIT DESCRIPTION PAGE NUMBER 10.42 License Agreement dated October 30, 1995 between Embrex and Lease Management Services, Inc. 10.43 Sublicense Agreement dated as of October 30, 1995 between Embrex and Lease Management Services, Inc. 10.44 Movable Hypothec on Equipment and Contracts dated as of October 30, 1995 between Embrex and Lease Management Services, Inc. 10.45 Warrant to Purchase 30,000 Shares of Common Stock dated October 30, 1995 issued to Lease Management Services, Inc. 10.46 Intercreditor Agreement dated as of October 31, 1995 among Financing for Science International, Inc., Lease Management Services, Inc., and Embrex. 13 Form of Annual Report to Shareholders for the year ended December 31, 1995 (with the exception of the information incorporated by reference into Items 5, 6, 7 and 8 of this Form 10-K, the 1995 Annual Report to Shareholders is not deemed filed as part of this report) 21 Subsidiaries 23 Consent of Ernst & Young LLP to the incorporation by reference of their report, included in the 1995 Annual Report to Shareholders, into this report on Form 10-K and into the Registration Statements under the Securities Act of 1933 on Form S-8 (Registration No. 33-51582 and No. 33-63318), as filed with the Securities and Exchange Commission on September 1, 1992 and May 25, 1993, respectively, and to the incorporation by reference in the Registration Statement (Form S-8 No. 33-63318) pertaining to the Employee Stock Purchase Plan of their report with respect to the financial statements of the Embrex, Inc. Employee Stock Purchase Plan included in this Form 10-K.
- ---------------------------- (1) Exhibit to the Company's Form 10-K as filed with the Securities and Exchange Commission for fiscal year ending December 31, 1991 and incorporated herein by reference (2) Exhibit to the Company's Registration Statement on Form S-1 as filed with the Securities and Exchange Commission (Registration No. 33-42482) effective November 7, 1991 and incorporated herein by reference (3) Exhibit to the Company's Form 10-Q as filed with the Securities and Exchange Commission for the three months ended June 30, 1995 and incorporated herein by reference (4) Exhibit to the Company's Form 10-Q as filed with the Securities and Exchange Commission for the three months ended March 31, 1995 and incorporated herein by reference (5) Exhibit to the Company's Registration Statement on Form 8-A as filed with the Securities and Exchange Commission on March 22, 1996 and incorporated herein by reference. (6) Exhibit to the Company's Form 10-K as filed with the Securities and Exchange Commission for the fiscal year ending December 31, 1992 and incorporated herein by reference (7) Exhibit to the Company's Form 10-QSB, as amended, as filed with the Securities Exchange Commission for the three months ended March 31, 1993 and incorporated herein by reference (8) Exhibit to the Company's Form 10-KSB, as amended, as filed with the Securities and Exchange Commission for the fiscal year ending December 31, 1993 and incorporated herein by reference (9) Exhibit to the Company's Form 10-K as filed with the Securities and Exchange Commission for the fiscal year ending December 31, 1994 and incorporated herein by reference EX-10 2 EXHIBIT 10.31 EXHIBIT 10.31 * = CONFIDENTIAL PORTIONS OF MATERIAL HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. LIMITED LICENSE AND SUPPLY AGREEMENT THIS AGREEMENT, dated as of July 20, 1995, is made by and between EMBREX, INC., a North Carolina corporation (hereinafter the "Supplier"), and CYANAMID WEBSTERS, a subsidiary of Arthur Webster PTY, Ltd. (ACN000321737) (hereinafter the "Purchaser"). WITNESSETH THAT: WHEREAS, Supplier has certain exclusive rights and proprietary know-how with respect to disease control in the avian species by embryonal vaccination and to the IN OVO delivery of vaccines; WHEREAS, in addition, Supplier has certain rights in a bursal disease antibody product ("BDA") and its use in an infectious bursal disease vaccine; WHEREAS, Purchaser wishes to produce BDA (also, the "Product") or to purchase BDA from Supplier for use in IN OVO vaccines manufactured by Purchaser and for the sale by Purchaser of such vaccines in various defined territories; WHEREAS, Purchaser wishes to obtain a limited sublicense to practice under the referenced patent, and to use related know-how, sufficient to allow commercialization of BDA vaccines upon terms and conditions hereinafter set forth; NOW, THEREFORE, in consideration of the covenants and representations contained herein, it is agreed as follows: ARTICLE 1: DEFINITIONS Solely for the purposes of this Agreement, the terms set forth hereinafter shall be defined as follows: (a) "Affiliate" shall mean any person, corporation, firm, partnership or other entity controlling, controlled by or under common control with Purchaser, with "control" defined as at least a fifty percent voting interest. (b) "Agreement" shall mean this Limited License and Supply Agreement. (c) "Authorized Products" shall mean BDA Products as hereinafter defined. It shall not mean, and this Agreement provides no rights to Purchaser with respect to, any other compound, product, preparation, technique, or technology. (d) "BDA Products" shall mean poultry vaccines manufactured by or on behalf of Purchaser which incorporate a live, conventional, whole strain of infectious bursal disease ("IBD") virus and BDA manufactured by Purchaser, or by or on behalf of Supplier and which are approved by appropriate governmental authorities throughout the Territory for administration IN OVO to provide immunization against IBD. (e) "Confidential Information" shall mean (a) data, inventions, information, processes, Know-how, Patents, patent applications, trade secrets and similar intellectual property rights of either party, including, without limitation, all documents, drawings, specifications, equipment, prototype models and tangible manifestations, embodying technology disclosed hereunder; and (b) any other information disclosed by either party to the other in writing and marked as "Confidential" or, if disclosed orally, reduced to writing and marked as "Confidential" and submitted within thirty (30) days of the original oral disclosure. (f) [ * ] (g) "Improvements" shall mean any and all improvements to the Subject Technology developed by Supplier, patented or unpatented, Know-how (including underlying improvements to the Know-how) including, without limitation, improved methods of manufacture and production techniques, and any new developments intended to enhance the efficacy of the Subject Technology. (h) "Know-how" shall mean the accumulation of skills, processes and experience, including formulae, production seed and specifications, heretofore developed or obtained by Supplier pertaining to the Subject Technology, including, but not limited to, any and all technical information, trade secrets, test results, studies and analyses, approved vendor lists for key raw materials, preclinical and clinical data, manufacturing data, formulation or production technology, and other information necessary or useful in the manufacture, sale and use of BDA or the Authorized Products. (i) "Patent" or "Patents" shall mean U.S. Patent Nos. 5,397,568 and 5,397,569, issued in March 1995, with respect to a method for treatment of infectious bursal disease virus infections, and all other patents and patent applications, United States or foreign, including any reissue patents, continuations, continuations in part, divisions, or reissue applications filed or to be filed which relate to the Subject Technology in which Supplier holds or obtains any rights or interests. (j) "Subject Technology" shall mean all ideas, methods, inventions, Improvements, Know-how, techniques, formulations and rights heretofore or hereafter owned by Supplier or licensed to Supplier during the life of this Agreement related to IN OVO technology used in avian applications, BDA, and/or the Patents, as hereinabove defined, including but not limited to compounds, formulations, methods, processes and techniques relating specifically to the foregoing. (k) "Unit" shall mean one thousand (1,000) doses. - ------------- * Confidential portions of material have been omitted and filed separately with the Securities and Exchange Commission. -2- ARTICLE 2: LICENSE 2.01 Supplier hereby grants to Purchaser, and Purchaser hereby accepts from Supplier, upon the terms and conditions herein specified, a license or sublicense, as the case may be, to use Subject Technology in such manner as is necessary for the purpose of producing, developing, testing, acquiring governmental approvals, making, having made, selling and distributing (itself or through third parties) "Authorized Products" (for avian applications) within the Territory subject to the limitations set forth in section 2.02 hereinafter and elsewhere in this Agreement. 2.02 Purchaser's license under Section 2.01 shall be exclusive from the date of this Agreement until (3 years from date of agreement), 1998, unless otherwise provided in this Agreement, and thereafter shall be nonexclusive for the life of any applicable BDA patents, if any, and shall extend to the following countries (the "Territory"): Europe: all countries on the continent Middle East: Bahrain, Israel, Jordan, Kuwait, Lebanon, Oman, Qutar, Saudi Arabia, Syria, United Arab Emirates Africa: all countries on the continent 2.03 No license, express or implied, is granted to Purchaser other than as provided in section 2.01. Such license is further qualified to the extent that rights arising under this Agreement with respect to BDA extend solely to the development, sale and distribution of Authorized Products. Such rights do not authorize Purchaser to use BDA in any other manner or to incorporate it into any other vaccine or product. In addition, notwithstanding any other provision of this Agreement, rights with respect to BDA are granted subject to the provisions of a Collaborative Research Agreement between Embrex, Inc. and the University of Arkansas pursuant to which Supplier obtained an exclusive, worldwide license to the technology for the life of applicable patents. Such rights are subject to termination if Supplier fails to perform under the agreement and, in any event, shall not extend longer than the term of said agreement. ARTICLE 3: CONFIDENTIALITY AND DISCLOSURE 3.01 Confidentiality. It is contemplated that in the course of the performance of this Agreement each party may, from time to time, disclose Confidential Information to the other party. Each party agrees to take all reasonable steps to safeguard such Confidential Information and to protect such information against disclosure, misuse, loss and theft. However, no provision in this Agreement shall be construed so as to preclude disclosure of Confidential Information: (a) which is known to the recipient as evidenced by its written records before receipt thereof under this Agreement; (b) which is disclosed to the recipient before or after acceptance of this Agreement by a third person lawfully in possession of such information and not under an obligation of nondisclosure; (c) which is or becomes part of the public domain or is publicly divulged through no fault of the recipient; (d) which the recipient party can demonstrate has been developed independently by it without the use of and not as a consequence of the Confidential Information received from the disclosing party; or (e) which is inherent in or reasonably necessary for the purpose of securing from any governmental agency any necessary approval to manufacture or market the Authorized Products. - 3 - 3.02 Ownership of Intellectual Property, and Disclosure. It is acknowledged and agreed by the parties that all right, title and interest in and to the Subject Technology shall remain the sole property of Supplier, and that all right, title and interest in and to Purchaser technology shall remain the sole property of Purchaser. Neither party shall obtain rights in or a license to property of the other except as provided in this Agreement. In addition, Purchaser hereby agrees that it will promptly provide Supplier with a full written disclosure of all data, discoveries, inventions, improvements, materials and other valuable information ("Intellectual Property") made in the course of experiments, field studies or any other type of investigation using Subject Technology. Supplier shall own, and Purchaser shall assign, all rights, title and interest in and to all Intellectual Property; provided, however, that Purchaser's access to Intellectual Property shall be included within the license of this Agreement. Purchaser shall be free to incorporate such information provided in any regulatory filing concerning BDA and, upon compliance in full with its obligations under this Agreement, Purchaser shall own any such product registration. ARTICLE 4: ROYALTY FEES 4.01 Royalty Rates. In consideration of Supplier's undertakings and the license rights granted hereunder, Purchaser shall pay Supplier royalties on the [ * ] of Authorized Products sold or otherwise disposed of in the Territory by Purchaser, Affiliates or their agents. The amount of such royalties shall be determined as follows: (a) For markets [ * ] the royalty will be paid at the rate of [ * ] and, (b) For markets [ * ] the royalty will be paid at the rate of [ * ] (c) In the event the Agreement becomes nonexclusive in part or all of the Territory, Supplier will ensure that Purchaser continues to receive the best available terms. - ------------- * Confidential portions of material have been omitted and filed separately with the Securities and Exchange Commission. -4- 4.02 [ * ] 4.03 Records and Reports. Purchaser shall keep accurate and complete records of Authorized Products sold or otherwise disposed of in the Territory by Purchaser and Affiliates and shall provide Supplier or its designated agent with written monthly reports of such transactions within thirty (30) days of the end of each calendar month for each country within the Territory. Monthly reports shall include the total sales of each type of Authorized Product for each country by quantity and value. Together with the monthly report, Purchaser shall remit to Supplier or its designated agent in U.S. dollars (or, with the prior approval of Supplier, in British pound sterling) total payments due pursuant to this Section 4.03 for the previous month, net of any amounts previously paid. All currency conversions shall occur at the mean of buying and selling rates at the close of business on the last Friday of the appropriate month, as listed in the London Financial Times. 4.04 Right of Audit. During the term of this Agreement, Supplier shall have the right, upon reasonable notice, during normal business hours, to have an audit performed of such financial and other records as are necessary to confirm Purchaser's reports on the amount and nature of sales and the costs or production of Authorized Products. ARTICLE 5: MANUFACTURE AND SUPPLY OF BDA 5.01 Purchase and Sale of BDA. Pursuant to the terms and conditions of this article 5, Supplier shall, if required by Purchaser, manufacture, sell and deliver BDA to Purchaser and Purchaser shall purchase from Supplier BDA ordered by Purchaser. [ * ] Purchaser agrees that, during the term of this Agreement, excepting only BDA produced by Purchaser, Supplier shall be the sole manufacturer of BDA for Purchaser. During any period in which Purchaser's license is exclusive pursuant to section 2.02, [ * ] 5.02 Manufacture of BDA. (a) Supplier shall take all necessary action to comply with all applicable governmental requirements in connection with the manufacture and supply of BDA. For reasonable cause, Purchaser shall have the right upon reasonable notice to Supplier to inspect Supplier's manufacturing facilities and operations and quality control records to review and inspect the manufacture of BDA, to audit and confirm compliance with regulatory requirements, to confirm the cost of production, and to trace production in connection with any recall, product liability or other problems related to manufacture. Any such inspection or right to inspect by Purchaser shall in no way relieve Supplier of its obligation to deliver BDA conforming to the terms and specifications set forth in this Agreement, or Purchaser's right to inspect and reject the BDA. Supplier shall inform Purchaser promptly in writing in the event of any inspection or audit by any governmental agency, including a description of any and all observations or notices made or given by such agency. - ------------- * Confidential portions of material have been omitted and filed separately with the Securities and Exchange Commission. -5- (b) Supplier shall manufacture BDA for Purchaser in conformance with Supplier's product specifications as set forth on Exhibit C, standard operating procedures, quality control standards and all applicable governmental regulations in effect at the time of manufacture and supply. Purchaser shall have the right to reject and return any shipment of BDA if it reasonably determines that the shipment does not conform with Supplier's product specifications and quality control standards. All or part of any shipment may be held for Supplier's disposition and at Supplier's expense if found not to be in conformity with such specifications and standards. 5.03 Price and Payment. (a) BDA shall be sold and delivered by Supplier at a price of [ * ] provided, however, that for the initial ten (10) year period of this Agreement, the BDA Minimum Price may be increased by Supplier by an amount no greater than the annual increase in the U.S. Producer Price Index. Thereafter, the BDA Minimum Price may be increased without limitation; provided, however, that Purchaser will receive the lowest BDA Minimum Price within the Territory. Increases may occur only once each year within a country and shall become effective thirty (30) days after written notice is given to Purchaser. (b) Supplier shall invoice Purchaser the Minimum Price upon delivery of BDA, in full conformity with the requirements of this Agreement, and payment shall be made by Purchaser in U.S. dollars net 45 days from the date of invoice for all accepted BDA. A late payment service charge of 1% per month (or the highest amount allowed by law, if lower than 1%) shall be paid on all past due amounts. (c) In the calculation of [ * ] 5.04 Delivery. BDA shall be delivered frozen (at -4(degree) C or lower) to Purchaser C.I.F. Purchaser's manufacturing plant, and title shall pass to Purchaser at such point in accordance with Purchaser's written instructions. Delivery shall be made in a manner which will minimize risks of damage to the BDA in accordance with Purchaser's specifications and shall be made no later than the delivery date requested by Purchaser or ninety (90) days following the receipt of a firm order from Purchaser (hereinafter referred to as a "Timely Basis"). In the event of any delay outside the control of Supplier, the date of delivery shall be extended for a period equal to the time lost by reason of the delay. Reschedules of deliveries shall otherwise occur only upon the prior written agreement of the parties. 5.05 Orders and Forecasts. (a) Supplier and Purchaser shall cooperate fully in estimating and scheduling production for the first commercial order to be placed by Purchaser. When placed, [ * ] (b) Each purchase order or any acknowledgement thereof, whether printed, stamped, typed or written, shall be governed by the terms of this Agreement and none of the - ------------- * Confidential portions of material have been omitted and filed separately with the Securities and Exchange Commission. -6- provisions of such purchase order or acknowledgement shall be applicable except those specifying quantity ordered, delivery dates, special shipping or delivery instructions and invoice information. 5.06 Order and Delivery Variances. While Supplier shall use its best efforts to fill all of Purchaser's orders, Supplier shall not be found in breach of this Agreement for delivery variances if firm orders by Purchaser pursuant to Section 5.05(a) exceed by more [ *] is given for such changes in estimated quarterly requirements. Purchaser shall not be deemed to be in breach if firm orders fall below its estimates. 5.07 Guarantees and Warranties. (a) Supplier warrants to Purchaser that: (1) BDA delivered to Purchaser pursuant to this Agreement shall conform with its product specifications and shall be manufactured in accordance with Title IX of the Code of Federal Regulations (9 CFR Parts 100-117). SUPPLIER MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO BDA. ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY SUPPLIER. (2) Supplier is a corporation duly organized, validly existing and in good standing under the laws of the State of North Carolina, with all requisite corporate power and authority to execute and deliver this Agreement, and to perform its obligations hereunder. The execution and delivery of this Agreement and the performance and observance of all terms, conditions and obligations have been duly authorized by any necessary actions on the part of Supplier. (3) Supplier has all legal power, right, title and interest necessary to grant all rights and licenses granted under this Agreement in the manner so granted and in accordance with the terms thereof, subject only to the reservations set forth in Section 2.03, and the execution and delivery of this Agreement and the consummation of all of the transactions contemplated hereby do not and will not conflict with, or be in contravention of, any of Supplier's corporate documents or any resolution of Supplier or any instrument or contract to which Supplier is a party. (b) Purchaser warrants to Supplier that: (1) Authorized Products sold to third parties shall conform with Purchaser's product specifications. PURCHASER MAKES NO OTHER WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO AUTHORIZED PRODUCTS. ALL OTHER - ------------- * Confidential portions of material have been omitted and filed separately with the Securities and Exchange Commission. -7- WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY SUPPLIER. (2) Purchaser is a corporation duly organized, validly existing and in good standing under the laws of New South Wales, with all requisite corporate power and authority to execute and deliver this Agreement, and to perform its obligations hereunder. The execution and delivery of this Agreement and the performance and observance of all terms, conditions and obligations have been duly authorized by any necessary actions on the part of Purchaser. (3) The execution and delivery of this Agreement and the consummation of all of the transactions contemplated hereby do not and will not conflict with, or be in contravention of, any of Purchaser's corporate documents or any resolution of Purchaser or any instrument or contract to which Purchaser is a party. (c) Supplier shall indemnify and hold Purchaser harmless from and against all claims, causes of action, settlement costs, including reasonable attorney's fees, losses or liabilities of any kind asserted by third persons which arise out of or are attributable to Supplier's breach of any of its representations, warranties and covenants under this Agreement, any defect or deficiency in BDA supplied by Supplier, or any negligent act or omission on the part of Supplier's employees, agents or representatives. (d) Purchaser shall indemnify and hold Supplier harmless from and against all claims, causes of action, settlement costs, including reasonable attorney's fees, losses or liabilities of any kind asserted by third persons which arise out of or are attributable to Purchaser's breach of any of its representations, warranties and covenants under this Agreement, any defect or deficiency in Authorized Products, or any negligent act or omission on the part of Purchaser's employees, agents or representatives. (e) The responsible party shall absorb any and all recall costs connected with any failure to meet product claims and shall indemnify the other party against any and all reasonable and necessary expenses incurred by such other party as a result of any such recall. Purchaser shall promptly advise Supplier of any contemplated recall and shall give Supplier the opportunity to participate, at Supplier's expense, in such recall. 5.08 Press Release. The parties agree that after execution of this Agreement a press release or other public announcement will be issued regarding the Agreement. Any such release or announcement shall be reviewed and approved by both parties prior to its issuance. 5.09 Acknowledgments. Unless prohibited by law, Purchaser will acknowledge in all product literature, packaging, and advertising that Authorized Products contain BDA, licensed to Purchaser by Supplier and that the Product is produced under license and sublicense from Supplier. - 8 - ARTICLE 6: DEVELOPMENT AND TECHNICAL ASSISTANCE 6.01 Supplier's Responsibilities. In consultation with Purchaser, Supplier will be responsible for the development and, where required, manufacture of BDA and for demonstrating the efficacy of in ovo Authorized Products. In addition, Supplier will exercise its best efforts to assist Purchaser in obtaining and maintaining whatever government approvals are deemed necessary or appropriate with respect to the BDA and Authorized Products in the Territory. Supplier will provide adequate Inovoject(R) systems for hatchery installations in the Territory and will provide technical service for such installations. 6.02 Purchaser's Responsibilities. (a) Purchaser, at its sole cost and expense, will be responsible for development and manufacture of Authorized Products and will exercise its best efforts in obtaining regulatory approvals of Authorized Products in the Territory, and agrees to allocate reasonably adequate funds and personnel, and to exercise its best efforts, to implement and conduct a program directed toward the successful commercialization and continued successful marketing of Authorized Products for in ovo application in each country within the Territory. Product registrations by Purchaser shall be owned by Purchaser. (b) As part of its responsibilities, Purchaser undertakes to initiate field testing or to make application for an Animal Test Certificate [ * ] (including, but not limited to, acts of God, regulation or law or other action of any government or agency thereof, war, insurrection, civil commotion, labor disturbances, or destruction of facilities or materials by fire, flood, storm or similar natural disaster), the schedule for performance shall be extended for the period of such events and Seller shall not elect to convert the license to a non-exclusive basis until the extended period has expired. 6.03 Technical Assistance. During a reasonable period of time following the execution of this Agreement, Supplier agrees to render technical assistance, training and consultation reasonably requested by Purchaser in connection with its use of the Subject Technology and development of Authorized Products. Such assistance shall include, at Purchaser's request and on reasonable notice, the presence of Supplier's personnel at Purchaser's facilities within a time frame to be mutually agreed. Such assistance shall be provided [ * ] In addition, at Purchaser's reasonable request and on responsible notice, Supplier shall undertake developmental studies to support registrations in the Territory [ * ] ARTICLE 7: CLAIMS AND INFRINGEMENT 7.01 Prosecution and Maintenance. Supplier shall determine, in the exercise of its best business judgment, whether to prosecute, or whether to request the University of Arkansas to pursue, patents and patent applications within the Subject Technology, to obtain assignments of patents thereto, and to maintain patents from time to time within the Subject Technology. - ------------- * Confidential portions of material have been omitted and filed separately with the Securities and Exchange Commission. -9- 7.02 Claims. In the event that any person or organization shall make any claim, demand, action or cause of action with respect to the Subject Technology, or any other rights being licensed under this Agreement, Purchaser shall promptly notify Supplier in writing as soon as it learns thereof, and Supplier, at its option, shall have complete and sole control of defending, negotiating, or settling any such claim, demand, action or cause of action, which shall be done at Supplier's expense. 7.03 Infringement. Purchaser shall promptly notify Supplier upon learning that a third party is making, using or selling a product or component of a product which is within the scope of the Patent or Subject Technology and shall provide Supplier with any evidence available pertaining to the infringement. Supplier shall have the right to bring, maintain and settle any suit, action or proceeding involving any such infringement of the Patent or Subject Technology, and shall pay all expenses incurred in connection therewith. Any amount recovered in any such suit, action or proceeding whether by judgment or settlement shall be paid to or retained by Supplier. If within three (3) months of notice of any such infringement, Supplier shall have failed either to cause such infringement to terminate or to initiate legal proceedings against the infringer (or in the event that Supplier earlier advises Purchaser that it does not intend to take action), Purchaser shall have the right, at its own expense, to bring and maintain any suit, action or proceeding involving any such infringement, which infringement could reasonably be expected to adversely affect the rights granted to Purchaser hereunder. If Purchaser lacks standing to bring such suit, action or proceeding, then Supplier shall request the University of Arkansas to bring and maintain suit upon Purchaser's undertaking to promptly reimburse Supplier and/or the University of Arkansas for all reasonable expenses (including attorneys' fees) resulting therefrom. Any amount recovered in any such action, suit or proceeding brought at Purchaser's expense (whether in its own name or in Supplier's name), whether by judgment or settlement, shall be paid to or retained by Purchaser. 7.04 Indemnification. Each party (the "Indemnifying Party") agrees to hold the other party (the "Indemnified Party") harmless against any and all liability, loss, damage, or expense, including reasonable attorneys fees, which the Indemnified Party may incur by reason of (a) any breach by the Indemnifying Party of its representations, warranties and covenants hereunder, or (b) any defect or deficiency in Authorized Products or BDA for which the Indemnified Party is not responsible. ARTICLE 8: DURATION AND TERMINATION 8.01 Term. This Agreement shall become effective upon the date hereinabove written and, unless sooner terminated in accordance with the provisions herein, shall remain in full force and effect for a period extending through the life of all Patents. 8.02 Termination by Purchaser. Purchaser may terminate this Agreement in its entirety by giving Supplier written notice at least twelve (12) months prior to such termination, and thereupon shall terminate the manufacture, use, sale and distribution of Authorized Products. In the event of such termination by Purchaser in some or all countries within the Territory, Purchaser will, on request of Supplier, promptly provide the latter with access to the appropriate product registrations and the registration file for the product. Additionally, the parties will discuss an appropriate supply agreement for provision of supplies of the product to Embrex Europe. 8.03 Termination by Either Party. In the event either party defaults on or breaches any material provision of this Agreement, the other party shall have the right to terminate this Agreement by giving written notice to the defaulting or breaching party; provided, however, that if said defaulting or breaching party cures said default or breach within sixty (60) days after said notice shall have been given, this Agreement shall continue in full force and effect. Failure on the part of either party - 10 - to exercise or enforce any right conferred upon it hereunder shall not be deemed to be a waiver of any such right nor operate to bar the exercise or enforcement thereof at any time or times thereafter. Either party may also terminate this Agreement, or restrict it to appropriate markets, immediately if (a) final product testing at the Central Veterinary Laboratory, Weybridge, determines the product to be non-viable at economic dose rates, or (b) if antigenic shift in IBD viruses causes field problems and makes the vaccine strain inappropriate in some or all of the Territory. 8.04 Bankruptcy. If during the term of this Agreement either party shall become bankrupt or insolvent, its business placed in the hands of a receiver or trustee, or it becomes a party to any procedure for the settlement of its debts or to a dissolution proceeding, whether by voluntary act or otherwise, this Agreement may be terminated by either party upon ten (10) days notice to the other party. Notwithstanding the foregoing, if either party commences a Chapter 11 voluntary bankruptcy, this Agreement shall survive unless terminated by the other party. 8.05 Other Remedies. Termination of this Agreement shall be without prejudice to the rights of either party in respect to any previous breach of any of the provisions of this Agreement and shall not relieve Purchaser of payment obligations already accrued. In addition, notwithstanding any termination of this Agreement, the provisions of Article III, Section 5.07, and Article VII shall survive. 8.06 Obligations on Termination. In the event of termination of this Agreement, Purchaser and its Affiliates shall thereafter: (a) Refrain from any use or disclosure of Subject Technology which belongs solely to Supplier or is licensed to Supplier, provided, however, that Purchaser shall be allowed to sell and distribute its remaining inventory of Authorized Products; (b) Return to Supplier all papers, writings, designs, and other documentation embodying or showing any of the Subject Technology, including Purchaser's remaining inventory of BDA upon reimbursement of any prepayments by Purchaser to Supplier for such inventory; (c) Take all necessary precautions and use its best efforts to insure that its employees will likewise comply with the provisions of this section; and (d) At the request of Supplier, sign all necessary documentation as may be reasonably necessary to effectuate any of Purchaser's obligations hereunder. ARTICLE 9: MISCELLANEOUS 9.01 Governing Law. The validity, performance and construction of this Agreement shall be governed by the laws of the State of North Carolina. Jurisdiction over any party in any action may be accomplished by giving notice as provided in this Agreement. 9.02 Notices. Any notice or communication required or permitted to be given by either party hereunder shall be deemed sufficiently given if mailed by registered mail and addressed to the party to whom notice is given as follows: If to Supplier to: EMBREX, INC. - 11 - P.O. Box 13989 Research Triangle Park NC 27709 If to Purchaser to: CYANAMID WEBSTERS, a subsidiary of Arthur Webster PTY, Ltd. P.O. Box 234 Baulkham Hills New South Wales 2153 Australia Notices shall be deemed given on the third business day after mailing. 9.03 Entire Agreement. This Agreement represents the entire agreement between the parties as of the effective date hereof but may be modified or amended at any time by mutual agreement set forth in writing and signed by both of the parties. 9.04 Severability. The parties agree that neither party intends to violate any public policy, statutory or common laws, or governmental regulations. If any provision of this Agreement shall be declared void or unenforceable by any judicial or administrative authority, the validity of the other provisions and of the entire agreement shall not be affected thereby. 9.05 Relationship. It is expressly agreed that the relationship hereby established is solely that of licensor and licensee, it being understood that Purchaser under this Agreement is acting for its own account as an independent contractor and has no authority to make, assume or create any representation, warranty, agreement, guarantee, claim or settlement on behalf of Supplier with respect to the Authorized Products, the Subject Technology or otherwise. 9.06 Assignment. This Agreement, the license and the sublicense may not be transferred or assigned without the prior written consent of both parties, and the sublicense may not be transferred or assigned without the additional consent of the University of Arkansas. The Agreement has been made solely for the benefit of the parties, their respective successors and permitted assigns, and no other person shall acquire or have any right under or by virtue of this Agreement, license or sublicense. Notwithstanding the foregoing, Purchaser may assign its rights hereunder to an Affiliate upon the prior written approval of Supplier, which approval shall not be unreasonably withheld. IN WITNESS WHEREOF, the parties hereto, each warranting to the other full power and authority to enter into this Agreement, have caused this Agreement to be duly and validly executed by their authorized representatives to have effect as a sealed instrument as of the day and year first above written. EMBREX, INC. CYANAMID WEBSTERS, a subsidiary of Arthur Webster PTY, Ltd. By: /s/ Randall L. Marcuson By: /s/ Arthur Webster Randall L. Marcuson Name: Arthur Webster President/CEO Title: Managing Director Date: July 20, 1995 Date: July 25, 1995 - 12 - -----END PRIVACY-ENHANCED MESSAGE-----