<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 14, 1998
MICROCIDE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in Charter)
DELAWARE 0-28006 94-3186021
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
850 MAUDE AVENUE
MOUNTAIN VIEW, CA 94043
(Address of Principal Executive Offices)
(650) 428-1550
(Registrant's Telephone Number, Including Area Code)
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ITEM 2 ACQUISITION OR DISPOSITION ASSETS.
Pursuant to the terms of the Series A Preferred Stock Purchase Agreement
between Microcide Pharmaceuticals, Inc., a Delaware corporation ("Microcide"),
and EpiGenix, Inc. ("EpiGenix"), a Delaware corporation, dated January 14, 1998,
the Core Technology Development and License Agreement between Microcide and
EpiGenix, dated January 14, 1998 (the "Core Technology Agreement") and the
Antiviral and Surrogate Genetics Research and Collaboration Agreement between
Microcide and EpiGenix, dated January 14, 1998 (the "Collaboration Agreement"),
Microcide has purchased 8,750,000 shares of Series A Preferred Stock of Iconix,
Inc., a Delaware corporation (formerly EpiGenix, hereinafter referred to as
"Iconix") in exchange for the assignment and license of certain technology from
Microcide to Iconix pursuant to the terms of the Core Technology Agreement. The
shares of Series A Preferred Stock are deemed to have a value of $0.75 per share
based upon the $0.75 price per share paid by the investors purchasing Series B
Preferred Stock of Iconix (which is substantially similar in rights,
preferences, and privileges to the Series A Preferred Stock) as part of the same
transaction.
Under the terms of the Core Technology Agreement, Microcide has agreed
to transfer or license certain technology to Iconix and to jointly develop
certain technologies for a specified period of time. Under the terms of the
Collaboration Agreement, the parties have agreed to collaborate to discover and
develop viral therapeutics, as well as to potentially utilize the technologies
which Iconix will develop for antibacterial and antifungal applications.
Dr. Keith Bostian, formerly Chief Operating Officer of Microcide, has
become the President and Chief Executive Officer of Iconix. Dr. Bostian will
continue to serve as a member of the Microcide Board of Directors and has become
a consultant to Microcide for a two-year period.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
The following exhibits are filed as part of this Current Report on Form
8-K, where indicated.
(a) None.
(b) None.
(c) Exhibits in accordance with Item 601 of Regulation S-K:
Exhibit No. Description
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2.1 EpiGenix, Inc. Series A Preferred Stock Purchase Agreement
Exhibit A Schedule of Investors
Exhibit B Amended and Restated Certificate of
Incorporation
Exhibit C(1) Schedule of Exceptions (omitted)
Exhibit D Form of Information and Registration
Rights Agreement
Exhibit E Form of Right of First Refusal Agreement
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(1) This Exhibit C, Schedule of Exceptions, sets forth the exceptions to
the representations and warranties made by Iconix to Microcide in
Section 8 of the Series A Preferred Stock Purchase Agreement between
such parties dated January 14, 1998.
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Exhibit F(2) Legal Opinion of Company Counsel (omitted)
Exhibit G Form of Voting Agreement
2.2 Core Technology Development and License Agreement by and
between Microcide Pharmaceuticals, Inc. and EpiGenix,
Inc.(3)
Exhibit A Assigned Technology
Exhibit B Licensed Patents
Exhibit C Alternative Dispute Resolution Mechanism
Exhibit D Preliminary 1998 Work Plan
Exhibit E Assignment Agreement
Exhibit F Definitions
2.3 Antiviral and Surrogate Genetics Research and
Collaboration Agreement by and between Microcide
Pharmaceuticals, Inc. and EpiGenix, Inc.(3)
Exhibit A Preliminary Initial Targets
Exhibit B Collaboration Equipment
Exhibit C Preliminary Research Plan
99.1 Press release dated January 14, 1998.
Microcide hereby agrees to furnish supplementally a copy of any omitted
exhibit to the Commission upon request.
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(2) This Exhibit F, Legal Opinion of Company Counsel, is the opinion letter
written by counsel for Iconix addressed to Microcide in connection with
Microcide's purchase of Series A Preferred Stock of Iconix.
(3) Confidential treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
2.1 EpiGenix, Inc. Series A Preferred Stock Purchase Agreement
Exhibit A Schedule of Investors
Exhibit B Amended and Restated Certificate of
Incorporation
Exhibit C(1) Schedule of Exceptions (omitted)
Exhibit D Form of Information and Registration Rights
Agreement
Exhibit E Form of Right of First Refusal Agreement
Exhibit F(2) Legal Opinion of Company Counsel (omitted)
Exhibit G Form of Voting Agreement
2.2 Core Technology Development and License Agreement by and
between Microcide Pharmaceuticals, Inc. and EpiGenix,
Inc.(3)
Exhibit A Assigned Technology
Exhibit B Licensed Patents
Exhibit C Alternative Dispute Resolution Mechanism
Exhibit D Preliminary 1998 Work Plan
Exhibit E Assignment Agreement
Exhibit F Definitions
2.3 Antiviral and Surrogate Genetics Research and
Collaboration Agreement by and between Microcide
Pharmaceuticals, Inc. and EpiGenix, Inc.(3)
Exhibit A Preliminary Initial Targets
Exhibit B Collaboration Equipment
Exhibit C Preliminary Research Plan
99.1 Press release dated January 14, 1998.
</TABLE>
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(1) This Exhibit C, Schedule of Exceptions, sets forth the exceptions to the
representations and warranties made by Iconix to Microcide in Section 8
of the Series A Preferred Stock Purchase Agreement between such parties
dated January 14, 1998.
(2) This Exhibit F, Legal Opinion of Company Counsel, is the opinion letter
written by counsel for Iconix addressed to Microcide in connection with
Microcide's purchase of Series A Preferred Stock of Iconix.
(3) Confidential treatment has been requested with respect to certain
portions of this exhibit. Omitted portions have been filed separately
with the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MICROCIDE PHARMACEUTICALS, INC.
Dated: January ___, 1998 By: /s/ Matthew J. Hogan
--------------------
Matthew J. Hogan
Chief Financial Officer
(principal financial and
accounting officer)
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EXHIBIT 2.1
EPIGENIX, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
<TABLE>
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PAGE
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1. Purchase and Sale of Series A Preferred Stock.........................1
1.1 Sale and Issuance of Series A Preferred......................1
1.2 Closing......................................................1
1.3 Second Closing...............................................2
2. Definitions...........................................................2
2.1 "Material Adverse Event......................................2
2.2 "Subsidiary..................................................2
3. Representations and Warranties of the Company to the Investors........2
3.1 Corporate Organization and Authority.........................2
3.2 Capitalization...............................................2
3.3 Subsidiaries.................................................3
3.4 Authorization................................................3
3.5 Validity of Series A Preferred...............................3
3.6 No Conflict with Other Instruments; Compliance with Laws.....4
3.7 Agreements; Actions..........................................4
3.8 Litigation...................................................5
3.9 Title to Properties; Liens and Encumbrances..................5
3.10 Patents and Other Proprietary Rights.........................5
3.11 No Defaults; Violations or Conflicts.........................6
3.12 Private Offering.............................................6
3.13 Registration Rights..........................................6
3.14 Brokers and Finders..........................................6
3.15 Governmental Consents........................................6
3.16 Corporate Documents..........................................6
3.17 Minute Books.................................................6
3.18 Financial Statements.........................................7
4. Representations and Warranties of the Investor........................7
4.1 Authorization................................................7
4.2 Brokers and Finders..........................................7
5. Securities Laws.......................................................7
5.1 Securities Laws Representations and Covenants of Investor....7
5.2 Legends......................................................9
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
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PAGE
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<S> <C>
6. Conditions of Investor's Obligations at the Initial Closing...........9
6.1 Representations and Warranties...............................9
6.2 Performance..................................................9
6.3 Blue Sky Compliance..........................................9
6.4 Information and Registration Rights..........................9
6.5 First Refusal Agreement......................................9
6.6 Proceedings Satisfactory: Compliance Certificate.............9
6.7 Opinion of Counsel..........................................10
6.8 Certified Charter Documents.................................10
6.9 Amended and Restated Certificate of Incorporation...........10
6.10 Voting Agreement............................................10
7. Conditions of the Company's Obligations at Initial Closing...........10
7.1 Representations and Warranties..............................10
7.2 Blue Sky Compliance.........................................10
7.3 Information and Registration Rights.........................10
7.4 First Refusal Agreement.....................................10
7.5 Amended and Restated Certificate of Incorporation...........10
7.6 Voting Agreement............................................11
8. Post-Closing Covenant of the Company.................................11
8.1 Securities Laws Compliance..................................11
9. Miscellaneous........................................................11
9.1 Entire Agreement; Successors and Assigns....................11
9.2 Governing Law...............................................11
9.3 Counterparts................................................11
9.4 Headings....................................................11
9.5 Notices.....................................................11
9.6 Survival of Warranties......................................11
9.7 Amendment of Agreement......................................12
9.8 Finders Fees................................................12
9.9 Expenses....................................................12
9.10 Aggregation of Stock........................................12
9.11 Severability................................................12
9.12 Delays or Omissions.........................................12
9.13 Corporate Securities Law....................................13
</TABLE>
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TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
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EXHIBITS
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<S> <C>
Exhibit A Schedule of Investors
Exhibit B Amended and Restated Certificate of Incorporation
Exhibit C Schedule of Exceptions
Exhibit D Form of Information and Registration Rights Agreement
Exhibit E Form of Right of First Refusal Agreement
Exhibit F Legal Opinion of Company Counsel
Exhibit G Form of Voting Agreement
</TABLE>
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SERIES A PREFERRED
STOCK PURCHASE AGREEMENT
THIS SERIES A PREFERRED STOCK PURCHASE AGREEMENT (the "Agreement") is
made as of January , 1998 by and among EpiGenix, Inc., a Delaware corporation
(the "Company"), and Microcide Pharmaceuticals, Inc. ("Microcide" or the
"Investor").
R E C I T A L S:
A. The Board of Directors of the Company has adopted the Amended and
Restated Certificate of Incorporation (the "Certificate") in the form attached
hereto as Exhibit B which, among other matters, establishes the rights,
preferences and privileges of the Company's Series A Preferred Stock ("Series A
Preferred"), Series B Preferred Stock (the "Series B Preferred") and Series C
Preferred Stock (the "Series C Preferred").
B. The Company desires to sell shares of Series A Preferred to the
Investor and the Investor desires to purchase shares of Series A Preferred, on
the terms and subject to the conditions set forth in this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Purchase and Sale of Series A Preferred Stock.
1.1 Sale and Issuance of Series A Preferred. The Company shall
sell to the Investor and the Investor shall purchase from the Company the number
of shares of Series A Preferred as set forth opposite the name of such Investor
on Exhibit A in exchange for the assignment and license of certain technology
from Microcide to the Company as set forth in the Core Technology Development
and License Agreement between Microcide and the Company of even date herewith
(the "License Agreement"). The shares of Series A Preferred sold to the Investor
are referred to as the "Shares."
1.2 Closing. The initial purchase and sale of the Shares shall
take place on the initial closing date of the sale by the Company to certain
investors of the Series B Preferred Stock pursuant to that certain Series B and
Series C Preferred Stock Purchase Agreement of even date herewith (the "Series B
and C Purchase Agreement"), or on such other date as the Company and the
Investor mutually agree (the dates of the purchase and sale of the Series A
Preferred are designated the "Closings"). At the initial closing ("Initial
Closing"), the Company shall deliver to the Investor a certificate representing
the Shares of Series A Preferred to be purchased by the Investor at the Initial
Closing as set forth on Exhibit A against delivery to the Company by such
Investor at the Initial Closing of (a) an executed counterpart of this
Agreement, and (b) an executed counterpart of the License Agreement.
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1.3 Second Closing. On the earliest to occur of (i) the
closing of the sale of the Series C Preferred on the second closing date under
the Series B and C Purchase Agreement, (ii) June 30, 1998 or (iii) thirty (30)
days prior to the closing of a proposed acquisition of the Company, whether by
way or merger, sale of assets or sale of stock, the Company agrees to issue at a
second Closing (the "Second Closing"), that number of Shares of the Series A
Preferred Stock set forth opposite the Investor's name on Exhibit A attached
hereto. At the Second Closing, the Company shall deliver to the Investor a
certificate representing the Shares of Series A Preferred Stock to be issued at
the Second Closing as set Forth on Exhibit A.
2. Definitions. For purposes of this Agreement:
2.1 "Material Adverse Event" shall mean an occurrence having a
consequence that either (a) is materially adverse as to the business,
properties, prospects or financial condition of the Company.
2.2 "Subsidiary" constitutes any corporation more than 50% of
whose stock (measured by virtue of voting rights) in the aggregate is owned by
the Company.
3. Representations and Warranties of the Company to the Investors.
Except as set forth on the Schedule of Exceptions attached hereto as Exhibit C,
the Company hereby represents and warrants to the Investor that:
3.1 Corporate Organization and Authority. The Company:
(a) is a corporation duly organized, validly
existing, authorized to exercise all its corporate powers, rights and
privileges, and is in good standing in the State of Delaware;
(b) has the corporate power and corporate
authority to execute this Agreement and the Information and Registration Rights
Agreement (the "Rights Agreement") attached hereto as Exhibit D, the Right of
First Refusal Agreement (the "First Refusal Agreement") attached hereto as
Exhibit E and the Voting Agreement (the "Voting Agreement") attached hereto as
Exhibit G (this Agreement, the Rights Agreement, the First Refusal Agreement and
the Voting Agreement are collectively referred to as the "Agreements") and carry
out the transactions contemplated hereby and thereby and to own and operate its
properties and to carry on its business as now conducted and as proposed to be
conducted; and
(c) is qualified as a foreign corporation in all
jurisdictions in which such qualification is required, except jurisdictions
where the failure to be qualified would not be a Material Adverse Event.
3.2 Capitalization. Immediately prior to the Closing, the
authorized capital of the Company shall consist of:
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(a) Preferred Stock. 21,803,334 shares of
Preferred Stock par value $0.001 per share, 8,750,000 shares of which are
designated Series A Preferred Stock and of which none are outstanding prior to
the Closing, 4,303,334 shares of which are designated Series B Preferred Stock
and of which none are outstanding prior to the Closing, and 8,750,000 shares of
Series C Preferred Stock, and of which none are outstanding prior to the
Closing.
(b) Common Stock. 50,000,000 shares of Common
Stock par value $0.001 per share, of which 3,134,750 shares are issued and
outstanding. All outstanding shares of Common Stock are duly and validly issued
(including without limitation, issued in compliance with applicable federal and
state securities laws), fully-paid, and non-assessable
(c) Other. Except as set forth in the Schedule
of Exceptions and as contemplated by this Agreement and the Rights Agreement,
there are no outstanding warrants, options, conversion privileges, preemptive
rights, or other rights or agreements to purchase or otherwise acquire or issue
any equity securities of the Company.
3.3 Subsidiaries. The Company does not presently own, have any
investment in, or control, directly or indirectly, any Subsidiaries,
associations or other business entities. The Company is not a participant in any
joint venture or partnership.
3.4 Authorization. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of all obligations under the
Agreements, and for the issuance and delivery of the Shares, and of the Common
Stock issuable upon conversion of the Shares, has been taken. The Agreements
constitute legally binding valid obligations of the Company enforceable against
the Company in accordance with their terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, and (iii) to the extent the indemnification
provisions contained in the Rights Agreement may be limited by applicable
federal or state securities laws.
3.5 Validity of Series A Preferred. The Shares, when issued,
sold and delivered in accordance with the terms and for the consideration
expressed in this Agreement, shall be duly and validly issued (including,
without limitation, issued in compliance with applicable federal and state
securities laws), fully-paid and non-assessable, and free from any liens or
encumbrances other than those accepted or imposed by the holders thereof, and
the applicable state and federal securities laws restrictions on transfer to
which such Shares are subject. The Common Stock issuable upon conversion of the
Shares, assuming such Common Stock is issued to the Investors or qualified
transferees, upon issuance in accordance with the Certificate shall be duly and
validly issued (including, without limitation, issued in compliance with all
applicable federal and state securities laws), fully paid and non-assessable,
and free from any liens or encumbrances other than those accepted or imposed by
the holders thereof and the applicable state and federal securities laws
restrictions on transfer to which such Shares are subject.
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3.6 No Conflict with Other Instruments; Compliance with Laws.
The execution, delivery and performance of the Agreements will not result in any
violation of, be in conflict with, or constitute a default under, with or
without the passage of time or the giving of notice: (i) any provision of the
Company's Certificate or Bylaws; (ii) any provision of any judgment, decree or
order to which the Company is a party or by which it is bound; (iii) any
material contract, obligation or commitment to which the Company is a party or
by which it is bound; or (iv) to the best of Company's knowledge, any statute,
rule or governmental regulation applicable to the Company. To the best of
Company's knowledge, the Company is conducting its business in compliance with
all statutes, rules, and governmental regulations applicable to the Company
where the failure to do so would constitute a Material Adverse Event.
3.7 Agreements; Actions.
(a) Except for the agreements explicitly contemplated
hereby, as set forth in the Schedule of Exceptions, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates or any affiliate thereof.
(b) There are no agreements, understandings,
instruments, contracts or proposed transactions to which the Company is a party
or by which it is bound which involve (i) obligations of, or payments to, the
Company in excess of $10,000, (ii) the license of any patent, copyright, trade
secret or other proprietary right of the Company or (iii) any other material
agreement.
(c) The Company has not (i) declared or paid any
dividends, or authorized or made any distribution upon or with respect to any
class or series of its capital stock, (ii) incurred any indebtedness for money
borrowed, (iii) incurred any other liabilities individually in excess of $10,000
or in excess of $25,000 in the aggregate, other than obligations or liabilities
of the Company for compensation under employment, advisor or consulting
agreements, (iv) made any loans or advances to any person, other than ordinary
advances for travel expenses, (v) sold, exchanged or otherwise disposed of any
of its material assets or rights or (vi) agreed to any of the foregoing.
(d) The Company is not a party to and is not bound by
any contract, agreement or instrument, or subject to any restriction under its
Certificate or Bylaws, which to the knowledge of the Company adversely affects
in any material respect its business as now conducted or as proposed to be
conducted, its properties or its financial condition.
(e) Except with respect to Microcide in connection
with the purchase and sale of Series A Preferred, the Company has not engaged in
the past six months in any discussion (i) with any representative of any
corporation or corporations regarding the consolidation or merger of the Company
with or into any such corporation or corporations, (ii) with any corporation,
partnership, association or other business entity or any individual regarding
the sale, conveyance or disposition of all or substantially all of the assets of
the Company or a transaction or series of related transactions in which more
than 50 percent of the voting power of the Company is disposed of, other than as
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contemplated by this Agreement, or (iii) regarding any other form of
liquidation, dissolution or winding up of the Company.
(f) The Company was incorporated on December 11, 1997
and has not yet commenced operations other than in connection with and as
contemplated by this Agreement and the Agreements or in connection with its
initial organization, recruitment of employees and consultants, licensing
patents and technology, leasing a facility, and other similar activities.
3.8 Litigation. There is no action, proceeding or
investigation pending or to the best of the Company's knowledge, threatened,
that questions the validity of this Agreement, or the Rights Agreement or the
right of the Company to enter into this Agreement or the Rights Agreement or to
consummate the transactions contemplated hereby and thereby, or that would
result, either individually or in the aggregate, in any Material Adverse Event,
nor is the Company aware that there is any basis for the foregoing. There is no
judgment, decree or order of any court in effect against the Company and the
Company is not in default with respect to any order of any governmental
authority to which the Company is a party or by which it is bound. The Company
has no present intention to commence litigation against any other party.
3.9 Title to Properties; Liens and Encumbrances. Excluding for
purposes of this section 3.9 the assets transferred to the Company pursuant to
the License Agreement, the Company has good and marketable title to all of its
tangible properties and assets, both real and personal, all of which is in good
operating and usable condition (subject to normal wear and tear), and has good
title to all its leasehold interests and is in compliance with such leases, in
each case subject to no mortgage, pledge, lien, security interest, conditional
sale agreement, encumbrance or charge which would constitute a Material Adverse
Event.
3.10 Patents and Other Proprietary Rights. To the best of the
Company's knowledge, and excluding for purposes of this section 3.10 the
intellectual property rights assigned or licensed to the Company pursuant to the
License Agreement, the Company has sufficient title and ownership of all
material patents, trademarks, service marks, trade names, copyrights, trade
secrets, information, proprietary rights and processes necessary for its
business as now conducted, and as proposed to be conducted, without conflict
with or infringement of the rights of others. There are no outstanding options,
licenses or agreements of any kind relating to the foregoing, nor is the Company
bound by or a party to any options, licenses or agreements of any kind with
respect to the patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of any
other person or entity, which would be material to the Company's business as
conducted or, to the best of the Company's knowledge, as proposed to be
conducted. The Company has not received any communications alleging, nor is the
Company aware of any basis for such allegation, that the Company has violated
or, by conducting its business as proposed, would violate any of the patents,
trademarks, service marks, trade names, copyrights or trade secrets or other
proprietary rights of any other person or entity. The Company is not aware that
any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such
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employee's best efforts to promote the interests of the Company or that would
conflict with the Company's business as proposed to be conducted. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company's
business by the employees of the Company, nor the conduct of the Company's
business as now conducted and as proposed to be conducted, will, to the best of
the Company's knowledge, conflict with or result in a breach of the terms,
conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. Each
employee of and consultant to the Company with access to confidential or
proprietary information has executed a proprietary information agreement
obligating such employee or consultant to hold all such information in
confidence. The Company does not believe it is or will be necessary to utilize
any inventions of any of its employees (or people it currently intends to hire)
made prior to their employment by the Company which have not been assigned or
licensed to the Company.
3.11 No Defaults; Violations or Conflicts. The Company is not
in violation of any term or provision of its Certificate, Bylaws, or any term or
provision of any indebtedness, mortgage, indenture, contract, agreement, or
judgment which would constitute a Material Adverse Event.
3.12 Private Offering. The Company agrees that neither the
Company nor anyone acting on its behalf will offer any of the Shares or any
similar securities for issuance or sale to, or solicit any offer to acquire any
of the same from, anyone so as to make the issuance and sale of the Shares
subject to the registration requirements of Section 5 of the Securities Act of
1933, as amended (the "Securities Act").
3.13 Registration Rights. Except as provided in the Rights
Agreement attached as Exhibit C, the Company is under no contractual obligation
to register under the Securities Act any of its presently outstanding securities
or any of its securities that may subsequently be issued.
3.14 Brokers and Finders. The Company has not retained any
investment banker, broker or finder in connection with the sale of the Shares.
3.15 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the consummation of the
transactions contemplated by this Agreement, except for qualification (or taking
such action as may be necessary to secure an exemption from qualification) under
the California Corporate Securities Laws and other applicable blue sky laws of
the Shares (and the Common Stock issuable upon conversion thereof) and the
modification of rights of stockholders contemplated by this Agreement and the
Rights Agreement.
3.16 Corporate Documents. The Certificate and Bylaws of the
Company as presently in effect are in the form previously provided to special
counsel to the Investor.
3.17 Minute Books. The minute books of the Company made
available to special counsel to the Investor contain a complete summary of all
meetings of directors and stockholders since
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the time of incorporation and reflect all transactions referred to in such
minutes accurately in all material respects.
3.18 Financial Statements. Consistent with having conducted no
operations as set forth in Section 3.7(f) hereof, the Company has no financial
statements (balance sheet, income statement and cash flow statement).
4. Representations and Warranties of the Investor. The Investor
represents and warrants to the Company as follows:
4.1 Authorization. When executed and delivered by the
Investor, and assuming execution and delivery by the Company, the Agreements
will constitute valid obligations of such Investor, enforceable in accordance
with their terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Rights Agreement may be limited by applicable federal or state securities
laws.
4.2 Brokers and Finders. The Investor has not retained any
investment banker, broker, or finder in connection with the transactions
contemplated by this Agreement.
5. Securities Laws.
5.1 Securities Laws Representations and Covenants of Investor.
(a) This Agreement is made with the Investor in
reliance upon such Investor's representation to the Company, which by such
Investor's execution of this Agreement such Investor hereby confirms, that the
Shares and the Common Stock issuable upon conversion thereof (collectively, the
"Securities") to be received by such Investor will be acquired for investment
for such Investor's own account, not as a nominee or agent, and not with a view
to the sale or distribution of any part thereof, and that such Investor has no
present intention of selling, granting any participation in, or otherwise
distributing the same. By executing this Agreement, such Investor further
represents that such Investor has no contract, undertaking, agreement or
arrangement with any person to sell, transfer, or grant participations to such
person or to any third person, with respect to any of the Securities.
(b) The Investor understands and acknowledges that
the offering of the Securities pursuant to this Agreement will not be registered
under the Securities Act on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration pursuant to Section
4(2) of the Securities Act, and that the Company's reliance upon such exemption
is predicated upon such Investor's representations set forth in this Agreement.
(c) The Investor covenants that in no event will it
dispose of any of the Securities (other than if a Registration Statement is in
effect with respect to such shares of the Securities
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or a disposition pursuant to Rule 144 promulgated by the Securities and Exchange
Commission ("Commission") under the Securities Act ("Rule 144") or any similar
or analogous rule) unless and until (i) the Investor shall have notified the
Company of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition that are
necessary to the availability of an exemption under the Securities Act other
than Rule 144, and (ii) if requested by the Company, the Investor shall have
furnished the Company with an opinion of counsel satisfactory in form and
substance to the Company and the Company's counsel to the effect that (x) such
disposition will not require registration under the Securities Act and (y)
appropriate action necessary for compliance with the Securities Act and any
applicable state, local or foreign law has been taken. Notwithstanding the
limitations set forth in the foregoing sentence, the Investor which is a
partnership may transfer Series A Preferred to its constituent partners or a
retired partner of such partnership who retires after the date hereof, or to the
estate of any such partner or retired partner or transfer by gift, will or
intestate succession to any such partner's spouse or lineal descendants or
ancestors without the necessity of registration or opinion of counsel if the
transferee agrees in writing to be subject to the terms of this Agreement, the
Rights Agreement and the First Refusal Agreement to the same extent as if such
transferee were an Investor; provided, however, that each Investor hereby
covenants not to effect such transfer if such transfer either would invalidate
the securities laws exemptions pursuant to which the Securities were originally
offered and sold or would itself require registration under the Securities Act
or applicable state securities laws. Any certificate evidencing the Securities
transferred as above provided shall bear the appropriate restrictive legend set
forth in Section 5.2 below, provided, however, that any legend endorsed on a
certificate pursuant to Section 5.2(a) hereof shall be removed (i) if the
Securities represented by such certificate shall have been effectively
registered under the Securities Act or otherwise lawfully sold in a public
transaction, or (ii) if such Securities may be transferred in compliance with
Rule 144(k) promulgated under the Securities Act. Any legend endorsed on a
certificate pursuant to Section 5.2(b) hereof shall be removed if the Company
receives an order of the appropriate state authority authorizing such removal.
(d) The Investor represents that: (i) it has such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of such Investor's prospective investment in the
Securities and is an accredited investor as defined in Rule 501(a) of Regulation
D under the Act; (ii) it has received all the information it has requested from
the Company and considers necessary or appropriate for deciding whether to
purchase the Securities; (iii) it has the ability to bear the economic risks of
such Investor's prospective investment; (iv) the Investor understands that no
public market currently exists for any of the Company's securities, and that the
Company has made no assurances that a public market will ever exist for the
Securities and (v) such Investor is able, without materially impairing its
financial condition, to hold the Securities for an indefinite period of time and
to suffer complete loss on its investment.
-8-
<PAGE> 13
5.2 Legends.
(a) All certificates for the Securities shall bear
the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED ("ACT"). SUCH SECURITIES MAY NOT BE
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER THE
ACT IS IN EFFECT AS TO SUCH TRANSFER OR SUCH TRANSFER
MAY BE MADE PURSUANT TO RULE 144 OR IN THE OPINION OF
COUNSEL FOR THE COMPANY, REGISTRATION UNDER THE ACT
IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO COMPLY
WITH THE ACT."
(b) Any certificates evidencing the Securities shall
also bear any legend required by the Commissioner of Corporations of the State
of Delaware or required pursuant to any state, local or foreign law governing
such securities.
6. Conditions of Investor's Obligations at the Initial Closing. The
obligations of the Investor under Sections 1.1 and 1.2 of this Agreement are
subject to the fulfillment at or before the Initial Closing of each of the
following conditions, any of which may be waived in writing by the Investor:
6.1 Representations and Warranties. The representations and
warranties of the Company contained in Section 3 shall be true on and as of the
date of the Initial Closing with the same effect as if made on and as of the
Initial Closing.
6.2 Performance. The Company shall have performed or fulfilled
in all material respects all agreements, obligations and conditions contained
herein required to be performed or fulfilled by the Company before the Initial
Closing.
6.3 Blue Sky Compliance. The Company shall have complied with
and be effective under all state securities or Blue Sky laws applicable to the
offer and sale of the Shares to the Investor at the Initial Closing.
6.4 Information and Registration Rights. The Company, the
purchasers of the Series B Preferred and the Investor shall have entered into
the Rights Agreement in substantially the form attached hereto as Exhibit D.
6.5 First Refusal Agreement. The Company, the Investor, other
investors and Keith Bostian shall have entered into a First Refusal Agreement in
substantially the form attached hereto as Exhibit E.
6.6 Proceedings Satisfactory: Compliance Certificate. All
corporate and legal proceedings taken by the Company in connection with the
transactions contemplated by this Agreement
-9-
<PAGE> 14
and all documents and papers relating to such transactions shall be satisfactory
to the Investors and their counsel, and the Investor shall have received all
such counterpart original and certified or other copies of such documents as it
may reasonably request. The Company shall have delivered to the Investor a
certificate dated as of the Initial Closing, signed by the Company's President,
certifying that the conditions set forth in Sections 6.1, 6.2, and 6.8 have been
satisfied.
6.7 Opinion of Counsel. There shall have been delivered to the
Investor an opinion of legal counsel to the Company, in substantially the form
of Exhibit F attached hereto, dated as of the date of the Initial Closing.
6.8 Certified Charter Documents. There shall have been
delivered to the Investor a copy of the Certificate and Bylaws of the Company
(as amended and restated through the date of the Closing), certified by the
Secretary of the Company as true and correct copies thereof as of the date of
the Initial Closing.
6.9 Amended and Restated Certificate of Incorporation. The
Amended and Restated Certificate of Incorporation shall have been filed with and
accepted by the Delaware Secretary of State.
6.10 Voting Agreement. The Company, the purchasers of the
Series B Preferred, the Investor and Keith Bostian shall have entered into a
Voting Agreement in substantially the form of Exhibit G attached hereto.
7. Conditions of the Company's Obligations at Initial Closing. The
obligations of the Company under Sections 1.1 and 1.2 of this Agreement are
subject to the fulfillment at or before the Initial Closing of each of the
following conditions, any of which may be waived in writing by the Company:
7.1 Representations and Warranties. The representations and
warranties of the Investor contained in Sections 4 and 5 shall be true on and as
of the Initial Closing with the same effect as though said representations and
warranties had been made on and as of the Initial Closing.
7.2 Blue Sky Compliance. The Company shall have complied with
and be effective under all state securities or Blue Sky laws applicable to the
offer and sale of the Shares to the Investor.
7.3 Information and Registration Rights. The Company and the
Investor shall have entered into the Rights Agreement in substantially the form
of Exhibit D attached hereto.
7.4 First Refusal Agreement. The Company, the purchasers of
the Series B Preferred, the Investor and Keith Bostian shall have entered into a
First Refusal Agreement attached hereto as Exhibit E.
7.5 Amended and Restated Certificate of Incorporation. The
Amended and Restated Certificate of Incorporation shall have been filed with and
accepted by the Delaware Secretary of State.
-10-
<PAGE> 15
7.6 Voting Agreement. The Company, the purchasers of the
Series B Preferred, the Investor and Keith Bostian shall have entered into a
Voting Agreement in substantially the form of Exhibit G attached hereto.
8. Post-Closing Covenant of the Company.
8.1 Securities Laws Compliance. The Company shall within
fifteen (15) days of the Closings file a notice of the sale of the Shares to the
Investors pursuant to Section 25102(f) of the California Corporations Code and
shall make any other filings required by the securities or Blue Sky laws of any
other applicable jurisdiction.
9. Miscellaneous.
9.1 Entire Agreement; Successors and Assigns. The Agreements
constitute the entire agreement between the Company and the Investors relative
to the subject matter hereof. Any previous agreement between the Company and the
Investors is superseded by this Agreement. Subject to the exceptions
specifically set forth in this Agreement, the terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the parties.
9.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of California
by California residents.
9.3 Counterparts. This Agreement may be executed in two (2) or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.4 Headings. The headings of the sections of this Agreement
are for convenience and shall not by themselves determine the interpretation of
this Agreement.
9.5 Notices. Any notice required or permitted hereunder shall
be given in writing and shall be conclusively deemed effectively given (i) five
(5) days after sending by first class U.S. mail postage prepaid, (ii) upon
personal delivery, or (iii) on the date of sending if sent by commercial
overnight courier addressed to the Company as set forth below the Company's name
on the signature page of this Agreement, and to an Investor, at the Investor's
address as set forth on Exhibit A or at such other address as the Company or the
Investor may designate.
9.6 Survival of Warranties. The warranties, representations
and covenants of the parties contained in or made pursuant to this Agreement
shall survive the execution and delivery of this Agreement and the Closing, and
such warranties, representations and covenants of the Company shall in no way be
affected by any investigation of the subject matter thereof made by or on behalf
of the
-11-
<PAGE> 16
Investors; provided, however, that such representations and warranties need only
be accurate as of the date of such execution and delivery and as of the Closing.
9.7 Amendment of Agreement. Any provision of this Agreement
may be amended, waived or terminated by a written instrument signed by the
Company and by persons holding more than fifty percent (50%) of the aggregate of
(i) the then outstanding shares of Series A Preferred Stock (assuming conversion
to Common Stock at the conversion rate then in effect) and (ii) the then
outstanding shares of Common Stock into which the shares of Series A Preferred
Stock have been converted, other than shares of Common Stock which have been
sold to the public.
9.8 Finders Fees. Each of the Company and the Investor will
indemnify the other against all liabilities incurred by the indemnifying party
with respect to claims related to investment banking or finders fees in
connection with the transactions contemplated by this Agreement, arising out of
arrangements between the party asserting such claims and the indemnifying party,
and all costs and expenses (including reasonable fees of counsel) of
investigating and defending such claims.
9.9 Expenses. The Company and the Investor will each bear
their respective legal and other fees and expenses in connection with the
transactions contemplated in this Agreement and the Series B and C Preferred
Stock Purchase Agreement; provided, however, if the sale of any of the Shares is
consummated, the Company shall pay at the Closing the reasonable fees and
expenses of counsel to the Investor, up to a maximum of $10,000.
9.10 Aggregation of Stock. All Shares held or acquired by
affiliated entities or persons shall be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
9.11 Severability. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.
9.12 Delays or Omissions. No delay or omission to exercise any
right, power or remedy accruing to any party under this Agreement, upon any
breach or default of any other party under this Agreement, shall impair any such
right, power or remedy of such non-breaching or non-defaulting party nor shall
it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any party of any
breach or default under this Agreement, or any waiver on the part of any party
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
party, shall be cumulative and not alternative.
-12-
<PAGE> 17
9.13 Corporate Securities Law. THE SALE OF THE SECURITIES
WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE
COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE
SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR
PRIOR TO THE QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM THE QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
[THIS SPACE INTENTIONALLY LEFT BLANK]
-13-
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE COMPANY: EPIGENIX, INC.
a Delaware corporation
By: [SIG]
-------------------------------
Title:
----------------------------
Address: 850 Maude Avenue
Mountain View, California 94043
[SIGNATURE PAGE TO SERIES A PREFERRED STOCK PURCHASE AGREEMENT]
<PAGE> 19
THE INVESTOR: MICROCIDE PHARMACEUTICALS, INC.,
a Delaware corporation
By: [SIG]
-------------------------------
Title:
----------------------------
Address: 850 Maude Avenue
Mountain View, California 94043
[SIGNATURE PAGE TO SERIES A PREFERRED STOCK PURCHASE AGREEMENT]
<PAGE> 20
EXHIBIT A
SCHEDULE OF INVESTORS
<TABLE>
<CAPTION>
Initial Closing Second Closing
---------------- -----------------
Number of Shares Number of Shares
Name and Address of Investor Series A Series A
- ---------------------------- ---------------- -----------------
<S> <C> <C>
Microcide Pharmaceuticals, Inc. 5,250,000 3,500,000
850 Maude Avenue
Mountain View, CA 94043
</TABLE>
<PAGE> 21
\ EXHIBIT B PAGE 1
State of Delaware
Office of the Secretary of State
------------
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO
HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED
CERTIFICATE OF "MOLECULAR MEDICINE, INC.", FILED IN THIS OFFICE ON THE
THIRTEENTH DAY OF JANUARY, A.D. 1998 AT 9 O'CLOCK A.M.
/s/ Edward J. Freel
[SEAL] -------------------------------
Edward J. Freel, Secretary of State
2828026 8100 AUTHENTICATION: 8865993
981015118 DATE: 01-14-98
<PAGE> 22
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 09:00 AM 01/13/1998
981015118 - 2828026
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
MOLECULAR MEDICINE, INC.
Keith Bostian and Joshua L. Green certify that:
1. They are the President and Secretary, respectively, of Molecular
Medicine, Inc., a corporation organized and existing under the laws of the State
of Delaware (the "Corporation").
2. The date of filing of this Corporation's original Certificate of
Incorporation with the Secretary of State of Delaware is December 11, 1997.
3. The text of the Amended and Restated Certificate of Incorporation of
this Corporation as heretofore amended or supplemented is restated to read in
its entirety as follows:
ONE. The name of the Corporation is EpiGenix, Inc. (the "Corporation"
or the "Company").
TWO. The name and address of the registered office of the Corporation
in the State of Delaware is 1013 Centre Road, in the City of Wilmington, County
of New Castle, Zip Code 19805. The name of the registered agent at such address
is the Corporation Service Company.
THREE. The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of the State of Delaware.
FOUR. This Corporation is authorized to issue two classes of shares to
be designated respectively Common Stock and Preferred Stock. The total number of
shares of Common Stock this Corporation shall have authority to issue is
50,000,000, and the total number of shares of Preferred Stock this Corporation
shall have authority to issue is 21,803,334, each with a par value of $0.001 per
share. The Preferred Stock may be issued from time to time in one or more
series, subject to the covenants contained in this Amended and Restated
Certificate of Incorporation. The Board of Directors is authorized to fix the
number of shares of any series of Preferred Stock and to determine or alter the
rights, preferences, privileges, and restrictions granted to or imposed upon any
wholly unissued series of Preferred Stock and, within the limits and
restrictions stated in any resolution or resolutions of the Board of Directors
originally fixing the number of shares constituting any series of Preferred
Stock, to increase or decrease (but not below the number of shares of any such
series then outstanding) the number of shares of any such series subsequent to
the issue of shares of that series. The Preferred Stock shall consist of three
series, designated (i) Series A Preferred Stock ("Series A Preferred")
consisting of 8,750,000 shares (ii) Series B Preferred Stock ("Series B
Preferred") consisting of 4,303,334 shares and (iii) Series C Preferred Stock
("Series C Preferred") consisting of
<PAGE> 23
8,750,000 shares. The Series A Preferred, Series B Preferred and Series C are
collectively referred to as the "Preferred".
The relative rights, preferences, privileges and restrictions granted
to or imposed on the respective classes of the shares of capital stock or the
holders thereof are as follows:
1. Dividends. The holders of the Preferred shall be entitled to receive
dividends out of funds legally available therefor, at the annual rate of (i)
$0.0675 per share of Series A Preferred, (ii) $0.0675 per share of Series B
Preferred, and (iii) $0.1008 per share of Series C Preferred, held by them, as
adjusted for stock splits, stock dividends, recapitalizations, and similar
events, prior and in preference to the declaration or payment of any dividend or
other distribution (payable other than in Common Stock) with respect to the
Common Stock, when, as and if declared by the Board of Directors. Such dividends
shall not be cumulative and no right to such dividends shall accrue to holders
of Preferred unless declared by the Board of Directors. No dividends or other
distributions shall be made with respect to the Common Stock, other than
dividends payable solely in Common Stock, unless (i) dividends shall have been
paid or declared and set apart for payment, on account of all shares of
Preferred then issued and outstanding, at the aforesaid rate for such calendar
year, and (ii) at the same time an equivalent dividend with respect to the
Preferred has been paid or declared and set apart for payment.
2. Liquidation Preference. In the event of any liquidation,
dissolution, or winding up of the Corporation, either voluntary or involuntary,
distributions to the stockholders of the Corporation shall be made in the
following manner:
(a) The holders of the Series B Preferred and Series C
Preferred shall be entitled to receive, prior and in preference to any
distribution of any of the assets or surplus funds of the Corporation to the
holders of the Series A Preferred and the Common Stock by reason of their
ownership of such stock, the amount equal to the greater of (i) the Original
Purchase Price per share for each share of Series B Preferred and Series C
Preferred Stock then held by them, adjusted for any combinations,
consolidations, or stock splits with respect to such shares and, in addition, an
amount equal to all declared but unpaid dividends on such series Preferred and
(ii) the amount such holders would receive upon conversion of the shares of
Series B Preferred and Series C Preferred held by them into shares of Common
Stock immediately prior to such liquidation, dissolution or winding up of the
Corporation and assuming all shares of Preferred Stock convert into shares of
Common Stock at their respective Conversion Rates. If the assets and funds thus
distributed among the holders of the Series B Preferred and Series C Preferred
shall be insufficient to permit the payment to such holders of the full
aforesaid preferential amount, then the entire assets and funds of the
Corporation legally available for distribution shall be distributed among the
holders of Series B Preferred and Series C Preferred in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
(b) After payment has been made to the holders of the Series B
Preferred and Series C Preferred of the full amounts to which they shall be
entitled as provided in paragraph (a), the holders of the Series A Preferred
shall be entitled to receive prior and in preference to any
-2-
<PAGE> 24
distribution of any of the assets or surplus funds of the Corporation to the
holders of Common Stock by reason of their ownership of such stock, the amount
equal to the greater of (i) the Original Purchase Price per share for each share
of Series A Preferred then held by them, adjusted for any combinations,
consolidations, or stock splits with respect to such shares and, in addition, an
amount equal to all declared but unpaid dividends on such series of Preferred
and (ii) the amount such holders would receive upon conversion of shares of
Series A Preferred held by them into shares of Common Stock immediately prior to
such liquidation, dissolution or winding up of the Corporation and assuming all
shares of Preferred Stock convert into shares of Common Stock at their
respective Conversion Rates. If the assets and funds thus distributed among the
holders of the Series A Preferred shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amount, then the remaining
assets and funds of the Corporation legally available for distribution shall be
distributed among the holders of Series A Preferred in proportion to the full
preferential amount each such holder is otherwise entitled to receive.
(c) After payment has been made to the holders of the Series A
Preferred, Series B Preferred and Series C Preferred of the full amounts to
which they shall be entitled as provided in paragraphs (a) and (b) above, the
holders of the Common Stock shall be entitled to receive ratably on a per-share
basis all the remaining assets of the Corporation. For the purposes of this
Section 2 and Section 4, the "Original Purchase Price" (i) for the Series A
Preferred shall be $0.75, (ii) for the Series B Preferred shall be $0.75, and
(iii) for the Series C Preferred shall be $1.117647.
(d) For purposes of this Section 2, a merger or consolidation
of the Corporation with or into any other corporation or corporations, or the
merger of any other corporation or corporations into the Corporation, in which
consolidation or merger the stockholders of the Corporation receive
distributions in cash or securities of another corporation or corporations as a
result of such consolidation or merger, a sale of all or substantially all of
the assets of the Corporation, or a transaction or series of related
transactions in which a person or group of persons (as defined in Rule
13d-5(b)(1) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) acquires beneficial ownership (as determined in accordance with Rule
13d-3 of the Exchange Act) of more than 50% of the voting power of the Company
shall be treated as a liquidation, dissolution or winding up of the Corporation.
The Corporation shall provide written notice of any such liquidation,
dissolution, winding up, merger, consolidation, sale of assets, or acquisition
of beneficial ownership of the Corporation as provided in Section 4(g) hereof.
Notwithstanding anything else contained herein to the contrary, each holder of
Preferred shall have the right to convert the shares of Preferred held into
Common Stock as provided in Section 4(a) hereof. Notwithstanding anything else
contained herein to the contrary, a consolidation, merger or sale of all or
substantially all assets will not be treated as a liquidation, dissolution or
winding up of this Corporation unless the Corporation's stockholders of record
as constituted immediately prior to such transaction will, immediately after
such transaction hold less than 50% of the voting power of the surviving or
acquiring entity.
-3-
<PAGE> 25
3. Voting Rights.
(a) General Voting Rights. Except as otherwise required by law
or Section 5 below, the holder of each share of Common Stock issued and
outstanding shall have one vote and the holder of each share of Preferred issued
and outstanding shall be entitled to the number of votes equal to the number of
shares of Common Stock into which such share of Preferred could be converted at
the record date for determination of the stockholders entitled to vote on such
matters, or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited, such votes to be
counted together with all other shares of stock of the Corporation having
general voting power and not separately as a class. Fractional votes by the
holders of Preferred shall not, however, be permitted and any fractional voting
rights shall (after aggregating all shares into which shares of Preferred held
by each holder could be converted) be rounded to the nearest whole number.
Holders of Common Stock and Preferred shall be entitled to notice of any
stockholders' meeting in accordance with the Bylaws of the Corporation.
(b) Board of Directors. The holders of the issued and
outstanding shares, if any, of Series B Preferred and Series C Preferred will be
entitled, voting together as a single, separate class, to elect three directors;
the holders of the issued and outstanding shares, if any, of Series A Preferred
voting as a single, separate class, will be entitled to elect two directors; the
holders of issued and outstanding shares, if any, of Common Stock, voting as a
single, separate class, will be entitled to elect one director; and the holders
of the issued and outstanding shares, if any, of Preferred and Common Stock
voting as single, separate classes, will be entitled to elect one director
(which director shall have received a plurality of the votes of both the
Preferred, including a plurality of the votes of the issued and outstanding
shares, if any, of the Series B and Series C Preferred, and the Common Stock,
each voting as a separate class).
(c) Vacancies. In the case of any vacancy in the office of a
director elected by any class or series of the Company's capital stock voting
(together if applicable) as a single, separate class pursuant to Section 3(b)
hereof, then either (A) the holders of such series or class may elect a
successor or successors to hold office for the unexpired term of the director or
directors whose office or offices shall be vacant or (B) the remaining
directors, if any, so elected by that class or series separately may, by
affirmative vote of a majority thereof (or the remaining director so elected if
there be but one (1)), may elect a successor or successors to hold office for
the unexpired term of the director or directors whose office or offices shall be
vacant. Any director who shall have been elected by the holders of any class or
series of the Company's capital stock voting (together if applicable) as a
single, separate class, or by any directors so elected a provided in the
preceding sentence hereof, may be removed during the aforesaid term of office,
either for or without cause, by, and only by, the vote of the holders such class
or series of the Company's capital stock who elected such director or directors
taken at a meeting of such stockholders duly called for that purpose, and any
vacancy thereby created may be filled by the holders of such class or series of
the Company's capital stock.
4. Conversion. The holders of the Preferred have conversion rights as
follows (the "Conversion Rights"):
-4-
<PAGE> 26
(a) Right to Convert. Subject to Section 4(d), each share of
Preferred shall be convertible, at the option of the holder thereof, at any time
after the date of issuance of such share at the office of the Corporation or any
transfer agent for the Preferred into that number of fully paid and
non-assessable shares of Common Stock which shall result from dividing the
Conversion Price for the such series of Preferred in effect at the time of
conversion into the Original Purchase Price (the "Conversion Rate"). For the
purposes of this Section 4, the "Conversion Price" (i) for the Series A
Preferred shall be $0.75, as adjusted herein, (ii) for the Series B Preferred
shall be $0.75, as adjusted herein, and (iii) for the Series C Preferred shall
be $1.117647, as adjusted herein.
(b) Automatic Conversion. Each share of Preferred shall
automatically be converted into shares of Common Stock at the then effective
Conversion Rate for such series upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the Corporation to the public at a price per
share (prior to underwriter commissions and offering expenses) of not less than
$3.00 per share (appropriately adjusted for any stock splits, stock dividends,
recapitalizations or similar events) and an aggregate offering price to the
public (prior to deduction of underwriter commissions and offering expenses) of
not less than $15,000,000.
(c) Mechanics of Conversion. No fractional shares of Common
Stock shall be issued upon conversion of Preferred. In lieu of any fractional
shares to which the holder would otherwise be entitled, the Corporation shall
pay cash equal to such fraction multiplied by the then effective Conversion
Price for such series of Preferred. Before any holder of Preferred shall be
entitled to convert the same into full shares of Common Stock and to receive
certificates therefor, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Preferred, and shall give written notice to the
Corporation at such office that such holder elects to convert the same;
provided, however, that in the event of an automatic conversion pursuant to
Section 4(b), the outstanding shares of Preferred shall be converted
automatically without any further action by the holders of such shares and
whether or not the certificates representing such shares are surrendered to the
Corporation or its transfer agent; and provided, further, that the Corporation
shall not be obligated to issue certificates evidencing the shares of Common
Stock issuable upon such automatic conversion unless the certificates evidencing
such shares of Preferred are either delivered to the Corporation or its transfer
agent as provided above, or the holder notifies the Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection with such certificates. The Corporation shall,
as soon as practicable after such delivery, or such agreement and
indemnification in the case of a lost certificate, issue and deliver at such
office to such holder of Preferred, a certificate or certificates for the number
of shares of Common Stock to which such holder shall be entitled as aforesaid
and a check payable to the holder in the amount of any cash amounts payable as
the result of a conversion into fractional shares of Common Stock. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred to be
converted, or in the case of automatic conversion on the date of closing of the
offering or the effective date of such written consent, and the person or
persons entitled to receive the shares of
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Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(d)Adjustments to Conversion Price.
(i) Adjustments for Stock Dividends. Subdivisions,
Combinations or Consolidation of Common Stock. In the event the outstanding
shares of Common Stock shall be subdivided (by stock split, or otherwise), into
a greater number of shares of Common Stock, or the Corporation at any time or
from time to time after the Original Issue Date for any series of Preferred
shall declare or pay any dividend on the Common Stock payable in Common Stock,
the Conversion Price then in effect for such series shall, concurrently with the
effectiveness of such subdivision or stock dividend, be proportionately
decreased. In the event the outstanding shares of Common Stock shall be combined
or consolidated, by reverse stock split, reclassification or otherwise, into a
lesser number of shares of Common Stock, the Conversion Rate then in effect for
such series shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased. The "Original Issue Date" for any
series of Preferred shall be the first date on which the shares of such series
are first issued and sold by the Corporation.
(ii) Adjustments for Other Distributions. In the
event the Corporation at any time or from time to time makes, or fixes a record
date for the determination of holders of Common Stock entitled to receive any
distribution payable in securities of the Corporation other than shares of
Common Stock and other than as otherwise adjusted in this Section 4, then and in
each such event provision shall be made so that the holders of the Preferred
shall receive upon conversion thereof, in addition to the number of shares of
Common Stock receivable thereupon, the amount of securities of the Corporation
which they would have received had their Preferred been converted into Common
Stock on the date of such event and had they thereafter, during the period from
the date of such event to and including the date of conversion, retained such
securities receivable by them as aforesaid during such period, subject to all
other adjustments called for during such period under this Section 4 with
respect to the rights of the holders of the Preferred.
(iii) Adjustments for Reorganization or
Reclassification. If the Common Stock issuable upon conversion of the Preferred
shall be changed into the same or a different number of shares of any other
class or classes of stock, whether by capital reorganization, reclassification
or otherwise (other than a subdivision or combination of shares provided for
above), each share of Preferred shall, concurrently with the effectiveness of
such reorganization or reclassification, be convertible into, in lieu of the
number of shares of Common Stock which the holders of Preferred would otherwise
have been entitled to receive, a number of shares of such other class or classes
of stock equivalent to the number of shares of Common Stock that would have been
subject to receipt by the holders upon conversion of the Preferred immediately
before that change. In any such case, appropriate adjustment shall be made in
the application of the provisions of this Section 4 with respect to the rights
of the holders of such series of Preferred after the reorganization or
reclassification, to the end that the provisions of this Section 4 (including
adjustment of the Conversion Price then in effect and the number of shares
purchasable upon conversion of such series of Preferred) shall be applicable
after that event as nearly equivalent as may be practicable.
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(e) No Impairment. Except as provided in Section 5, the
Corporation will not, by amendment of its Certificate of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Corporation but will at all times in good faith
assist in the carrying out of all the provisions of this Section 4 and in the
taking of all such action as may be necessary or appropriate in order to protect
the conversion rights of the holders of the Preferred against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 4,
the Corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Preferred a certificate setting forth such adjustment or readjustment and
showing in detail the facts upon which such adjustment or readjustment is based.
The Corporation shall promptly furnish or cause to be furnished to such holder a
like certificate setting forth (i) such adjustments and readjustments, (ii) the
Conversion Rate and the Conversion Price at the time in effect, and (iii) the
number of shares of Common Stock and the amount, if any, of other property which
at the time would be received upon the conversion of each series of Preferred.
(g) Notices of Record Date. In the event that this Corporation
shall propose at any time:
(i) to declare any dividend or distribution upon its
Common Stock, whether in cash, property, stock or other securities, whether or
not a regular cash dividend and whether or not out of earnings or earned
surplus;
(ii) to effect any reclassification or
recapitalization of its Common Stock outstanding involving a change in the
Common Stock; or
(iii) to merge or consolidate with or into any other
corporation, or sell, lease or convey all or substantially all its property or
business, or to liquidate, dissolve or wind up; then, in connection with each
such event, this Corporation shall send to the holders of the Preferred:
(iv) at least 20 days' prior written notice of the
date on which a record shall be taken for such dividend, distribution or
subscription rights (and specifying the date on which the holders of Common
Stock shall be entitled thereto) or for determining rights to vote in respect of
the matters referred to in (ii) and (iii) above; and
(v) in the case of the matters referred to in (ii)
and (iii) above, at least 20 days' prior written notice of the date when the
same shall take place (and specifying the date on which the holders of Common
Stock shall be entitled to exchange their Common Stock for securities or other
property deliverable upon the occurrence of such event or the record date for
the determination of such holders if such record date is earlier).
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Each such written notice shall be delivered personally or given by
first class mail, postage prepaid, addressed to the holders of the Preferred at
the address for each such holder as shown on the books of this Corporation;
provided, that any such written notice to an address outside the United States
shall additionally be given by telecopy and confirmed in writing sent by two day
guaranteed international courier.
5. Covenants.
(a) In addition to any other rights provided by law, so long
as shares of Preferred are outstanding, this Corporation shall not, without
first obtaining the affirmative vote or written consent of the holders of a
majority of the outstanding shares of the Preferred (which, prior to the
issuance of any shares of Series C Preferred, shall include a majority of the
outstanding shares of Series B Preferred):
(i) amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or the
Corporation's Bylaws if such action would adversely alter or change the
preferences, rights, privileges or powers of, or the restrictions provided for
the benefit of, the Preferred;
(ii) create (by reclassification or otherwise) or
issue shares of any class or series of stock having a preference over, or being
on a parity with, the Preferred with respect to voting, dividends or upon
liquidation;
(iii) sell, convey, or otherwise dispose of or
encumber all or substantially all of its property or business or merge into or
consolidate with any other corporation immediately after which merger or
consolidation (including any series of related transactions) the shareholders of
the Corporation shall hold less than 50% of the voting power of the surviving
corporation;
(iv) dissolve, liquidate or wind up the Corporation;
(v) declare any dividends on or make any
distribution on account of the Preferred or the Common Stock; or
(vi) repurchase any outstanding shares of Common
Stock, except for repurchases of Common Stock from directors, employees and
consultants;
(vii) do any act or thing which would result in
taxation of the holders of shares of Preferred under Section 305 of the Internal
Revenue Code of 1986, as amended, or any comparable provision of the Internal
Revenue Code as hereafter from time to time amended;
(viii) file a petition in voluntary bankruptcy, seek
relief under any provision of any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution, liquidation or other similar law
of any jurisdiction or consent to the filing of any such petition against it
under any such law; or
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<PAGE> 30
(ix) make any assignment for the benefit of
creditors, admit in writing the inability of the Corporation to pay its debts
generally as they become due or consent to the appointment of a receiver,
trustee, liquidator of the Corporation or of its property.
(b) If any amendment or action referred to in (i) or (ii)
above would adversely affect the holders of the Series A Preferred or the
holders of the Series B Preferred or holders of Series C Preferred, but not all
other series of the Preferred Stock, then such amendment or action shall also
require the consent of the holders of a majority of such series of Preferred
Stock which would be adversely affected.
6. Consent for Certain Repurchases of Common Stock Deemed to be
Distributions. Each holder of Preferred Stock shall be deemed to have consented
to distributions made by the Corporation in connection with the repurchase of
shares of Common Stock issued to or held by employees or consultants upon
termination of their employment or services pursuant to agreements providing for
such right of repurchase between the Corporation and such persons.
FIVE. The corporation is to have perpetual existence.
SIX. In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make, alter, amend or
repeal the Bylaws of the Corporation.
SEVEN. The number of directors which will constitute the whole Board of
Directors of the Corporation shall be as specified in the Bylaws of the
Corporation.
EIGHT. The election of directors need not be by written ballot unless
the Bylaws of the Corporation shall so provide.
NINE. Meetings of stockholders may be held within or without the State
of Delaware, as the Bylaws may provide. The books of the Corporation may be kept
(subject to any provisions contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the Bylaws of the Corporation.
TEN. To the fullest extent permitted by the Delaware General
Corporation Law as the same exists or as may hereafter be amended, a director of
the Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
The Corporation may indemnify to the fullest extent permitted by law any person
made or threatened to be made a party to an action or proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that
such person or his or her testator or intestate is or was a director, officer or
employee of the Corporation, or any predecessor of the Corporation, or serves or
served at any other enterprise as a director, officer or employee at the request
of the Corporation or any predecessor to the Corporation. Neither any amendment
nor repeal of this Article, nor the adoption of any provision of this
Certificate of Incorporation inconsistent with this Article, shall eliminate or
reduce the effect of this Article in respect of any matter occurring, or any
cause of
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<PAGE> 31
action, suit or claim that, but for this Article, would accrue or arise, prior
to such amendment, repeal or adoption of an inconsistent provision.
ELEVEN. Advance notice of new business and stockholder nomination for
the election of directors shall be given in the manner and to the extent
provided in the Bylaws of the Corporation.
TWELVE. Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code,
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation, as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
THIRTEEN. Subject to the General Corporation Law of the State of
Delaware and Section 5 hereof, the Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by statute, and all
rights conferred upon stockholders herein are granted subject to this
reservation.
1. This Amended and Restated Certificate of Incorporation has been duly
approved by the Board of Directors of this Corporation.
2. The foregoing Amended and Restated Certificate of Incorporation has
been duly adopted in accordance with Sections 228 and 245 of the General
Corporation Law of the State of Delaware by the Board of Directors and the
stockholders of the Corporation. The total number of outstanding shares of
Common Stock of the Corporation is 2,841,000. The number of shares voting in
favor of the amendment and restatement equaled or exceeded the vote required.
The percentage vote required was more than 50% of the outstanding shares of
Common Stock.
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<PAGE> 32
IN WITNESS WHEREOF, Molecular Medicine, Inc. has caused this Amended
and Restated Certificate of Incorporation to be signed by the President and
Secretary in Mountain View, California this 13th day of January, 1998.
/S/ Keith Bostian, President
-------------------------------
Keith Bostian, President
/S/ Joshua L. Green, Secretary
-------------------------------
Joshua L. Green, Secretary
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<PAGE> 33
EXHIBIT D
EPIGENIX, INC.
INFORMATION AND REGISTRATION RIGHTS AGREEMENT
<PAGE> 34
INFORMATION AND REGISTRATION RIGHTS AGREEMENT
THIS INFORMATION AND REGISTRATION RIGHTS AGREEMENT (the "Agreement") is
made as of January___, 1998, by and among EpiGenix, Inc., a Delaware corporation
(the "Company"), the persons listed on the attached Schedule A who become
signatories to this Agreement (collectively, the "Investors and individually an
"Investor"), and Keith Bostian (the "Founder").
R E C I T A L S
WHEREAS, the Company and the Investors have entered into agreements
(each, a "Purchase Agreement") for sale by the Company and purchase by the
Investors of the Company's Series A, Series B, and Series C Preferred Stock (the
"Preferred Stock");
WHEREAS, in connection with the purchase and sale of the Company's
Preferred Stock, the Company and the Investors desire to provide for (i) the
rights of the Investors with respect to information about the Company (ii) the
rights of the Investors and the Founder with respect to the registration of the
Common Stock, issued upon conversion of the shares of Preferred Stock held by
the Investors, and the Common Stock held by the Founder, according to the terms
of this Agreement, (iii) a right of first refusal for the Investors with respect
to certain future stock issuances by the Company, and (iv) certain other
provisions as set forth below;
WHEREAS, it is a condition of the closing of the sale of the Preferred
Stock to the Investors that the Company enter into this Agreement;
NOW THEREFORE, in consideration of the promises set forth above and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties agree as follows:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
(b) "Convertible Securities" shall mean securities of the
Company convertible into or exchangeable for Registrable Securities, including
the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred
Stock and any other securities of the Company convertible into or exchangeable
for Registrable Securities included in this Agreement pursuant to Section 12.
(c) "Form S-3" shall mean Form S-3 issued by the Commission or
any substantially similar form then in effect.
<PAGE> 35
(d) "Founder's Stock" shall mean all Common Stock of the
Company currently held by the Founder, any Common Stock subsequently acquired by
such person, and any Common Stock issued or issuable with respect to such Common
Stock upon any stock splits, stock dividends or similar distributions.
(e) "Holder" shall mean any holder of outstanding Registrable
Securities which have not been sold to the public, but only if such holder is an
Investor or an assignee or transferee of Registration rights as permitted by
Section 17.
(f) "Initiating Holders" shall mean Holders who in the
aggregate hold at least forty percent (40%) of the Common Stock issued or
issuable upon conversion of the Series B Preferred Stock and Series C Preferred
Stock.
(g) "Material Adverse Event" shall mean an occurrence having a
consequence that either (a) is materially adverse as to the business,
properties, prospects or financial condition of the Company or (b) is reasonably
foreseeable, has a reasonable likelihood of occurring, and if it were to occur
would materially adversely affect the business, properties, prospects or
financial condition of the Company.
(h) The terms "Register", "Registered" and "Registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act ("Registration Statement"), and
the declaration or ordering of the effectiveness of such Registration Statement.
(i) "Registrable Securities" shall mean all Common Stock of
the Company issued or issuable upon conversion of the Company's Series A
Preferred Stock, Series B Preferred Stock and/or Series C Preferred Stock
purchased by or issued to the Investors and the Founder, including Common Stock
issued pursuant to stock splits, stock dividends and similar distributions with
respect to such shares, and any securities of the Company granted registration
rights pursuant to Section 12 of this Agreement, provided that such shares have
not previously been sold to the public. For purposes of the registration rights
granted to holders of Company securities pursuant to Section 7 hereof, and for
purposes of the obligations imposed upon holders of Registrable Securities under
Sections 11 and 14, but not for the definition of Initiating Holders,
"Registrable Securities" shall include Founder's Stock.
(j) "Registration Expenses" shall mean all expenses incurred
in complying with Sections 6 or 7 of this Agreement, including, without
limitation, all federal and state registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company, blue sky
fees and expenses, reasonable fees and disbursements of one counsel for the
selling Holders not in excess of $10,000 in the aggregate, and the expense of
any special audits incident to or required by any such registration, other than
Selling Expenses.
(k) "Reserved Shares" shall mean the 3,750,000 shares of
Common Stock reserved for issuance to directors, officers, employees and
consultants upon the sale of stock or
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<PAGE> 36
exercise of options to be granted under the Company's stock option and purchase
plan (together with any additional shares of Common Stock authorized by the
Board of Directors for issuance under such plan).
(l) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(m) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities
pursuant to this Agreement.
2. Information Rights. The Company hereby covenants and agrees that,
for so long as any of the Preferred Stock is outstanding and Investor is a
holder of at least 100,000 shares of Preferred Stock (as adjusted for any stock
split, stock dividend, stock combination or other recapitalization) it will mail
the following reports to such Investor:
2.1 Financial Statements.
(a) The Company shall deliver to the Investors as
soon as practicable after the end of each fiscal year of the Company, commencing
on December 31, 1998, and in any event within ninety (90) days thereafter,
audited consolidated balance sheets of the Company and its subsidiaries, if any,
as of the end of such year and audited consolidated statements of income,
shareholders' equity and cash flows for such year, which year-end financial
reports shall be in reasonable detail and shall be prepared in accordance with
generally accepted accounting principles and be accompanied by the opinion of
independent public accountants of recognized standing selected by the Board of
Directors of the Company.
(b) As soon as practicable after the end of each
month, and in any event within 30 days thereafter, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such month, and
consolidated statements of income and cash flow for such month and for the
current fiscal year to date, including a comparison between the actual monthly
financial statements and the projected figures for such monthly periods.
(c) As soon as practicable following submission to
and approval by the Board of Directors of the Company, but in no event later
than thirty (30) days prior to the beginning of each fiscal year, an operating
budget and plan for the Company respecting the next fiscal year containing a
monthly breakdown of income and cash flow.
(d) As soon as practicable after the end of the
first, second and third quarterly accounting periods in each fiscal year, and in
any event within forty-five (45) days thereafter, consolidated balance sheets of
the Company and its subsidiaries, if any, as of the end of such quarter,
consolidated statements of income, shareholders' equity and cash flow for such
quarter, and a statement showing the number of shares of each class and series
of capital stock and securities convertible into or exercisable for shares of
capital stock outstanding at the end of the period, the
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<PAGE> 37
number of shares of Common Stock issuable upon conversion or exercise of any
outstanding securities convertible or exercisable for shares of Common Stock and
the exchange ratio or exercise price applicable thereto, all in sufficient
detail as to permit the Investor to calculate its percentage equity ownership in
the Company.
3. Inspection. The Company shall permit each Investor holding the
number of shares set forth in Section 2 hereof, at such Investor's expense, to
visit and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by each such
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 3 to provide any information which it reasonably considers to be a
trade secret or confidential information. The rights of an Investor under this
Section 3 may not be assigned as part of such Investor's sale of Preferred Stock
except with the consent of the Company, which consent shall not be unreasonably
withheld.
4. Right of First Refusal. For so long as any of the Preferred Stock is
outstanding, the Company hereby grants to each Investor the right of first
refusal to purchase its Pro Rata Amount (as defined below) of any New Securities
(as defined in this Section 4) which the Company may, from time to time, propose
to sell and issue. An "Investor's Pro Rata Amount", for purposes of this right
of first refusal, shall be the ratio of (i) the number of shares (on an
as-converted basis) of Common Stock held by such Investor (which shall be deemed
to include the shares of Common Stock issuable on the conversion of any shares
of Preferred Stock that such Investor, pursuant to a Purchase Agreement, has the
right to receive from the Company or the obligation to purchase from the Company
subject to the satisfaction of certain conditions by the Company) to (ii) the
total number of shares (on an as-converted basis) of Common Stock of the Company
outstanding (which shall be deemed to include the shares of Common Stock
issuable on the conversion of any shares of Preferred Stock that such Investor,
pursuant to a Purchase Agreement, has the right to receive from the Company or
the obligation to purchase from the Company subject to the satisfaction of
certain conditions by the Company), including all outstanding securities
convertible into or exchangeable for Common Stock on an as-converted or
exercised basis. This right of first refusal shall be subject to the following
provisions:
(a) "New Securities" shall mean any capital stock of the
Company whether or not now authorized, the rights, options or warrants to
purchase capital stock and securities of any type whatsoever that are, or may
become, convertible into capital stock; provided that the term "New Securities"
does not include (i) securities issuable upon exercise or conversion of
currently outstanding securities; (ii) the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock sold pursuant to the Purchase
Agreements; (iii) securities issued pursuant to a public offering pursuant to an
effective Registration Statement; (iv) securities issued pursuant to the
Company's acquisition of another entity by merger, purchase of substantially all
assets or other reorganization; (v) the Reserved Shares; (vi) securities issued
in connection with equipment lease financing arrangements, credit agreements or
other non-equity raising, commercial transactions approved by the Board of
Directors; (vii) securities issued pursuant to a corporate strategic partner
transaction involving the license of technology, establishment of a joint
venture or alliance, a research and development agreement, product development
or marketing agreement, or other similar
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<PAGE> 38
arrangement approved by the Board of Directors; and (viii) securities issued in
connection with any stock split, stock dividend or recapitalization of the
Company.
(b) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Investor written notice of its intention,
describing the type of New Securities, the price and number of shares and the
general terms upon which the Company proposes to issue the same. Each Investor
shall have twenty (20) days from the date of receipt of any such notice to agree
to purchase up to the amount of New Securities equal to the Investor's Pro Rata
Amount of such New Securities for the price and upon the general terms specified
in the notice by giving written notice to the Company.
(c) In the event an Investor fails to exercise in full the
right of first refusal within said twenty (20) day period, the Company shall
have ninety (90) days thereafter to sell the New Securities respecting which the
Investor's option was not exercised, at the price and upon the terms specified
in the Company's notice. In the event the Company has not sold the New
Securities within said ninety (90) day period, the Company shall not thereafter
issue or sell any New Securities, without first offering such securities to the
Investors in the manner provided above.
5. Termination of Covenants. Except as otherwise provided herein, the
covenants of the Company set forth in Sections 2, 3 and 4 shall be terminated
and be of no further force or effect upon the closing of the Company's initial
public offering of its Common Stock at a price per share (prior to underwriter
commissions and offering expenses) of not less than $3.00 per share
(appropriately adjusted for any stock splits, stock dividends, recapitalizations
and similar events) and an aggregate offering price to the public of not less
than $15,000,000 (prior to deduction of underwriter commissions and offering
expenses) pursuant to a Registration Statement filed by the Company under the
Securities Act ("IPO").
6. Demand Registration.
6.1 Request for Registration on Form Other Than Form S-3.
Subject to the terms of this Agreement, in the event that the Company shall
receive from the Initiating Holders at any time after the earlier of (i)
December 31, 2001, and (ii) six (6) months after the effective date of the
registration statement filed in connection with a public offering of securities
by the Company, a written request that the Company effect any Registration with
respect to all or a part of the Registrable Securities on a form other than Form
S-3 for an offering of at least twenty percent (20%) of the then outstanding
Registrable Securities (or any lesser percent if the reasonably anticipated
aggregate offering price to the public would exceed $5,000,000), the Company
shall (i) promptly give written notice of the proposed Registration to all other
Holders and shall (ii) use its best efforts to effect, as soon as practicable,
Registration of the Registrable Securities specified in such request, together
with any Registrable Securities of any Holder joining in such request as are
specified in a written request given within twenty (20) days after written
notice from the Company.
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<PAGE> 39
6.2 Request for Registration on Form S-3. Subject to the terms
of this Agreement, in the event that the Company receives from Holders a written
request that the Company effect any Registration on Form S-3 (or any successor
form to Form S-3 regardless of its designation) at a time when the Company is
eligible to register securities on Form S-3 (or any successor form to Form S-3
regardless of its designation) for an offering of Registrable Securities the
reasonably anticipated aggregate offering price to the public of which would
exceed $1,000,000, the Company will promptly give written notice of the proposed
Registration to all the Holders and will use its best efforts to effect, as soon
as practicable, Registration of the Registrable Securities specified in such
request, together with all or such portion of the Registrable Securities of any
Holder joining in such request as are specified in a written request delivered
to the Company within twenty (20) days after written notice from the Company of
the proposed Registration.
6.3 Limitations on Registrations. Notwithstanding the
foregoing, the Company shall not be obligated to take any action pursuant to
this Section 6.3: (i) in any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act; (ii) if the Company, within ten (10) days after such receipt gives notice
of its bona fide intention to effect the filing of a Registration Statement with
the Commission within sixty (60) days of receipt of such request (other than
with respect to a Registration Statement relating to a Rule 145 transaction, an
offering solely to employees or any other Registration which is not appropriate
for the Registration of Registrable Securities) and the Company shall promptly
notify the initiating Holders in the event it abandons its intention to effect
such Registration Statement; (iii) during the period starting with the date
sixty (60) days prior to the Company's estimated date of filing of, and ending
on the date three (3) months immediately following, the effective date of any
Registration Statement pertaining to securities of the Company (other than a
Registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in good
faith all reasonable efforts to cause such Registration Statement to become
effective; (iv) after the Company has effected two (2) Registrations pursuant to
Section 6.1 and four (4) Registrations pursuant to Section 6.2, respectively,
and such Registrations have been declared or ordered effective, provided that
all Registrable Securities requested to be included in each such Registration
were in fact included in the Registration; or (v) if the Company shall furnish
to such Holder a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders as a whole for Registration
Statements to be filed in the near future, then the Company's obligation to use
its best efforts to file a Registration Statement shall be deferred for a period
not to exceed one hundred twenty (120) days from the receipt of the request to
file such Registration by such Holder, provided, however, that the Company shall
not utilize this right more than once in any twelve (12) month period.
6.4 Registration of Other Securities in Demand Registration.
Any Registration Statement filed pursuant to the request of the Initiating
Holders under this Section 6 may, subject to the provisions of Section 6.6,
include securities of the Company other than the Registrable Securities.
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<PAGE> 40
6.5 Underwriting in Demand Registration.
6.5.1 Notice of Underwriting. If the Initiating
Holders intend to distribute the Registrable Securities covered by their request
by means of an underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 6, and the Company shall include such
information in the written notice referred to in Section 6.1 or 6.3. The right
of any Holder to Registration pursuant to Section 6.1 shall be conditioned upon
such Holder's agreement to participate in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Holder with respect to such participation and inclusion).
6.5.2 Inclusion of Other Holders in Demand
Registration. If the Company, officers or directors of the Company holding
Common Stock other than Registrable Securities or holders of securities other
than Registrable Securities request inclusion in such Registration, the
Initiating Holders, to the extent they deem advisable and consistent with the
goals of such Registration and subject to the allocation provisions of Section
6.5.4 below, shall, on behalf of all Holders, offer to include any or all of the
Company, such officers or directors and such holders of securities other than
Registrable Securities that such securities other than Registrable Securities in
the underwriting and may condition such offer on the acceptance by such persons
of the terms of this Section 6.
6.5.3 Selection of Underwriter in Demand
Registration. The Company shall (together with all Holders proposing to
distribute their securities through such underwriting) enter into and perform
its obligations under an underwriting agreement in usual and customary form with
the representative ("Underwriter's Representative") of the underwriter or
underwriters selected for such underwriting by the Company and consented to by
the Holders of a majority of the Registrable Securities being registered by the
Initiating Holders (which consent shall not be unreasonably withheld).
6.5.4 Marketing Limitation in Demand Registration. In
the event the Underwriter's Representative advises the Company in writing that
market factors (including, without limitation, the aggregate number of shares of
Common Stock requested to be Registered, the general condition of the market,
and the status of the persons proposing to sell securities pursuant to the
Registration) require a limitation of the number of shares to be underwritten,
then the Company shall so advise all Holders, and the number of shares of
Registrable Securities that may be included in the Registration and underwriting
shall be allocated among all Holders in proportion, as nearly as practicable, to
the number of shares proposed to be included in such Registration by such
Holder; provided, however, that the number of shares of Registrable Securities
to be included in such underwriting shall not be reduced unless all other
securities (including those proposed to be included by the Company and the
officers and directors of the Company) are first entirely excluded from the
underwriting. No Registrable Securities or other securities excluded from the
underwriting by reason of this Section 6.5.4 shall be included in such
Registration Statement.
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<PAGE> 41
6.5.5 Right of Withdrawal in Demand Registration. If any
Holder of Registrable Securities, or a holder of other securities entitled (upon
request) to be included in such Registration, disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders delivered at least seven
(7) days prior to the effective date of the Registration Statement. The
securities so withdrawn shall also be withdrawn from the Registration Statement.
6.6 Blue Sky in Demand Registration. In the event of any
Registration pursuant to Section 6, the Company will exercise its best efforts
to register and qualify the securities covered by the Registration Statement
under such other securities or Blue Sky laws of such jurisdictions as the
Holders shall reasonably request and as shall be reasonably appropriate for the
distribution of such securities; provided, however, that the Company shall not
be required to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
7. Piggyback Registration.
7.1 Notice of Piggyback Registration and Inclusion of
Registrable Securities. Subject to the terms of this Agreement, in the event the
Company decides to Register any of its Common Stock (either for its own account
or the account of a security holder or holders exercising their respective
demand registration rights) on a form that would be suitable for a registration
involving solely Registrable Securities, the Company will: (i) promptly give
each Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such securities
under the applicable Blue Sky or other state securities laws) and (ii) include
in such Registration (and any related qualification under Blue Sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request delivered to the Company by any Holder
within twenty (20) days after delivery of such written notice from the Company.
7.2 Underwriting in Piggyback Registration.
7.2.1 Notice of Underwriting in Piggyback
Registration. If the Registration of which the Company gives notice is for a
Registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to Section
7.1. In such event the right of any Holder to Registration shall be conditioned
upon such underwriting and the inclusion of such Holder's Registrable Securities
in such underwriting to the extent provided in this Section 7. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement with the
Underwriter's Representative for such offering. The Holders shall have no right
to participate in the selection of the underwriters for an offering pursuant to
this Section 7.
7.2.2 Marketing Limitation in Piggyback Registration.
In the event the Underwriter's Representative advises the Company seeking
registration of Registrable Securities pursuant to Section 7 in writing that
market factors (including, without limitation, the aggregate
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<PAGE> 42
number of shares of Common Stock requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
shares to be underwritten, the Underwriter's Representative may:
(a) in the case of the Company's initial
public offering, exclude some or all Registrable Securities from such
registration and underwriting; and
(b) in the case of any Registered public
offering subsequent to the Company's initial public offering, limit the number
of shares of Registrable Securities to be included in such Registration and
underwriting to not less than ten percent (10%) of the total number of shares
included in such Registration. In such event, the Underwriters Representative
shall so advise all Holders and the number of shares of Registrable Securities
that may be included in the Registration and underwriting (if any) shall be
allocated as follows: first, among all Holders of Registrable Securities
(excluding Holders who solely hold Founder's Stock) in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities (excluding
Founder's Stock) held by such Holders at the time of filing of the registration
statement, and second, among all Holders of Founder's Stock, in proportion, as
nearly as practicable, to the respective amounts of Founder's Stock held by such
Holders at the time of filing of the registration statement, and third, to the
chief executive officer of the Company, in proportion, as nearly as practicable,
to the respective amount of Registrable Securities held by the chief executive
officer at the time of filing of the registration statement. The number of
shares of Registrable Securities to be included in such underwriting shall not
be reduced unless all other securities (other than those to be sold by the
Company) are first entirely excluded from the underwriting. No Registrable
Securities or other securities excluded from the underwriting by reason of this
Section 7.2.2 shall be included in such Registration Statement.
7.2.3 Withdrawal in Piggyback Registration. If any
Holder, or a holder of other securities entitled (upon request) to be included
in such Registration, disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter delivered at least seven (7) days prior to the effective date of the
Registration Statement. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall be withdrawn from such Registration.
7.3 Blue Sky in Piggyback Registration. In the event of any
Registration of Registrable Securities pursuant to Section 7, the Company will
exercise its best efforts to Register and qualify the securities covered by the
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as the Holders shall reasonably request and as shall be reasonably
appropriate for the distribution of such securities; provided, however, that the
Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
8. Expenses of Registration. All Registration Expenses incurred in
connection with the two (2) Registrations pursuant to Section 6.1, up to the
four (4) Registrations on Form S-3 pursuant to Section 6.2, all Registrations
pursuant to Section 7 and all Registrations of the Registrable Securities in
connection with a waiver by the Holders of such Registrable Securities of the
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<PAGE> 43
Company's obligations pursuant to Section 6 or Section 7 shall be borne by the
Company, All Registration Expenses incurred in connection with any other
registration, qualification or compliance shall be apportioned among the Holders
and other holders of the securities so registered on the basis of the number of
shares so registered. Notwithstanding the above, the Company shall not be
required to pay for any expenses of Holders in connection with any registration
proceeding begun pursuant to Section 6.1 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (which Holders shall bear such
expenses), unless the Holders of a majority of the Registrable Securities agree
to forfeit their right to one (1) demand registration pursuant to Section 6.1;
provided further, however, that (i) if at the time of such withdrawal, the
Holders have learned of a Material Adverse Event not known to the Holders at the
time of their request or (ii) such withdrawal is made after a deferral of such
registration by the Company pursuant to Section 6.2, then the Holders shall not
be required to pay any of such expenses and shall retain their rights pursuant
to Section 6.1. All Selling Expenses shall be borne by the holders of the
securities registered pro rata on the basis of the number of shares registered.
9. Registration Procedures. The Company will keep each Holder whose
Registrable Securities are included in any registration pursuant to this
Agreement advised as to the initiation and completion of such Registration. At
its expense the Company will: (a) use its best efforts to keep such Registration
effective for a period of one hundred eighty (180) days or until the Holder or
Holders have completed the distribution described in the Registration Statement
relating thereto, whichever first occurs; (b) furnish such number of
prospectuses (including preliminary prospectuses) and other documents as a
Holder from time to time may reasonably request; (c) prepare and file with the
Commission such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement; and
(d) notify each Holder of Registrable Securities covered by such Registration
Statement 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, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing.
10. Information Furnished by Holder. It shall be a condition precedent
of the Company's obligations under this Agreement that each Holder of
Registrable Securities included in any Registration furnish to the Company such
information regarding such Holder and the distribution proposed by such Holder
or Holders as the Company may reasonably request.
11. Indemnification.
11.1 Company's Indemnification of Holders. To the extent
permitted by law, the Company will indemnify each Holder, each of its officers,
directors and constituent partners, legal counsel and accountants for the
Holders, and each person controlling such Holder, with respect to which
Registration, qualification or compliance of Registrable Securities has been
effected pursuant to this Agreement or in connection with a waiver by the
Holders of such Registrable Securities of the
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<PAGE> 44
Company's obligations pursuant to Section 6 or Section 7 of this Agreement, and
each underwriter, if any, and each person who controls any underwriter against
all claims, losses, damages or liabilities (or actions in respect thereof) to
the extent such claims, losses, damages or liabilities arise out of or are based
upon any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, preliminary or final prospectus,
offering circular or any amendment or supplement thereto, or are based on 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, or
any violation by the Company of the Securities Act, the Securities Exchange Act
of 1934, as amended (the "1934 Act"), or any state securities law, or any rule
or regulation promulgated under the Securities Act, the 1934 Act or any state
securities law, applicable to the Company and relating to action or inaction
required of the Company in connection with any such Registration, qualification
or compliance; and the Company will reimburse each such Holder, each of its
officers, directors and constituent partners, legal counsel and accountants,
each such underwriter, and each person who controls any such Holder or
underwriter, for any legal and any other expenses reasonably incurred, as
incurred, in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that the indemnity contained in
this Section 11.1 shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability or action if settlement is effected without the
consent of the Company (which consent shall not unreasonably be withheld); and
provided, further, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based upon any untrue statement or omission based upon written information
furnished to the Company by such Holder, its officers, directors, constituent
partners, legal counsel, accountants, underwriter or controlling person and
stated to be for use in connection with the offering of securities of the
Company.
11.2 Holder's Indemnification of Company. To the extent
permitted by law, each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such Registration,
qualification or compliance is being effected pursuant to this Agreement,
severally and not jointly, indemnify the Company, each of its directors and
officers, each legal counsel and independent accountant of the Company, each
underwriter, if any, of the Company's securities covered by such a Registration
Statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors, constituent partners, legal counsel and accountants and each person
controlling such other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact contained in
any such Registration Statement, preliminary or final prospectus, offering
circular or any amendment or supplement thereto, or 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, or any violation by
such Holder of the Securities Act, the 1934 Act or any state securities law, or
any rule or regulation promulgated under the Securities Act, the 1934 Act or any
state securities law, applicable to such Holder and relating to action or
inaction required of such Holder in connection with any such Registration,
qualification or compliance; and will reimburse the Company, such Holders, such
directors, officers, partners, persons, law and accounting firms, underwriters
or control persons for any legal and any other expenses reasonably incurred, as
incurred, in connection with investigating or defending any such claim, loss,
damage, liability or action, in each case to the
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<PAGE> 45
extent, but only to the extent, that such untrue statement (or alleged untrue
statement), omission (or alleged omission) or violation (or alleged violation)
is made in such Registration Statement, preliminary or final prospectus,
offering circular or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such Holder and
stated to be specifically for use in connection with the offering of securities
of the Company, provided, however, that each Holder's liability under this
Section 11.2 shall be limited to the proportion of any such claim, loss, damage,
liability or expense which is equal to the proportion that the public offering
price of the securities sold by such Holder in the offering made in connection
with such Registration bears to the total public offering price of all
securities sold in connection therewith, but shall not exceed such Holder's net
proceeds from the offering of securities made in connection with such
Registration; and provided, further, that the indemnity contained in this
Section 11.2 shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of the Holder (which consent shall not unreasonably be withheld).
11.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 11 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 11, notify the indemnifying
party in writing of the commencement thereof and generally summarize such
action. The indemnifying party shall have the right to participate in and to
assume the defense of such claim, jointly with any other indemnifying party
similarly noticed; provided, however, that the indemnifying party shall be
entitled to select counsel for the defense of such claim with the approval of
any parties entitled to indemnification, which approval shall not be
unreasonably withheld; provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
Company and the Investors in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under this Section 11,
then counsel for such party shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interest of such party. The failure to notify an indemnifying party promptly of
the commencement of any such action, if prejudicial to the ability of the
indemnifying party to defend such action, shall relieve such indemnifying party,
to the extent so prejudiced, of any liability to the indemnified party under
this Section 11, but the omission so to notify the indemnifying party will not
relieve such party of any liability that such party may have to any indemnified
party otherwise other than under this Section 11.
12. Limitations on Registration Rights Granted to Other Securities.
From and after the date of this Agreement, the Company shall not enter into any
agreement with any holder or prospective holder of any securities of the Company
providing for the granting to such holder of any Registration rights unless such
rights are subordinate to the Registration rights set forth herein, except that,
with the consent of the Holders of fifty percent (50%) of the aggregate of the
Convertible Securities and Registrable Securities then outstanding, additional
holders may be added as parties to this Agreement with regard to any or all
securities of the Company held by them. Any such additional parties shall
execute a counterpart of this Agreement, and upon execution by such additional
parties and by the Company, shall be considered an Investor for all purposes of
this
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<PAGE> 46
Agreement. The additional parties and the additional Registrable Securities
shall be identified in an amendment to Schedule A hereto.
13. Reports Under Securities Exchange Act of 1934. With a view to
making available to the Investors the benefits of Rule 144 and any other rule or
regulation of the Commission that may at any time permit an Investor to sell
securities of the Company to the public without Registration or pursuant to a
Registration Statement on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are defined in Rule 144, at all times after ninety (90) days after the effective
date of the first Registration Statement filed by the Company for the offering
of its securities to the general public;
(b) file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
1934 Act; and
(c) furnish to any Investor, so long as such Investor owns any
Convertible Securities or Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the effective
date of the first Registration Statement filed by the Company), the Securities
Act and the 1934 Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of
the most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as may
be reasonably supplied by the Company to enable an Investor to avail itself of
any rule or regulation of the Commission which permits the selling of any such
securities without Registration.
14. Market Stand-off. Each Holder hereby agrees that, if so requested
by the Company and the Underwriter's Representative (if any), such Holder shall
not sell or otherwise transfer (other than to donees who agree to be similarly
bound) any Registrable Securities or other securities of the Company during the
one hundred eighty (180)-day period following the effective date of a
Registration Statement of the Company filed under the Securities Act; provided
that such restriction shall only apply to the first Registration Statement of
the Company to become effective which include securities to be sold on behalf of
the Company to the public in an underwritten offering; and provided, further,
that all officers and directors of the Company and all other persons with
registration rights (whether or not pursuant to this Agreement) enter into
similar agreements.
15. Conversion of Preferred Stock. The Registration rights of the
Holders of the Shares set forth in this Agreement are conditioned upon the
conversion of the Shares with respect to which registration is sought into
Common Stock prior to the effective date of the Registration Statement.
16. Termination of Registration Rights. The right to cause the Company
to Register securities granted by the Company to the Investors under the
Agreement shall terminate five (5) years after the date of the closing of the
Company's initial public offering of its securities or at and after such time
following the Company's initial public offering of its securities as all the
Registrable
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<PAGE> 47
Securities held by such Holder requesting the right to cause the Company to
register securities may be immediately sold under Rule 144 under the Securities
Act during any 90-day period.
17. Transfer of Rights. The rights to information under Sections 2 and
3, the right of first refusal set forth in Section 4 and the Registration rights
of the Investors set forth in Sections 6, 7, 8 and 9 may be assigned by any
Holder to a transferee or assignee of any Convertible Securities or Registrable
Securities not sold to the public acquiring at least twenty percent (20%) of the
shares of such Holder's Convertible Securities or Registrable Securities
(equitably adjusted for any recapitalizations, stock splits, combinations, and
the like) or acquiring all of the Convertible Securities and Registrable
Securities held by such Holder if transferred to a single entity; provided,
however, that (i) the Company must receive written notice prior to the time of
said transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such information and
Registration rights are being assigned, and (ii) the transferee or assignee of
such rights must not be a person deemed in good faith by the Board of Directors
of the Company to be a competitor or potential competitor of the Company.
Notwithstanding the limitation set forth in the foregoing sentence respecting
the minimum number of shares which must be transferred, any Holder which is a
partnership may transfer such Holder's Registration rights to such Holder's
constituent partners (or may transfer to their heirs in the case of individuals)
without restriction as to the number or percentage of shares acquired by any
such constituent partner (or heirs).
18. Miscellaneous.
18.1 Entire Agreement; Successors and Assigns. This Agreement
constitutes the entire contract between the Company, the Investors and the
Founder relative to the subject matter hereof. Any previous agreement between
the Company and the Investors or the Founder concerning information rights,
rights of first refusal or Registration rights is superseded by this Agreement.
Subject to the exceptions specifically set forth in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective executors, administrators, heirs, successors and assigns of
the parties.
18.2 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of California
by California residents.
18.3 Counterparts. This Agreement may be executed in two (2)
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
18.4 Headings. The headings of the Sections of this Agreement
are for convenience and shall not by themselves determine the interpretation of
this Agreement.
18.5 Notices. Any notice required or permitted hereunder shall
be given in writing and shall be conclusively deemed effectively given upon
personal delivery, or five (5) days after deposit in the United States mail, by
first class mail, postage prepaid, or upon sending if sent by
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<PAGE> 48
commercial overnight delivery service addressed (i) if to the Company, as set
forth below the Company's name on the signature page of this Agreement, and (ii)
if to an Investor or the Founder, at such Investor's or Founder's address as set
forth on the attached Schedule A, or at such other address as the Company or
such Investor or Founder may designate by ten (10) days' advance written notice
to the Investors and Founders or to the Company, respectively. Notwithstanding
the foregoing sentence, any notice or communication to an address outside the
United States shall additionally be given by telecopy and confirmed in writing
sent by two (2) day guaranteed international courier.
18.6 Amendment of Agreement. Except as otherwise specifically
provided herein, any provision of this Agreement may be amended by a written
instrument signed by the Company and by persons holding more than fifty percent
(50%) of the then outstanding Convertible Securities and Registrable Securities
(calculated on an as converted basis); provided, that no amendment to Section
1(d) or Section 7.2.2 which adversely affects the rights of the holders of
Founder's Stock shall be enforceable against the holders of Founder's Stock
unless approved by persons holding more than fifty percent (50%) of the
Founder's Stock.
18.7 Aggregation of Stock. All Convertible Securities and
Registrable Securities held or acquired by affiliated entities or persons shall
be aggregated together for the purpose of determining the availability of any
rights under this Agreement.
18.8 Severability. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.
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<PAGE> 49
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE COMPANY: EPIGENIX, INC.
a Delaware corporation
By: [SIG]
-------------------------------
Title:
---------------------------
Address:
--------------------------
THE FOUNDER:
-------------------------------
Keith Bostian
Address:
[SIGNATURE PAGE OF INFORMATION AND REGISTRATION RIGHTS AGREEMENT]
<PAGE> 50
THE INVESTORS: MICROCIDE PHARMACEUTICALS, INC.
a Delaware corporation
By:[SIG]
-------------------------------
Title:
----------------------------
KLEINER PERKINS CAUFIELD & BYERS VIII
By: KPCB VIII Associates, its general partner
By:[SIG]
-------------------------------
General Partner
KPCB VIII FOUNDERS FUND
By: KPCB VIII Associates, its general partner
By:[SIG]
-------------------------------
General Partner
KPCB LIFE SCIENCES ZAIBATSU FUND II
By: KPCB VII Associates, its general partner
By:[SIG]
-------------------------------
General Partner
INSTITUTIONAL VENTURE PARTNERS VII, L.P.
By: Institutional Venture
Management VII, L.P., its general partner
By:
-------------------------------
Title: General Partner
[SIGNATURE PAGE OF INFORMATION AND REGISTRATION RIGHTS AGREEMENT]
<PAGE> 51
INSTITUTIONAL VENTURE MANAGEMENT VII, L.P.
By:[SIG]
-------------------------------
Title: General Partner
IVP FOUNDERS FUND I, L.P.
By: Institutional Venture Management VI, L.P.,
its general partner
By:[SIG]
-------------------------------
Title: General Partner
ABINGWORTH BIOVENTURES II SICAV
By:
-------------------------------
Title:
----------------------------
[SIGNATURE PAGE OF INFORMATION AND REGISTRATION RIGHTS AGREEMENT]
<PAGE> 52
INSTITUTIONAL VENTURE MANAGEMENT VII, L.P.
By:
-------------------------------
Title: General Partner
IVP FOUNDERS FUND I, L.P.
By: Institutional Venture Management VI, L.P.,
its general partner
By:
-------------------------------
Title: General Partner
ABINGWORTH BIOVENTURES II SICAV
By:[SIG]
-------------------------------
Title: Attorney-in-fact
----------------------------
[SIGNATURE PAGE OF INFORMATION AND REGISTRATION RIGHTS AGREEMENT]
<PAGE> 53
EXHIBIT A
SCHEDULE OF INVESTORS
Name and Address of Investors
- -----------------------------
Microcide Pharmaceuticals, Inc.
850 Maude Avenue
Mountain View, CA 94043
Keith Bostian, Ph.D.
850 Maude Avenue
Mountain View, CA 94043
Kleiner Perkins Caulfield & Byers VIII
2750 Sand Hill Road
Menlo Park, CA 94025
Attn: Joseph S. Lacob
KPCB VIII Founders Fund
2750 Sand Hill Road
Menlo Park, CA 94025
Attn: Joseph S. Lacob
KPCB Life Sciences Zaibatsu Fund II
2750 Sand Hill Road
Menlo Park, CA 94025
Attn: Joseph S. Lacob
Institutional Venture Partners VII, L.P.
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Attn: L. James Strand, M.D.
Institutional Venture Management VII, L.P.
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Attn: L. James Strand, M.D.
IVP Founders Fund I, L.P.
3000 Sand Hill Road
Building 2, Suite 290
Menlo Park, CA 94025
Attn: L. James Strand, M.D.
Abingworth Bioventures II SICAV
Boite Postal 566
L-2015 Luxemborg
Attn: Karl Sanne
with copies to:
- --------------
Abingworth Management Limited
26 St. James's Street
London SW1A 1HA England
Attn: Stephen Bunting, Ph.D.
Abingworth Venture Management Incorporated
401 East Pratt Street, Ste. 1222
Baltimore, MD 21202
Attn: Hugh Y. Rienhoff, Jr., M.D.
<PAGE> 54
EXHIBIT E
EPIGENIX, INC.
RIGHT OF FIRST REFUSAL AGREEMENT
THIS RIGHT OF FIRST REFUSAL AGREEMENT is made as of January ___, 1998
(the "Agreement") by and among EpiGenix, Inc., a Delaware corporation (the
"Company"), the persons listed on the attached Schedule A who become signatories
to this Agreement (the "Investors"), and Keith Bostian (the "Key Employee").
RECITALS
WHEREAS, the Company and the Investors have entered into agreements
(each, a "Purchase Agreement") for sale by the Company and purchase by the
Investors of the Company's Series A, Series B and Series C Preferred Stock;
WHEREAS, the Investors have entered into the Purchase Agreements in
reliance on the ability of the Key Employee to manage, operate and guide the
business affairs of the Company; and
WHEREAS, it is a condition to the obligations of the Investors under
the Purchase Agreements that this Agreement be executed by the parties hereto,
and the parties hereto and thereto are willing to execute this Agreement and to
be bound by the provisions hereof and thereof;
NOW, THEREFORE, in consideration of the premise set forth above and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties agree as follows:
SECTION 1
Certain Definitions
As used in this Agreement the following terms shall have the following
respective meanings:
1.1 "Affiliate" shall mean any entity who is controlled by, controls or
is under common control with any of the parties hereto.
1.2 "Common Stock" shall mean shares of the Company's Common Stock now
owned or subsequently acquired by the Holders.
1.3 "Holder" shall mean the Key Employee and the holders of the
Preferred Stock.
1.4 "Preferred Stock" shall mean the Company's outstanding Series A,
Series B and Series C Preferred Stock.
<PAGE> 55
SECTION 2
Restrictions on and Notices of Sales
2.1 Company's Right of First Refusal. Before any shares of Common Stock
or Preferred Stock may be sold or otherwise transferred by a Holder (including
transfer by gift, operation of law or other involuntary transfer, such as
divorce or death, but excluding on death a transfer to a Key Employee's
Immediate Family as set forth in Section 2.8 below, but except in the event
there is a registration statement covering the proposed transfer), the Company
shall have a right of first refusal to purchase the shares (the "Right of First
Refusal").
2.2 Notice of Proposed Transfer. Before the transfer of any shares of
Common Stock or Preferred Stock, the Holder shall deliver to the Company and the
Investors a written notice (the "Transfer Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such shares; (ii) the name of
each proposed purchaser or other transferee (a "Proposed Transferee"); (iii) the
number of shares to be transferred to each Proposed Transferee; and (iv) the
bona fide cash price or other consideration for which the Holder proposes to
transfer the shares (the "Offered Price"), and the Holder shall offer the shares
at the Offered Price first to the Company and then to the Investors.
2.3 Exercise of Right of First Refusal. At any time within 20 days
after receipt of the Transfer Notice, the Company may, by giving written notice
to the Holder, elect to purchase all, but not less than all, of the shares
proposed to be transferred to any one or more of the Proposed Transferees, at
the purchase price determined in accordance with subsection 2.4 below. Failure
of the Company to give such a notice within such time period will be deemed an
election by it not to exercise its option.
2.4 Purchase Price. The purchase price for the shares purchased by the
Company shall be the Offered Price, or such other amount agreed to in writing by
the Company and the Holder (the "Company Purchase Price"). If the Offered Price
includes consideration other than cash, the cash equivalent value of the
non-cash consideration shall be determined in good faith by the Board of
Directors of the Company, but if challenged by the Holder, then as determined by
an independent appraiser mutually acceptable to the Board of Directors of the
Company and the Holder, the cost of such appraisal to be borne equally by the
Holder and the Company.
2.5 Payment. Payment of the Company Purchase Price shall be made in
cash (or such other form of consideration mutually agreed to by the Company and
the Holder) within 30 days after such Company Purchase Price was agreed upon
between the Company and the Holder.
2.6 Investor's Right to Purchase.
(a) In the event or to the extent the Company does not
exercise its Right of First Refusal, as the case may be, each Investor shall
have the right, upon notice to the Holder at any time
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<PAGE> 56
within 30 days after receipt of the Transfer Notice, to purchase its Pro Rata
Share of all, but not less than all, of such shares not purchased by the Company
at the Offered Price and upon the same terms (or terms as similar as reasonably
possible) upon which the Holder is proposing or is to dispose of such shares
(the "Purchase Right"), and the Holder shall sell such shares to the Investors
pursuant to such terms. "Pro Rata Share" for the purposes of this Section 2.6
shall mean the ratio the number of shares of Common Stock (on an as-converted
basis) held by such Investor (which shall be deemed to include, for purposes of
this Section 2.6, the shares of Common Stock issuable on the conversion of any
shares of Preferred Stock that such Investors, pursuant to a Purchase Agreement,
has the right to receive from the Company or obligation to purchase from the
Company, subject to the satisfaction of certain conditions by the Company) bears
to the total number of shares of Common Stock (on an as-converted basis) held by
all Investors; provided, that, if Holder proposing to transfer such shares of
Common Stock or Preferred Stock is an Investor, such Pro Rata Share shall mean
the ratio of the number of shares of Common Stock (on an as-converted basis)
held by such Investor bears to the total number of Common Stock (on an
as-converted basis) held by all Investors other than such Holders.
(b) The Investors shall have a right of oversubscription such
that if any Investors fails to purchase its Pro Rata Share, the other Investors
shall, among them, have the right to purchase up to the balance of the shares
not so purchased. Such right of oversubscription may be exercised by an Investor
by notifying the holder of its desire to purchase more than its Pro Rata Share.
If, as a result thereof, such oversubscriptions exceed the total number of
shares available in respect of such oversubscription privilege, the
oversubscribing Investors shall be cut back with respect to their
oversubscriptions on a pro rata basis in accordance with their respective Pro
Rata Shares or as they may otherwise agree among themselves.
2.7 Holder's Right to Transfer. If all of the shares proposed in the
Transfer Notice to be transferred are not purchased by the Company and the
Investors, then the Holder may sell or otherwise transfer all shares originally
covered in the Transfer Notice to the Proposed Transferee(s) at the Offered
Price or at a higher price, provided that such sale or other transfer is
consummated within 90 days after the date of the Transfer Notice and provided
further that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Proposed Transferee agrees in writing that
the provisions of this Section shall continue to apply to the shares that are
transferred to such Proposed Transferee. If the shares described in the Transfer
Notice are not transferred to the Proposed Transferee(s) within such 90-day
period, the Holder will not transfer any shares unless first re-offered to the
Company and the Investors in accordance herewith.
2.8 Exception for Certain Transfers. Anything to the contrary contained
in this Section 2 notwithstanding, the following transactions shall be exempt
from the provisions of this Section 2: (i) the transfer of shares currently held
by any Key Employee to another Key Employee that was approved by the Company's
Board of Directors, which approval shall not be unreasonably withheld, (ii) the
transfer of any or all of the shares during Key Employee's lifetime or on the
Key Employee's death by will or intestacy to Key Employee's Immediate Family or
a trust for the benefit of Key Employee or Key Employee's immediate family,
(iii) the transfer by a Holder that is a corporation to
-3-
<PAGE> 57
its shareholders or a partnership to its constituent partners, and (iv) the
transfer of up to 10,000 shares (as adjusted for stock splits, stock dividends,
and the like) in any one year period. In such case, the transferee or other
recipient shall receive and hold the shares so transferred subject to the
provisions of this Section 2, and there shall be no further transfer of such
shares except in accordance with the terms of this Section 2.
"Immediate Family" as used herein shall mean spouse, lineal descendant
or (including children, grandchildren, etc.), father, mother, brother or sister.
2.9 Termination of Right of First Refusal and Purchase Right. The Right
of First Refusal and the Purchase Right shall terminate upon the earlier to
occur of (i) the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act of
1933, as amended, covering the offer and sale of common stock of the Company to
the public at a price per share (prior to underwriter commissions and offering
expenses) of not less than $3.00 per share (appropriately adjusted for any stock
splits, stock dividends, recapitalizations or similar events) and an aggregate
offering price to the public of not less than $15,000,000 (prior to deduction of
underwriter commissions and offering expenses) and (ii) December 31, 2007.
2.10 Legends.
(a) The certificates evidencing shares of the Company held by
parties hereto shall bear, in addition to any other legend required under the
federal or the Delaware securities laws, the following legends, as applicable:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RIGHTS, INCLUDING RESTRICTIONS ON TRANSFER, AS SET FORTH IN A RIGHT OF
FIRST REFUSAL AGREEMENT ENTERED INTO BY THE HOLDER OF THESE SHARES, THE
ISSUER AND CERTAIN SHAREHOLDERS OF THE ISSUER. A COPY OF SUCH AGREEMENT
MAY BE EXAMINED AT THE PRINCIPAL OFFICE OF THE CORPORATION."
(b) The legends referred to in Section 2.10(a) above shall be
removed upon termination of this Agreement in accordance with the provisions of
Section 2.9 above.
SECTION 3
Miscellaneous
3.1 Survival. The representations, warranties, covenants and agreements
made herein shall survive the closing of the transactions contemplated hereby.
-4-
<PAGE> 58
3.2 Entire Agreement. This Agreement and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
3.3 Notice. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed
(a) if to an Investor, at Investor's address set forth on the signature page to
this Agreement, or at such other address as Investor shall have furnished to the
Company in writing, (b) if to a Key Employee, at Key Employee's address set
forth on the signature page to this Agreement or at such other address as Key
Employee shall have furnished to the Company in writing, and (c) if to the
Company, to the address set forth on the signature page to this Agreement and
addressed to the attention of the Corporate Secretary, or to such other address
as the Company shall have furnished to the Investors and the Key Employee.
Notwithstanding the foregoing sentence, any notice or communication required or
permitted hereunder to an address outside the United States shall additionally
be given by telecopy and confirmed in writing sent by two (2) day guaranteed
international courier. If notice is provided by mail, notice shall be deemed to
be given upon proper deposit in the mail (and if outside the United States, sent
by airmail).
3.4 Successors and Assigns. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
3.5 Amendments or Waivers. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated other than by written
instrument signed by the party against whom enforcement of any such amendment,
waiver, or discharge or termination is sought; provided, however, that the
holders of a majority of the Shares held by the Investors voting together may
waive, discharge, terminate, modify or amend on behalf of all Investors, any
provisions hereof.
3.6 Counterparts. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one instrument, and each of
which may be executed by less than all of the parties to this Agreement.
3.7 Severability. In the event that any provision of this Agreement
becomes or declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
3.8 Governing Law. The Agreement shall be governed by and construed in
accordance with the laws of the State of California as applied to the agreements
made and performed in California by residents of California.
-5-
<PAGE> 59
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and date set forth above.
THE COMPANY: EPIGENIX, INC.
a Delaware corporation
By:_________________________________
Title:______________________________
Address: 850 Maude Avenue
Mountain View, California 94043
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 60
THE INVESTORS: MICROCIDE PHARMACEUTICALS, INC.
a Delaware corporation
By:_______________________________
Title:____________________________
Address: 850 Maude Avenue
Mountain View, CA 94043
KLEINER PERKINS CAUFIELD & BYERS VIII
By: KPCB VIII Associates, its general partner
By:________________________________
General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
KPCB VIII FOUNDERS FUND
By: KPCB VIII Associates, its general partner
By:________________________________
General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
KPCB LIFE SCIENCES ZAIBATSU FUND II
By: KPCB VII Associates, its general partner
By:_________________________________
General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
[SIGNATURE PAGE OF RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 61
INSTITUTIONAL VENTURE PARTNERS VII, L.P.
By: Institutional Venture
Management VII, L.P., its general partner,
By:_____________________________________
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
INSTITUTIONAL VENTURE MANAGEMENT VII, L.P.
By:_____________________________________
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
IVP FOUNDERS FUND I, L.P.
By: Institutional Venture
Management VI, L.P., its general partner,
By:_____________________________________
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
ABINGWORTH BIOVENTURES II SICAV
By:_____________________________________
Title:__________________________________
Address: Boite Postal 566
L-2015 Luxemborg
Attn: Karl Sanne
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 62
VLG INVESTMENTS 1998
By:_____________________________________
Title:__________________________________
COMMUNITY TRUST UNDER THE GREEN FAMILY TRUST UNDER
AGREEMENT DATED NOVEMBER 6, 1995
----------------------------------------
Joshua L. Green, Trustee
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
-9-
<PAGE> 63
THE KEY EMPLOYEE:
----------------------------------------
Keith Bostian, Ph.D.
Address: 850 Maude Avenue
Mountain View, CA 94043
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
-10-
<PAGE> 64
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and date set forth above.
THE COMPANY: EPIGENIX, INC.
a Delaware corporation
By:[SIG]
---------------------------------
Title:______________________________
Address: 850 Maude Avenue
Mountain View, California 94043
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 65
INSTITUTIONAL VENTURE PARTNERS VII, L.P.
By: Institutional Venture
Management VII, L.P., its general partner,
By:[SIG]
---------------------------------
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
INSTITUTIONAL VENTURE MANAGEMENT VII, L.P.
By:[SIG]
---------------------------------
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
IVP FOUNDERS FUND I, L.P.
By: Institutional Venture
Management VI, L.P., its general partner,
By:[SIG]
---------------------------------
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
ABINGWORTH BIOVENTURES II SICAV
By:_____________________________________
Title:__________________________________
Address: Boite Postal 566
L-2015 Luxemborg
Attn: Karl Sanne
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 66
THE INVESTORS: MICROCIDE PHARMACEUTICALS, INC.
a Delaware corporation
By:[SIG]
---------------------------------
Title:____________________________
Address: 850 Maude Avenue
Mountain View, CA 94043
KLEINER PERKINS CAUFIELD & BYERS VIII
By: KPCB VIII Associates, its general partner
By:[SIG]
---------------------------------
General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
KPCB VIII FOUNDERS FUND
By: KPCB VIII Associates, its general partner
By:[SIG]
---------------------------------
General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
KPCB LIFE SCIENCES ZAIBATSU FUND II
By: KPCB VII Associates, its general partner
By:[SIG]
---------------------------------
General Partner
Address: 2750 Sand Hill Road
Menlo Park, CA 94025
[SIGNATURE PAGE OF RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 67
THE KEY EMPLOYEE: [SIG]
----------------------------------------
Keith Bostian, Ph.D.
Address: 850 Maude Avenue
Mountain View, CA 94043
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
-10-
<PAGE> 68
INSTITUTIONAL VENTURE PARTNERS VII, L.P.
By: Institutional Venture
Management VII, L.P., its general partner,
By:_____________________________________
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
INSTITUTIONAL VENTURE MANAGEMENT VII, L.P.
By:_____________________________________
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
IVP FOUNDERS FUND I, L.P.
By: Institutional Venture
Management VI, L.P., its general partner,
By:_____________________________________
Title: General Partner
Address: 3000 Sand Hill Road, Bldg 2, Ste. 290
Menlo Park, CA 94025
ABINGWORTH BIOVENTURES II SICAV
By: [SIG]
-------------------------------------
Title: Attorney-in-fact
----------------------------------
Address: Boite Postal 566
L-2015 Luxemborg
Attn: Karl Sanne
[SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AGREEMENT]
<PAGE> 69
EXHIBIT G
EPIGENIX, INC.
VOTING AGREEMENT
THIS VOTING AGREEMENT (the "Agreement") is made as of January __, 1998
by and among EpiGenix, Inc., a Delaware corporation (the "Company"), Keith A.
Bostian, Ph.D. (the "Founder"), the holder of shares of Series A Preferred Stock
set forth on the signature page to this Agreement opposite the heading "Series A
Investor" (the "Series A Investor"), and the holders of shares of Series B
Preferred Stock set forth on the signature page to this Agreement opposite or
below the heading "Series B and C Investors" (collectively referred to as the
"Series B and C Investors" and individually as a "Series B and C Investor"). The
Series A Investor and the Series B and C Investors are collectively referred to
as the "Investors."
RECITALS
The Company and the Investors have entered into a Series A Preferred
Stock Purchase Agreement and a Series B Preferred and Series C Preferred Stock
Purchase Agreement (the "Purchase Agreements") of even date herewith pursuant to
which the Company desires to sell to the Investors and the Investors desire to
purchase from the Company shares of the Company's Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock. A condition to the
Investors' obligations under each of the Purchase Agreements is that the
Company, the Founder and the Investors enter into this Agreement for the purpose
of setting forth the terms and conditions pursuant to which the Investors and
the Founder shall vote the shares of the Company's voting securities now or
hereafter owned, whether beneficially or otherwise, by them (the "Shares") in
favor of certain designees to the Company's Board of Directors. The Company, the
Investors and the Founder each desire to facilitate the voting arrangements set
forth in this Agreement, and the sale and purchase of shares of Series A
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock pursuant
to the Purchase Agreements, by agreeing to the terms and conditions set forth
below.
THE PARTIES AGREE AS FOLLOWS:
1. ELECTION OF DIRECTORS
(a) SERIES B AND C DIRECTORS.
(i) The Series B and C Investors hereby agree that
each of Abingworth Bioventures II SICAV or its affiliates ("Abingworth"),
Institutional Venture Partners V or its affiliates ("IVP"), and Kleiner Perkins
Caufield & Byers VI or its affiliates ("KP") (together, the "Nominating Series B
and C Investors" and individually, a "Nominating Series B and C Investors")
shall have the right to designate one (1) nominee for election as a director of
the Company who shall be elected solely by the holders of outstanding shares, if
any, of Series B Preferred Stock and Series C Preferred Stock, voting together
as a single, separate class (together, the "Series B and C Nominees" and
individually, a "Series B and C Nominee"). At least ten (10) days prior to any
meeting (or written action in lieu of a meeting) of stockholders of the Company
at or by which directors are to be elected by the holders of outstanding shares,
if any, of Series B Preferred Stock and Series C Preferred, voting together as a
single, separate class, each Nominating Series B and C Investor shall notify the
other Preferred
<PAGE> 70
Investors in writing of each Series B and C Nominee designated by such
Nominating Series B and C Investor for election as a director of the Company. In
the absence of any such notification, it shall be presumed that each of the
Nominating Series B and C Investor's then incumbent Series B and C Nominees has
been redesignated as a Series B and C Nominee. The initial Series B and C
Nominee of Abingworth is Hugh Y. Reinhoff, Jr. The initial Series B and C
Nominee of IVP is L. James Strand. The initial Series B and C Nominee of KP is
Joseph S. Lacob.
(ii) At each meeting (or written action in lieu of a
meeting) of stockholders of the Company at or by which directors are to be
elected by the holders of Series B Preferred and Series C Preferred Stock,
voting together as a single, separate class, each Preferred Investor shall vote
all of its Shares (entitled to vote thereon) to elect, as directors of the
Company, the Series B and C Nominees designated in the manner provided in
Section 2(a)(i).
(iii) If a Series B and C Nominee shall cease to
serve as a director for any reason, the Nominating Series B and C Investor which
designated such Series B and C Nominee shall have the right to designate a
successor Series B and C Nominee and each other Preferred Investor shall use its
best efforts to ensure that such successor Series B and C Nominee is duly
elected as a director. If a Nominating Series B and C Investor notifies the
other Preferred Investors that it desires to remove its Series B and C Nominee
as a director, each of the other Preferred Investors shall use its best efforts
to ensure that such Series B and C Nominee is duly removed as a director. If a
Nominating Series B and C Investor notifies the Company that it desires to
remove its Series B and C Nominee as a director and/or designate a successor
Series B and C Nominee, the Company shall, at the request of such Nominating
Series B and C Investor, use its best efforts to ensure that a meeting of
stockholders of the Company is promptly called for such purpose.
(b) SERIES A DIRECTOR.
(i) At each meeting (a written action in lieu of a
meeting) of stockholders of the Company at or by which directors are to be
elected by the holders of Series A Preferred Stock, voting as a single, separate
class, the Series A Investor shall vote all of its Shares (entitled to vote
thereon) to elect two directors nominated by Microcide Pharmaceuticals, Inc.
("Microcide"), one of which shall be an employee, member of the Board of
Directors or other affiliate of Microcide (the "Microcide Nominee"), and the
other of which shall not be an employee, member of the Board of Directors or
other affiliate of Microcide (the "Independent Series A Seat"). The initial
Microcide Nominee is James E. Rurka, and the Independent Series A Seat shall
initially be vacant.
(ii) If a director designated in the manner provided
in Section 2(b)(i) shall be unable to serve as director for any reason, the
Series A Investor shall use its best efforts to ensure that a successor director
is duly elected to fill such seat.
(c) CEO DIRECTOR.
(i) At each meeting (or written action in lieu of a
meeting) of stockholders of the Company at or by which a director is to be
elected by the holders of Common Stock, voting as a single, separate class, each
Investor and the Founder shall vote all of his, her or its Shares (entitled to
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<PAGE> 71
vote thereon) to elect the then current Chief Executive Officer of the Company
(the "CEO Director"). The initial CEO Director is Keith A. Bostian.
(ii) If a director designated in the manner provided
in Section 2 (c)(i) shall cease to serve as a director for any reason, each
Investor and the Founder shall use his, her or its best efforts to ensure that a
successor director is duly elected to file such seat.
(d) INDEPENDENT DIRECTOR.
(i) At each meeting (or written action in lieu of a
meeting) of stockholders of the Company at or by which a director is to be
elected by the holders of (A) a plurality of the outstanding shares of Preferred
Stock (which must also include the holders of a plurality of the outstanding
shares of Series B Preferred Stock unless and until the Sale of the Series C
Preferred Stock pursuant to the Series B Preferred and Series C Preferred Stock
Purchase Agreement has been consummated), voting as a single, separate class,
and (B) a plurality of the outstanding shares of Common Stock, voting as a
single, separate class, each Investor and the Founder shall vote all of his, her
or its Shares to elect an independent person as the director of the Company to
be elected by the holders of (A) a plurality of the outstanding shares of
Preferred Stock (which must also include the holders of a plurality of the
outstanding shares of Series B Preferred Stock unless and until the Sale of the
Series C Preferred Stock pursuant to the Series B Preferred and Series C
Preferred Stock Purchase Agreement has been consummated), voting as a single,
separate class, and (B) a plurality of the outstanding shares of Common Stock,
voting as a single, separate class (the "Independent Board Seat"). The
Independent Board Seat shall initially be vacant.
(ii) If a director designated in the manner provided
in Section 2(d)(i) shall cease to serve as a director for any reason, each
Investor and the Founder shall use his, her or its best efforts or ensure that a
successor director is duly elected to fill the Independent Board Seat.
2. NO REVOCATION. The voting agreements contained herein are coupled
with an interest and may not be revoked during the term of this Agreement.
3. CHANGE IN NUMBER OF DIRECTORS. The Founder and the Investors will
not vote for any amendment or change to the Certificate of Incorporation or
Bylaws providing for the election of more or less than seven (7) directors, or
any other amendment or change to the Company's Certificate of Incorporation or
Bylaws inconsistent with the terms of this Agreement.
4. LEGENDS. Each certificate representing any Shares held by the
Founder or the Investors or any assignee of the Founder or the Investors shall
bear the following legend:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND
AMONG THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY (A COPY OF
WHICH MAY BE EXAMINED AT THE PRINCIPAL OFFICE OF THE CORPORATION), AND
BY ACCEPTING ANY INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH
INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE
PROVISIONS OF SAID VOTING AGREEMENT."
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5. TERMINATION. This Agreement shall terminate upon the earlier of (a)
the closing of a firm commitment underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
covering the offer and sale of the Company's Common Stock to the public at a
price per share (prior to underwriter commissions and offering expenses) of not
less than $3.00 per share (appropriately adjusted for any stock splits, stock
dividends, recapitalizations or similar events) and an aggregate offering price
to the public (prior to deduction of underwriter commissions and offering
expenses) of not less than $15,000,000; (b) the sale, conveyance, disposal, or
encumbrance of all or substantially all of the Company's property or business or
the merger into or consolidation with any other corporation (other than a
wholly-owned subsidiary corporation) or if the Company effects any other
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is disposed of, provided that this
Section 5 shall not apply to a merger effected exclusively for the purpose of
changing the domicile of the Company, or (c) the tenth anniversary of this
Agreement.
6. MISCELLANEOUS.
(a) SUCCESSORS IN INTEREST OF THE PARTIES. The provisions of
this Agreement shall be binding upon any successors in interest of the Founder
and the Investors. The Company shall not permit the transfer of any Shares on
its books or issue a new certificate representing any Shares unless and until
the person to whom such security is to be transferred shall have executed a
written agreement pursuant to which such person becomes a party to this
Agreement and agrees to be bound by all the provisions hereof as if such person
was a party hereunder.
(b) ASSIGNEES AND TRANSFEREES. Except as otherwise expressly
provided in this Agreement, the provisions hereof shall inure to the benefit of,
and be binding upon, the assignees and transferees of the parties hereto. The
Founder and the Investors hereby agree, and any transferee or assignee of any
voting securities of the Company that are owned by the Founder or the Investors
is hereby on notice that, any transfer or assignment of such securities of the
Company is conditioned upon such transferee's or assignee's execution and
delivery of this Agreement prior to such transfer or assignment for the purpose
of becoming a party to this Agreement. Any transfer or assignment of any of such
voting securities of the Company in violation of this Section 6(b) shall be void
and be of no force or effect.
(c) GRANT OF PROXY. Should the provisions of this Agreement be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement.
(d) SPECIFIC ENFORCEMENT. It is agreed and understood that
monetary damages would not adequately compensate a party to this Agreement for
the breach of this Agreement by any other party, that this Agreement shall be
specifically enforceable, and that any breach or threatened breach of this
Agreement shall be the proper subject of a temporary or permanent injunction or
restraining order. Further, the Founder and each Investor hereto waives any
claim or defense that there is an adequate remedy at law for such breach or
threatened breach.
(e) MANNER OF VOTING. The voting of Shares pursuant to this
Agreement may be effected in person, by proxy, by written consent, or in any
other manner permitted by applicable law.
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(f) STOCK SPLITS, STOCK DIVIDENDS, ETC. In the event of any
issuance of shares of the Company's voting securities hereafter to the Founder
or any Investor (including, without limitation, in connection with any stock
split, stock dividend, recapitalization, reorganization or combination) such
shares shall become Shares for purposes of this Agreement and shall be endorsed
with the legend set forth in Section 4 hereof.
(g) AMENDMENTS AND WAIVERS. Any term hereof may be amended or
waived only with the written consent of the Company, the Founder, and holders of
at least a majority (greater than 50%) of the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock, voting together as a
class (which shall be deemed to include any shares of Series A Preferred Stock
which the Series A Investor has the right to receive from the Company pursuant
to the Series A Preferred Stock Purchase Agreement and any shares of Series C
Preferred Stock which the Series B and C Investors have the obligation to
purchase from the Company subject to the satisfaction of certain conditions by
the Company pursuant to the Series B Preferred and Series C Preferred Stock
Purchase Agreement). Any amendment or waiver effected in accordance with this
Section 6(g) shall be binding upon the Company, the Founder, the Investors, and
each of their respective successors and assigns.
(h) NOTICES. Any notice required or permitted by this
Agreement shall be in writing and shall be deemed sufficient on the date of
delivery, when delivered personally or by overnight courier or sent by telegram
or fax, or forty-eight (48) hours after being deposited in the U.S. mail, as
certified or registered mail, with postage prepaid, and addressed to the party
to be notified at such party's address or fax number as set forth on the
signature page hereto, or as subsequently modified by written notice; provided,
that any such written notice to an address outside the United States shall
additionally be given by telecopy and confirmed in writing sent by two day
guaranteed international courier.
(i) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, the parties agree to
renegotiate such provision in good faith. In the event that the parties cannot
reach a mutually agreeable and enforceable replacement for such provision, then
(i) such provision shall be excluded from this Agreement, (ii) the balance of
the Agreement shall be interpreted as if such provision were so excluded and
(iii) the balance of the Agreement shall be enforceable in accordance with its
terms.
(j) GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto and the rights and obligations of the parties
hereto shall be governed, construed and interpreted in accordance with the laws
of the State of Delaware, without giving effect to principles of conflicts of
law.
(k). EXECUTION BY THE COMPANY. The Company, by its execution
in the space provided below, agrees that it will cause the certificate(s)
evidencing the shares of Common Stock and Series A Preferred Stock, Series B
Preferred Stock, and Series C Preferred Stock to bear the legend required by
Section 4 herein, and it shall supply, free of charge, a copy of this Agreement
to any holder of a certificate evidencing shares of capital stock of the Company
upon written request from such holder to the Company at its principal office.
The parties hereby agree that the failure to cause the certificates evidencing
the shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock,
and Series C Preferred Stock to bear the legend required by Section 4 herein
and/or failure of
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<PAGE> 74
the Company to supply, free of charge, a copy of this Agreement as provided
under this Section 6(k) shall not affect the validity or enforceability of this
Agreement.
(l) COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(m) TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
[Signature Page Follows]
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<PAGE> 75
IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of the date first written above.
COMPANY: EPIGENIX, INC.
By: [SIG]
----------------------------------
Title:
-------------------------------
Address: 850 Maude Avenue
Mountain View, CA 94043
THE FOUNDER: [SIG]
-------------------------------------
Keith A. Bostian, Ph.D.
Address:
-----------------------------
SERIES A INVESTOR: MICROCIDE PHARMACEUTICALS, INC.
By:[SIG]
----------------------------------
Title:
-------------------------------
Address:
-------------------------------
-------------------------------------
SERIES B AND C INVESTORS: KLEINER PERKINS CAUFIELD & BYERS VIII
By: KPCB VIII Associates, Its General Partner
By:
----------------------------------
General Partner
Address:
-------------------------------
-------------------------------------
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<PAGE> 76
IN WITNESS WHEREOF, the parties hereto have executed this Voting
Agreement as of the date first written above.
COMPANY: EPIGENIX, INC.
By:
----------------------------------
Title:
-------------------------------
Address: 850 Maude Avenue
Mountain View, CA 94043
THE FOUNDER:
-------------------------------------
Keith A. Bostian, Ph.D.
Address:
-----------------------------
SERIES A INVESTOR: MICROCIDE PHARMACEUTICALS, INC.
By: [SIG]
----------------------------------
Title:
-------------------------------
Address:
-------------------------------
-------------------------------------
SERIES B AND C INVESTORS: KLEINER PERKINS CAUFIELD & BYERS VIII
By: KPCB VIII Associates, Its General Partner
By: [SIG]
----------------------------------
General Partner
Address: 2750 SAND HILL ROAD
-------------------------------
MENLO PARK, CA 94025
-------------------------------------
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<PAGE> 77
KPCB VIII Founders Fund
By: KPCB VIII Associates, Its General Partner
By: [SIG]
----------------------------------
General Partner
Address: 2750 SAND HILL ROAD
-------------------------------
MENLO PARK, CA 94025
-------------------------------------
KPCB Life Science Zaibatsu Fund II
By: KPCB VII Associates, Its General Partner
By: [SIG]
----------------------------------
General Partner
Address: 2750 SAND HILL ROAD
-------------------------------
MENLO PARK, CA 94025
-------------------------------------
INSTITUTIONAL VENTURE PARTNERS VII, L.P.
By: Institutional Venture Management VII,
L.P., its general partner
By:
----------------------------------
General Partner
Address:
-------------------------------
-------------------------------------
INSTITUTIONAL VENTURE
MANAGEMENT VII, L.P.
By:
----------------------------------
General Partner
Address:
-------------------------------
-------------------------------------
IVP FOUNDERS FUND I, L.P.
By: Its General Partner, Institutional Venture
Management VI, L.P.
By:
----------------------------------
General Partner
Address:
-------------------------------
-------------------------------------
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KPCB VIII Founders Fund
By: KPCB VIII Associates, Its General Partner
By:
----------------------------------
General Partner
Address:
-------------------------------
-------------------------------------
KPCB Life Science Zaibatsu Fund II
By: KPCB VII Associates, Its General Partner
By:
----------------------------------
General Partner
Address:
-------------------------------
-------------------------------------
INSTITUTIONAL VENTURE PARTNERS VII, L.P.
By:Institutional Venture Management VII, L.P.,
its general partner
By: [SIG]
----------------------------------
General Partner
Address: 2750 SAND HILL ROAD
-------------------------------
MENLO PARK, CA 94025
-------------------------------------
INSTITUTIONAL VENTURE
MANAGEMENT VII, L.P.
By: [SIG]
----------------------------------
General Partner
Address: 2750 SAND HILL ROAD
-------------------------------
MENLO PARK, CA 94025
-------------------------------------
IVP FOUNDERS FUND I, L.P.
By: Its General Partner, Institutional Venture
Management VI, L.P.
By: [SIG]
----------------------------------
General Partner
Address: 2750 SAND HILL ROAD
-------------------------------
MENLO PARK, CA 94025
-------------------------------------
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<PAGE> 79
ABINGWORTH BIOVENTURES II SICAV
By:
----------------------------------
Address:
-------------------------------
-------------------------------------
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<PAGE> 80
ABINGWORTH BIOVENTURES II SICAV
By:[SIG]
----------------------------------
Address: Attorney-in-fact
-------------------------------
L-2015 Luxemborg
-------------------------------------
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<PAGE> 1
EXHIBIT 2.2
CORE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT
by and between
MICROCIDE PHARMACEUTICALS, INC.
and
EPIGENIX, INC.
This CORE TECHNOLOGY DEVELOPMENT AND LICENSE AGREEMENT (the
"Agreement") is entered into as of the 14th day of January, 1998 (the "Effective
Date") by and between MICROCIDE PHARMACEUTICALS, INC., a Delaware corporation
having a principal place of business at 850 Maude Ave., Mt. View, CA 94043
("Microcide"), and EPIGENIX, INC., a Delaware corporation having a principal
place of business at 850 Maude Ave., Mt. View, CA 94043 ("EpiGenix"), with
reference to the following:
RECITALS
WHEREAS Microcide is a biopharmaceuticals company in the business of
discovering, developing, and commercializing novel antimicrobials for the
treatment of serious bacterial and fungal infections;
WHEREAS EpiGenix is a company established to use genomic approaches,
including surrogate genetics, to discover, develop, and commercialize products
for use in human health, animal health, agriculture, and the like; and
WHEREAS the parties wish to develop products in their respective
fields, based on existing technology owned and retained by Microcide and
existing technology owned by Microcide and transferred or licensed to EpiGenix,
as well as on new technology developed during a period of joint development; and
WHEREAS the parties have entered into a Stock Purchase Agreement, by
which Microcide is acquiring certain shares of stock in EpiGenix (the "Stock
Purchase Agreement"), and an Anti-Viral Research Collaboration Agreement, by
which the parties agree to collaborate in developing certain viral therapeutics
technology (the "Research Collaboration Agreement"), both of which are executed
concurrently herewith (collectively, the "Ancillary Agreements");
NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth in this Agreement and in the Ancillary Agreements, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties do hereby agree as follows:
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<PAGE> 2
AGREEMENT
SECTION 1: DEFINITIONS AND RULES OF CONSTRUCTION
1.1 Definitions. For purposes of this Agreement, the following words and phrases
shall have the following meaning:
"Affiliate" shall mean, with respect to a party, any person,
corporation or other business entity that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, a party. For this purpose, control of a corporation or other business
entity shall mean direct or indirect beneficial ownership of fifty percent (50%)
or more of the voting interest in, or a fifty percent (50%) or greater interest
in the equity of, such corporation or other business entity.
"Assigned Technology" shall mean the issued patents, pending patent
applications, invention disclosures and certain technology owned by Microcide,
which Microcide has the right to assign to EpiGenix without obligation (or for
which EpiGenix agrees to pay any sublicensing royalties) relating to Surrogate
Genetics, informatics and genome sciences [ * ], or relating primarily to the
EpiGenix Field, as more specifically identified in Exhibit A together with a
description of any applicable royalties.
"Change in Control" shall mean the occurrence of one of the following
events or circumstances with respect to a party to this Agreement:
(a) as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases, consolidation, merger or otherwise,
any entity or individual becomes the beneficial owner, as defined in Rule 13d-3
under the Securities Exchange Act of 1934, directly or indirectly, of fifty
percent (50%) of the then outstanding voting shares or other equity interests of
a party;
(b) in any share exchange, extraordinary dividend,
acquisition, disposition or recapitalization (or series of related transactions
of such nature), the holders of voting securities of the respective party
immediately prior thereto do not continue to beneficially own voting securities
or other equity interests representing at least a majority of the same ownership
and voting interests of the total combined entity (or any successor entity)
immediately thereafter;
(c) the party files a petition in bankruptcy, insolvency or
similar law for the protection of all or a substantial portion of its assets
against creditors whether such filing is in a state or federal court and whether
it is on a voluntary or involuntary basis, provided such filing or plan is not
dismissed or vacated within thirty (30) days, or a plan of liquidation or
dissolution of a party is submitted to and approved by the holders of voting
securities of such party;
(d) the sale or disposition by a party (in one transaction or
a series of transactions) of all or substantially all of such party's assets;
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 3
(e) any entity or individual is granted the right to appoint a
majority of the members of the board of directors of the respective party
through a proxy contest or otherwise; or
(f) the board of directors of a party approves, or that party
enters into, an agreement providing for a transaction, event or development that
constitutes (or would constitute if consummated) a Change of Control of that
party pursuant to (a) through (e) above.
"FDA" shall mean the United States Food and Drug Administration or any
successor agency thereof.
"Intellectual Property Rights" shall mean, collectively, worldwide
Patents, Trade Secrets, Copyrights, Trademarks, moral rights, know-how (whether
or not patentable), and all other intellectual property rights and proprietary
rights, whether arising under the laws of the United States or any other state,
country or jurisdiction, including all rights or causes of action for
infringement or misappropriation of any of the foregoing. For purposes of this
Agreement: (i) "Patents" shall mean all patent rights and all right, title, and
interest in all letters patent or equivalent rights and applications, including
provisional applications, and all government issued or granted indicia of
invention ownership, including any reissue, extension, division, continuation,
or continuation-in-part applications and patents throughout the world; (ii)
"Trade Secrets" shall mean all right, title and interest in all trade secrets
and trade secret rights arising under common law, state law, federal law or laws
of foreign countries; (c) "Copyrights" shall mean all copyrights, all other
literary property and authorship rights, and all right, title, and interest in
all copyrights, copyright registrations, certificates of copyright and copyright
interests throughout the world; and (iii) "Trademarks" shall mean all right,
title, and interest in all trademark, service mark, trade name, and trade dress
rights arising under the common law, state law, federal law, and laws of foreign
countries, and all right, title, and interest in all trademark, service mark,
trade name, domain name, and trade dress applications and registrations
interests throughout the world.
"Joint Technology" shall mean that technology, including Intellectual
Property Rights therein, jointly developed by the parties during the three (3)
year period following the Effective Date, in the areas of molecular diversity,
high throughput screening ("HTS"), informatics, and genomic sciences, and such
other technology as the parties shall mutually agree. The parties hereto agree
that the Joint Technology Committee shall amend Exhibit F attached hereto to
include a definition of such technology within thirty (30) days after the
Effective Date.
"Licensed Patents" shall mean the Patents, invention disclosures, owned
or licensed by Microcide, which Microcide has the right to license to EpiGenix
without obligation (or for which EpiGenix agrees to pay any sublicensing
royalties), and relating to both the EpiGenix Field and fields of use outside
the EpiGenix Field, as listed in Exhibit B.
"Licensed Technology" shall mean all technology, including Intellectual
Property Rights therein, owned or licensed by Microcide (other than the Assigned
Technology and Joint Technology), including Licensed Patents which Microcide has
the right to license to EpiGenix
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<PAGE> 4
without obligation (or for which EpiGenix agrees to pay any sublicensing
royalties), as of the Effective Date of this Agreement, and during the three (3)
years following the Effective Date (provided that such period shall terminate
earlier upon the closing of a transaction in which EpiGenix or Microcide shall
consummate a Change in Control), and in each case which are necessary or
materially useful in the EpiGenix Field; provided, however, [ * ].
"Microcide Field" shall mean research and development of products for
infectious diseases caused by bacteria, fungi, viruses or other infectious
agents, for use in [ * ].
"Microcide Joint Technology" shall mean the Joint Technology primarily
relating to molecular diversity and HTS technology.
"EpiGenix Field" shall mean research, development and commercialization
of products using genomics (for gene identification), functional genomics (for
functional characterization), genetic-based assays, including Surrogate
Genetics, for uses such as [ * ], to discover and develop products such as but
not limited to [ * ], for use in human health, animal health, agriculture or
other applications, except for infectious diseases caused by bacteria or fungi.
"EpiGenix Inner Field" shall mean the non-infectious diseases [ * ]
portion of the EpiGenix Field that relates to products for [ * ].
"Development Stage Product" shall mean any compound or potential
product entity identified and selected other than by Microcide for development
for which formal preclinical testing (such as GLP toxicological and
pharmacological studies as well as product substance, product formulation and
manufacturing development activities) are being undertaken or are planned to be
undertaken reasonably promptly, using reasonable commercial efforts to develop
and register the entity as a product.
"EpiGenix Joint Technology" shall mean the Joint Technology primarily
relating to informatics and genome science technology.
"EpiGenix Technology" shall mean all technology, including Intellectual
Property Rights therein, owned or licensed by EpiGenix (other than Joint
Technology), including the Assigned Technology, necessary or materially useful
in the Microcide Field, which EpiGenix has the right to license to Microcide
without obligation (or for which Microcide agrees to pay any
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 5
sublicensing royalties) as of the Effective Date and during the three (3) years
following the Effective Date; provided, however, that such period shall
terminate upon the closing of a transaction in which EpiGenix or Microcide shall
consummate a Change in Control; provided, further, [ * ].
"Regulatory Approval" shall mean the granting of all governmental or
regulatory approvals required, if any, for the sale of a Licensed Product in a
given country or jurisdiction within the Territory, including without
limitation, FDA approval in the United States.
"Surrogate Genetics" shall mean the use of genetically engineered
recipient cells, such as, but not limited to bacteria, fungi, worm, fly, or
mammalian cells, to create heterologous systems useful for gene-based functional
assays for any gene, in applications such as, but not limited to gene discovery,
functional genomics, drug screening, phenoprinting and diagnostics.
1.2 Rules of Construction. As used in this Agreement, all terms used in the
singular shall be deemed to include the plural, and vice versa, as the context
may require. The words "hereof," "herein" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including any exhibits
hereto, as the same may from time to time be amended or supplemented. The word
"including" when used herein is not intended to be exclusive and means
"including, without limitation." The descriptive headings of this Agreement are
inserted for convenience of reference only and do not constitute a part of and
shall not be utilized in interpreting this Agreement. The terms "party" and
"parties" shall refer to Microcide and EpiGenix, individually or collectively.
This Agreement has been negotiated by the parties hereto and their respective
counsel and shall be fairly interpreted in accordance with its terms and without
any rules of construction relating to which party drafted the Agreement being
applied in favor of or against either party.
SECTION 2: LICENSE GRANTS; ASSIGNMENT.
2.1 License from EpiGenix to Microcide. Subject to the rights of third parties
heretofore or hereafter existing with regard to technology developed after the
Effective Date, and to the extent that it is legally able to do so, EpiGenix
grants to Microcide a worldwide, royalty free, perpetual license, under
EpiGenix's Intellectual Property Rights in and to the EpiGenix Technology,
Assigned Technology, and the EpiGenix Joint Technology for use in: (i) the
antibacterial and antifungal portions of the Microcide Field on an exclusive
basis for the period of [ * ] after the Effective Date; (ii) the remainder of
the Microcide Field on a co-exclusive basis (together with EpiGenix) basis for
the period of [ * ] after the Effective Date; and (iii) thereafter on a
non-exclusive basis within and outside the Microcide Field; provided, however,
that in the event any Intellectual Property Rights are developed that are
considered part of the [ * ] program at EpiGenix and not developed pursuant to
the Research Collaboration Agreement or other collaboration agreements between
EpiGenix and Microcide,
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 6
then Microcide shall obtain no rights to such Intellectual Property Rights. The
rights shall include the right to sublicense, and all the customary rights to
make, have made, use, offer to sell, sell, have sold, import, export,
distribute, and have distributed products using the EpiGenix Technology,
Assigned Technology, and EpiGenix Joint Technology.
2.2 License from Microcide to EpiGenix. Subject to the rights of third parties
heretofore or hereafter existing and to the extent that it is legally able to do
so, Microcide grants to EpiGenix a worldwide, royalty-free, perpetual license,
under all Microcide's Intellectual Property Rights, in and to the Licensed
Technology and the Microcide Joint Technology for use in: (i) the EpiGenix Inner
Field, on an exclusive basis, for the period of [ * ] after the Effective Date;
(ii) the remainder of the EpiGenix Field on a co-exclusive basis (together with
Microcide) for the period of [ * ] after the Effective Date; and (iii)
thereafter on a non-exclusive basis within and outside the EpiGenix Field. The
rights shall include the right to sublicense, and all of the customary rights to
make, have made, use, offer to sell, sell, have sold, import, export,
distribute, and have distributed products developed using the Licensed
Technology, Licensed Patents, and Microcide Joint Technology.
2.3 Assignment. Subject to the license granted in Section 2.1 above, Microcide
agrees to irrevocably assign to EpiGenix all right, title and interest in and to
the Assigned Technology, and agrees to execute the Assignment Agreement,
attached hereto as Exhibit E, concurrently herewith. In addition, Microcide
agrees to execute all documents, and to fully cooperate as necessary and as
reasonably requested by EpiGenix to effect such assignment.
SECTION 3: PRODUCT DEVELOPMENT.
3.1 Joint Technology Committee.
(a) Microcide and EpiGenix shall form a Joint Technology Committee
which shall meet no less than quarterly or as otherwise mutually agreed to
oversee the transfer of technology, coordinate the joint research conducted
pursuant to this Agreement, and, prior to the end of any particular calendar
year, to establish a work plan for the ensuing calendar year for each party to
develop or acquire such technology, including, without limitation, specifying
the amount to be paid therefor by each party and the number of full time
employees to be assigned to the work plan. A draft of an initial work plan for
the first year is set forth hereto as Exhibit D, which will be revised and
modified in good faith by the parties to reflect the mutual agreement of the
parties over a period not to exceed sixty (60) days from the Effective Date. The
Joint Technology Committee will be composed of an equal number of voting
representatives from each of Microcide and EpiGenix (not to exceed three (3)
representatives per party).
(b) All decisions of the Joint Technology Committee will require a
unanimous vote of such committee. A quorum shall not exist for the purpose of a
vote of the Joint Technology Committee unless all members thereof are in
attendance. In the event of an inability of the Joint Technology Committee to
reach a decision on any issue, then such issue shall be submitted to the CEOs of
both parties. In the event that the CEOs are unable to reach a decision on such
issue,
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 7
then the matter shall go to arbitration pursuant to Section 11.6 hereto. Any
decision by the Joint Technology Committee shall be binding upon the parties.
(c) Either EpiGenix or Microcide may recommend changes, additions or
deletions to any work plan to the Joint Technology Committee which then will
consider whether to approve such changes in good faith. Any and all Confidential
Information, including Licensed Technology and Assigned Technology as well as
Microcide Joint Technology or EpiGenix Joint Technology, shall be provided to
the Joint Technology Committee and shall be disclosed to others within EpiGenix
or Microcide solely to assist either of them in conducting their respective
responsibilities under the Agreement or as necessary to utilize the license
rights granted under the Agreement.
3.2 Costs of Joint Technology Committee. In the event that the parties are each
located in separate cities, each party shall pay its own travel and lodging
expenses incurred in connection with the meetings of the Joint Technology
Committee described in Section 3.1, which meetings shall alternate between
locations so as to balance travel requirements and expenses. Each party shall
use reasonable efforts to cause its respective representatives to attend all
meetings of the Joint Technology Committee.
3.3 Joint Technology Development. During the three (3) year period following the
Effective Date (the "Joint Development Period"), the parties shall jointly work
to develop and utilize Joint Technology; provided, however, that the Joint
Development Period shall terminate upon the closing of a transaction in which
EpiGenix or Microcide shall consummate a Change in Control. During the Joint
Development Period, Microcide shall primarily be responsible for developing
molecular diversity and HTS technology, and EpiGenix will primarily be
responsible for developing informatics and genome science technology. In the
event that the parties cannot agree on the appropriate allocation of payment to
develop Joint Technology, either party shall be free to develop or have
developed such technology on its behalf, at its own expense, and shall
thereafter solely own such technology ("Non-Joint Technology"), subject to the
licenses granted pursuant to Section 2 hereto; provided, however, that any
license granted under Non-Joint Technology from one party to the other pursuant
to Section 2, shall commence on the date that is [ * ] after the Effective Date
(the "Non-Joint Technology License Date"); provided, further, that if during
such [ * ] the licensee desires to have such license commence prior to the
Non-Joint Technology License Date, the licensor shall negotiate in good faith
such a license, contingent upon such licensee agreeing to pay a mutually agreed
portion of the development costs associated with the development of such
Non-Joint Technology.
3.4 Costs of Joint Technology Development. Costs incurred in connection with the
development of the Joint Technology will be accounted for and paid as determined
by the Joint Technology Committee pursuant to the relevant work plan.
3.5 Permitted Use of Information and Assistance. EpiGenix and Microcide each
shall be entitled to use the information and assistance furnished by the other
party pursuant to this Section 3 solely as necessary to fulfill the obligations
set forth in this Agreement, without incurring any
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 8
additional royalty or other payment obligation. All such information and
assistance shall be deemed Confidential Information as defined in Section 9.1
hereto.
3.6 Delivery of Materials. Promptly after the Effective Date, and at regular
intervals thereafter: (i) Microcide will deliver to EpiGenix all materials owned
or licensed by Microcide, which Microcide has the right to license to EpiGenix,
that constitute the Licensed Patents, Licensed Technology, Microcide Joint
Technology, and Assigned Technology, or as necessary for EpiGenix to exercise
its rights thereto; and (ii) EpiGenix will deliver to Microcide all materials
and things that constitute the EpiGenix Technology, EpiGenix Joint Technology,
or as necessary for Microcide to exercise its rights thereto.
SECTION 4: OBLIGATIONS OF THE PARTIES
4.1 Non-Compete Obligations of EpiGenix. For a period of [ * ] from the
Effective Date of this agreement (the "Non-Compete Period"), EpiGenix agrees
that it will not undertake any efforts to discover, develop, commercialize,
offer to sell, sell, or distribute (alone or jointly with others, or authorize
others to do so) any products in the [ * ] EpiGenix further agrees not to
undertake any efforts to discover, develop, commercialize, offer to sell, sell
or distribute (alone or jointly with others, or authorize others to do so)
products in the [ * ] that utilize, are derived from, based upon or developed
using the [ * ] for a period of [ * ] after the Effective Date, and only to the
extent that each such technology is not in the public domain and freely
available for use at the time.
4.2 Non-Compete Obligations of Microcide. For a period of [ * ] from the
Effective Date, Microcide agrees that it will not undertake any efforts to
discover, develop, commercialize, offer to sell, sell, or distribute (alone or
jointly with others, or authorize others to do so) any products in the [ * ] and
for a period of [ * ] thereafter Microcide agrees that it will not undertake any
efforts to discover, develop, commercialize, offer to sell, sell, or distribute
(alone or jointly with others, or authorize others to do so) any products within
the [ * ] in a program area in which EpiGenix has entered into a corporate
collaboration or has undertaken an effort consisting of at least [ * ] Microcide
further agrees not to undertake any efforts to discover, develop, commercialize,
offer to sell, sell, or distribute (alone or jointly with others, or authorize
others to do so) products in the [ * ] using (i) [ * ] for a period of [ * ]
from the Effective Date, or (ii) [ * ] for a period of [ * ] after the Effective
Date, and only to the extent that each such technology is not in the public
domain and freely available for use at the time; provided, however, that
Microcide may use the [ * ] in the [ * ] Microcide further agrees not to
undertake any efforts to discovery, develop, commercialize, offer to sell, sell,
or distribute (alone or jointly with others, or authorize others to do so)
products in the [ * ] that utilize, are derived from, based upon or developed
using the [ * ] for a period of [ * ] after the Effective Date.
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 9
4.3 Disclosure. For a period of [ * ] after the Effective Date, each party will
promptly disclose to the other, by means of the Joint Technology Committee or
otherwise, any new inventions, improvements, derivative works, enhancements, and
know-how developed by or for such party and relating to: (i) the [ * ] in the
case of Microcide; or (ii) the [ * ] in the case of EpiGenix.
4.4 Inventions. In the event that EpiGenix solely invents or discovers any
improvement(s) or modification(s) solely applicable to: (i) Microcide
Technology, then ownership therein shall be solely in Microcide; or (ii)
EpiGenix Technology, then ownership therein shall be solely in EpiGenix. In the
event that Microcide solely invents or discovers any improvement(s) or
modification(s) solely applicable to: (x) EpiGenix Technology, then ownership
therein shall be solely in EpiGenix; or (y) Microcide Technology, then ownership
therein shall be solely in Microcide. Each party shall fully cooperate in
assuring that all rights in and to such inventions and discoveries are fully
vested in the other party in accordance with this Section 4.4. Each party shall
promptly notify the other party of any such inventions or discoveries set forth
in this Section 4.4.
SECTION 5: PATENT PROSECUTION.
5.1 Microcide Rights and Obligations. Microcide will have primary responsibility
for prosecuting and paying maintenance fees relating to the Licensed Patents and
for filing, prosecuting, and maintaining patent applications relating to the
Licensed Technology and Microcide Joint Technology, at Microcide's sole expense,
and in any and all countries in Microcide's sole discretion. EpiGenix will
cooperate fully with Microcide in connection with all filings and prosecution of
the Microcide Joint Technology. In the event that Microcide elects to abandon
any patent or claimed invention, or issued patent, or to withhold patenting any
disclosed invention, in any country, then Microcide shall provide EpiGenix with
at least sixty (60) days prior notice before the applicable deadline or
statutory bar of its election not to file, prosecute, or maintain any one of the
Licensed Patents or patents or patent applications relating to the Microcide
Joint Technology or Licensed Technology. If Microcide makes such election, then
EpiGenix will have the right to file, prosecute, or maintain the same at
EpiGenix's sole cost and expense, and Microcide will cooperate with EpiGenix's
filing, prosecution, and maintenance, as applicable, at EpiGenix's expense.
5.2 EpiGenix Rights and Obligations. EpiGenix will have the primary
responsibility for filing, prosecuting and paying maintenance fees relating to
the Assigned Technology, EpiGenix Technology, and EpiGenix Joint Technology, at
EpiGenix's sole expense, and in any and all countries in EpiGenix's sole
discretion. Microcide will cooperate fully with EpiGenix in connection with all
filings and prosecution of the EpiGenix Joint Technology. In the event EpiGenix
elects to abandon any patent or claimed invention, or issued patent, or to
withhold patenting any disclosed invention, in any country, then EpiGenix shall
provide Microcide with at least sixty (60) days prior notice before the
applicable deadline or statutory bar of its election not to file, prosecute, or
maintain any one of the patents or patent applications relating to the Assigned
Technology, EpiGenix Technology, or EpiGenix Technology. If EpiGenix makes such
*Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 10
election, then Microcide will have the right to file, prosecute or maintain the
same at Microcide's sole cost and expense, and EpiGenix will cooperate with
EpiGenix's filing, prosecution, and maintenance, as applicable, at Microcide's
expense.
SECTION 6: ENFORCEMENT RIGHTS.
6.1 Microcide Rights and Obligations. Microcide will have primary responsibility
for enforcing the Licensed Technology, Licensed Patents, and Microcide Joint
Technology rights with respect to third party infringers. Microcide shall use
diligent, good faith efforts to enforce all Intellectual Property Rights
included within the Licensed Technology, Licensed Patents, and Microcide Joint
Technology that would be infringed by the manufacture, use or sale by an
unlicensed party of products based on, derived from, or incorporating any such
Licensed Technology, Licensed Patents, or Microcide Joint Technology
(collectively, the "Microcide Rights"). Upon learning of a significant and
continuing infringement of any Microcide Rights by a Third Party, Microcide or
EpiGenix, as the case may be, promptly shall provide notice to the other party
in writing of the fact and shall supply the other party with all evidence
possessed by the notifying party pertaining to said infringement(s). Microcide
shall have ninety (90) days from the giving of notice under this Section 6.1, or
such lesser period of time if a further delay would result in material harm to,
or the loss of a material right of EpiGenix, to abate the infringement, or to
file suit against at least one of the infringers, at its sole expense, following
consultation with EpiGenix. If Microcide does not, within ninety (90) days of
the giving of such notice, or such lesser period of time if a further delay
would result in material harm to, or the loss of a material right of, EpiGenix,
abate the infringement or file suit to enforce the Microcide Rights, EpiGenix
shall have the right, at its own expense, to take whatever action it deems
appropriate in its own name or, if required by law, in the name of Microcide, to
enforce the Microcide Patent Rights. All monies recovered upon the final
judgment or settlement of any such suit shall be retained by the party bearing
the costs of enforcement of the Microcide Rights.
6.2 EpiGenix Rights and Obligations. EpiGenix will have primary responsibility
for enforcing the Assigned Technology, EpiGenix Technology, and EpiGenix Joint
Technology rights with respect to third party infringers. EpiGenix shall use
diligent, good faith efforts to enforce all Intellectual Property Rights
included within the Assigned Technology, EpiGenix Technology, and EpiGenix Joint
Technology that would be infringed by the manufacture, use or sale by an
unlicensed party of products based on, derived from, or incorporating any such
Assigned Technology, EpiGenix Technology, and EpiGenix Joint Technology
(collectively, the "EpiGenix Rights"). Upon learning of a significant and
continuing infringement of any EpiGenix Rights by a Third Party, EpiGenix or
Microcide, as the case may be, promptly shall provide notice to the other party
in writing of the fact and shall supply the other party with all evidence
possessed by the notifying party pertaining to said infringement(s). EpiGenix
shall have ninety (90) days from the giving of notice under this Section 6.2, or
such lesser period of time if a further delay would result in material harm to,
or the loss of a material right of Microcide, to abate the infringement, or to
file suit against at least one of the infringers, at its sole expense, following
consultation with Microcide. If EpiGenix does not, within ninety (90) days of
the giving of such notice, or such lesser period of time if a further delay
would result in material harm to, or the loss of a material right of Microcide,
abate the infringement or file suit to
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<PAGE> 11
enforce the EpiGenix Rights, Microcide shall have the right, at its own expense,
to take whatever action it deems appropriate in its own name or, if required by
law, in the name of EpiGenix, to enforce the EpiGenix Rights. All monies
recovered upon the final judgment or settlement of any such suit shall be
retained by the party bearing the costs of enforcement of the EpiGenix Rights.
SECTION 7: REPRESENTATIONS AND WARRANTIES
7.1 Microcide Representations and Warranties. Microcide hereby represents and
warrants to EpiGenix that: (i) Microcide has the right to enter into and perform
Microcide's obligations under this Agreement and to grant the licenses granted
herein; (ii) to the best of Microcide's knowledge and belief, the execution,
delivery, and performance of this Agreement does not conflict with, violate, or
breach any agreement of Microcide or with Microcide's Certificate of
Incorporation or Bylaws; (iii) to the best of its knowledge and belief it owns
all unencumbered rights to the Licensed Patents and Assigned Technology; (iv) to
the best of Microcide's knowledge and belief it has not received any written
communication alleging infringement of any third party Intellectual Property
Rights with regard to the Licensed Patents or Assigned Technology.
7.2 EpiGenix Representation and Warranties. EpiGenix hereby represents and
warrants to Microcide that: (i) EpiGenix has the right to enter into and perform
EpiGenix's obligations under this Agreement and to grant the licenses granted
herein; (ii) to the best of EpiGenix's knowledge and belief, the execution,
delivery, and performance of this Agreement does not conflict with, violate, or
breach any agreement of EpiGenix or with EpiGenix's Certificate of Incorporation
or Bylaws.
7.3 Disclaimer of Warranties. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NEITHER
PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR USE AND ANY OTHER STATUTORY WARRANTIES.
SECTION 8: INDEMNIFICATION
8.1 By Microcide. Subject to the provisions of Section 8.3 hereto, Microcide
hereby agrees at all times during the Term of this Agreement to be responsible
for, and to indemnify, defend and hold harmless EpiGenix from and against any
and all claims, actions, proceedings, expenses, liabilities or losses, including
reasonable legal expenses and costs, including attorney fees arising from or
based on a breach of Microcide's representations and warranties contained in
Section 7.1 hereto.
8.2 By EpiGenix. Subject to the provisions of Section 8.3 hereto, EpiGenix
hereby agrees to indemnify, defend and hold harmless Microcide from and against
any and all claims, actions, proceedings, liabilities or losses, including
reasonable legal expenses and costs, including attorney fees arising from or
based on a breach of EpiGenix's representations and warranties contained herein.
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<PAGE> 12
8.3 Notification. The parties shall promptly notify each other of any claims or
suits with respect to which indemnification is sought. The party requesting
indemnification shall permit the indemnifying party to assume the defense of
such claims or suits giving rise to the request at the indemnifying party's
expense. The requesting party shall cooperate with the indemnifying party in
such defense when reasonably requested to do so. No settlement or compromise
involving any liability or obligation on the part of a party to this Agreement
shall be binding on such party without such party's prior written consent, such
consent not to be unreasonably withheld.
8.4 Limitation of Liability. IN NO EVENT WILL EITHER PARTY HERETO BE LIABLE FOR
ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES SUFFERED BY THE OTHER
PARTY ARISING IN ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY
OF LIABILITY; PROVIDED HOWEVER, THAT THE FOREGOING LIMITATION SHALL NOT APPLY TO
A BREACH BY EITHER PARTY OF SECTION 9. THIS LIMITATION WILL APPLY EVEN IF THE
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
SECTION 9: CONFIDENTIALITY
9.1 "Confidential Information" shall mean any and all non-public and proprietary
information, including, without limitation, information relating to the
Intellectual Property Rights of the other party, the Licensed Technology,
Licensed Patents, Assigned Technology, EpiGenix Technology, or Joint Technology,
and the business plans of the other party, including information provided by
either party to the other party prior to the Effective Date, which such party
knows or has reason to know are or contain trade secrets or other proprietary
information of the other, and which is specifically designated as such and which
is disclosed by either party to the other in any form in connection with this
Agreement, and if orally disclosed, is reduced in writing and provided to the
other party within thirty (30) days of such disclosure. During the term of this
Agreement and thereafter, each party shall maintain in confidence all
Confidential Information and materials disclosed by the other party and shall
not use such Confidential Information for any purpose except as permitted by
this Agreement or disclose the same to anyone other than those of its
Affiliates, sublicensees, employees, consultants, agents or subcontractors as
are necessary in connection with such party's activities as contemplated in this
Agreement. Each party shall obtain a written agreement from any sublicensees,
employees, consultants, agents and subcontractors, prior to disclosure, to hold
in confidence and not make use of such Confidential Information for any purpose
other than those permitted by this Agreement.
9.2 Exceptions. Notwithstanding the above, neither party shall have liability to
the other with regard to any Confidential Information that: (i) is or becomes
publicly known through no wrongful act of the receiving party; (ii) was already
known to the receiving party; (iii) has rightfully been received from a third
party not under confidentiality obligations with respect to such information;
(iv) has been independently developed by the receiving party without reference
to or use of the other party's Confidential Information; (v) has been approved
for release by
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<PAGE> 13
written authorization of the disclosing party; or (vi) is required to be
disclosed by the receiving party pursuant to the order or requirement of a
court, administrative agency, or other governmental body; provided, however,
that the receiving party shall provide reasonable advance notice to enable the
disclosing party to seek a protective order or otherwise prevent such
disclosure.
9.3 Agreement and Terms Confidential. Unless otherwise agreed to in writing or
as necessary to comply with a valid legal order of a court of law or agency of
competent jurisdiction or with the rules and regulations promulgated by the
Securities and Exchange Commission, both the existence and terms of this
Agreement shall be kept confidential by the parties.
9.4 Publication. Both parties agree not to publish any reports or papers, make
any public presentation or otherwise publicly disseminate any information
relating to any Confidential Information or other documentation or data
belonging to the other, and which was received pursuant to the terms of this
Agreement without first obtaining written consent of the other party hereto,
unless and to the extent disclosure of such documentation or data is necessary
to comply with any law or government regulations, and provided further that the
non-publishing party is so notified. Both parties also agree to provide each
other with a manuscript of any proposed publication or written summary of any
proposed oral disclosure at least twenty-one (21) days prior to submission
thereof for publication and to incorporate any changes in such manuscript as are
necessary to protect the Confidential Information of the non-publishing party.
EpiGenix and Microcide may also require the other to include an acknowledgment
of its role in any study to be published. Except as otherwise provided herein,
no right, express or implied, is granted by this Agreement to either party to
use in any manner the name of EpiGenix or Microcide or any other trade name or
trademark of the other party in connection with the performance of this
Agreement.
SECTION 10: TERM AND TERMINATION
10.1 Term and Expiration. The term of this Agreement shall begin on the
Effective Date of this Agreement, and shall end at the expiration of the
last-to-expire Licensed Patent, unless earlier terminated pursuant to the
provisions of this Section 10. This Agreement may be terminated at any time upon
mutual agreement of the parties.
10.2 Termination With Cause. Upon any material breach of this Agreement or the
Stock Purchase Agreement by either party, the non-breaching party may terminate
this Agreement upon sixty (60) days written notice to the breaching party. The
notice shall become effective at the end of the thirty (60) day period unless
the breaching party shall cure such breach within such period.
10.3 Bankruptcy of Microcide. All rights and licenses granted under or pursuant
to this Agreement by Microcide to EpiGenix in respect of Licensed Patents,
Licensed Technology, and Microcide Joint Technology are and shall otherwise be
deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of
rights to "Intellectual Property" as defined under Section 101(57) of the
Bankruptcy Code. The parties agree that EpiGenix, as licensee of such
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<PAGE> 14
rights and licenses, shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code. The parties further agree that, in the
event that any proceeding shall be instituted by or against Microcide seeking to
adjudicate it as bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief or composition of it
or its debts under any law relating to bankruptcy, insolvency, or reorganization
or relief of debtors, or seeking an entry of any order for relief or the
appointment of a receiver, trustee or other similar official for it for any
substantial part of its property or if it shall take any action to authorize any
of the foregoing actions (each "Proceeding"), EpiGenix shall have the right to
retain and enforce its rights under this Agreement, including, but not limited
to the right to a complete duplicate of (or complete access to, as appropriate)
all Licensed Patents, Licensed Technology, and Microcide Joint Technology, if
not already in EpiGenix's possession, which shall be promptly delivered to
EpiGenix upon any such commencement of a Proceeding upon written request
therefore by EpiGenix, unless Microcide elects to continue to perform all of its
obligations under this Agreement; or if not otherwise delivered upon rejection
of this Agreement by or on behalf of Microcide upon written request therefore by
EpiGenix.
10.4 Bankruptcy of EpiGenix. All rights and licenses granted under or pursuant
to this Agreement by EpiGenix to Microcide in respect of EpiGenix Technology,
Assigned Technology, and EpiGenix Joint Technology are and shall otherwise be
deemed to be, for purposes of Section 365(n) of the Bankruptcy Code, licenses of
rights to "Intellectual Property" as defined under Section 101(57) of the
Bankruptcy Code. The parties agree that Microcide, as licensee of such rights
and licenses, shall retain and may fully exercise all of its rights and
elections under the Bankruptcy Code. The parties further agree that, in the
event that any Proceeding shall be instituted by or against EpiGenix, Microcide
shall have the right to retain and enforce its rights under this Agreement,
including, but not limited to the right to a complete duplicate of (or complete
access to, as appropriate) all EpiGenix Technology, Assigned Technology, and
EpiGenix Joint Technology, if not already in Microcide's possession, which shall
be promptly delivered to Microcide upon any such commencement of a Proceeding
upon written request therefore by Microcide, unless EpiGenix elects to continue
to perform all of its obligations under this Agreement; or if not otherwise
delivered upon rejection of this Agreement by or on behalf of EpiGenix upon
written request therefore by Microcide.
10.5 Effect of Termination. Termination or expiration of this Agreement shall
not release any party hereto from any liability which, at the time of such
termination or expiration, has already accrued to the other party, or which is
attributable to such termination or expiration, nor shall it preclude either
party from pursuing all rights and remedies it may have hereunder or at law or
in equity with respect to any breach of this Agreement. Termination of this
Agreement pursuant to Section 10.2 shall not affect any rights or licenses
granted to the non-breaching party, which shall survive any such termination.
Breach of this Agreement shall constitute a breach of the Stock Purchase
Agreement.
SECTION 11: MISCELLANEOUS PROVISIONS
11.1 Relationship of Parties. It is understood and agreed that both parties
hereto are independent contractors and are engaged in the operation of its own
respective businesses, and
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<PAGE> 15
neither party hereto is to be considered the agent or partner of the other party
for any purpose whatsoever. Neither party has any authority to enter into any
contracts or assume any obligations for the other party or make any warranties
or representations on behalf of the other party.
11.2 Survival. The provisions of Sections 1, 2, 4 (as stated), 5, 6, 7, 8, 9,
10.5, and 11 shall survive termination or expiration of this Agreement. In the
event that this Agreement is terminated by EpiGenix pursuant to Section 10.2,
then the provisions of Section 4.1 shall not survive the termination of this
Agreement. In the event that this Agreement is terminated by Microcide pursuant
to Section 10.2, then the provisions of Section 4.2 shall not survive the
termination of this Agreement.
11.3 Entire Agreement. This Agreement sets forth the entire agreement and
understanding between the parties and supersedes all previous agreements,
promises, representations, understandings, and negotiations, whether written or
oral between the parties with respect to the subject matter hereof. There shall
be no amendments or modifications to this Agreement, except by a written
document signed by both parties.
11.4 Assignment. Subject to the express provisions regarding the effects of
Change in Control, this Agreement shall not be assigned by either party without
the prior written consent of the other party, except as part of a sale or
transfer, by way of merger or otherwise, of all or substantially all of the
business assets of such party to which this Agreement relates, and provided
further that the assignee agrees to be bound in writing by all the terms of this
Agreement in place of the assignor, or the assignor agrees to remain responsible
for the obligations of the assignee pursuant to the terms set forth herein.
11.5 Binding Upon Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of successors in interest and assigns of Microcide and
EpiGenix subject to the limitations on assignment.
11.6 Governing Law; Disputes and Alternative Dispute Resolution. This Agreement
shall be construed and enforced in accordance with the laws of the State of
California, without giving effect to its principles of conflicts of law. Any
dispute or claim arising out of or in connection with this Agreement (unless
otherwise set forth herein) shall be resolved in accordance with the provisions
set forth herein and attached as Exhibit C attached hereto.
11.7 Severability. If any provision of this Agreement is finally held to be
invalid, illegal or unenforceable by a court or agency of competent
jurisdiction, that provision shall be severed or shall be modified by the
parties so as to be legally enforceable (and to the extent modified, it shall be
modified so as to reflect, to the extent possible, the intent of the parties)
and the validity, legality and enforceability of the remaining provisions shall
not be affected or impaired in any way.
11.8 No Waiver. Any delay in enforcing a party's rights under this Agreement or
any waiver as to a particular default or other matter shall not constitute a
waiver of a party's right to the future enforcement of its rights under this
Agreement.
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11.9 Attorney's Fees. In the event of a dispute under this Agreement between the
parties, or in the event of any default, the party prevailing in the resolution
of any such dispute or default shall be entitled to request a recovery of its
attorneys' fees and other costs.
11.10 Notices. Any notice required or permitted by this Agreement to be given to
either party shall be in writing and shall be deemed given when delivered
personally, by confirmed telecopy to a fax number designated in writing by the
party to whom notice is given, or by registered, recorded or certified mail,
return receipt requested, and addressed to the party to whom such notice is
directed, at:
If to Microcide: Microcide Pharmaceuticals, Inc.
850 Maude Avenue
Mt. View, CA 94043
Telephone: 650-428-3525
Facsimile: 650-428-3534
Attention: President and CEO
with a copy to: Michael O'Donnell, Esq.
Wilson, Sonsini, Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Telephone: 415-493-9300
Facsimile: 415-493-6811
If to EpiGenix: EpiGenix, Inc. cc: Joshua Green, Esq.
_______________________________ Venture Law Group
_______________________________ 2800 Sand Hill Road
Telephone:_____________________ Menlo Park, CA 94025
Fax:___________________________ Telephone: 415-854-4488
Attention:_____________________ Fax: 415-854-1121
or at such other address or telecopy number as such party to whom notice is
directed may designate to the other party in writing.
11.11 Public Announcements. The parties will cooperate to create appropriate
public announcements of the relationship set forth in this Agreement. Neither
party shall make any public announcement regarding the existence or content of
this Agreement without the other party's prior written approval and consent.
11.12 Force Majeure. If the performance of this Agreement or any obligations
hereunder is prevented, restricted or interfered with by reason of fire or other
casualty or accident, strikes or labor disputes, war or other violence, any law,
order, proclamation, ordinance, demand or requirement of any government agency,
or any other act or condition beyond the control of the parties hereto, the
party so affected, upon giving prompt notice to the other party shall be
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<PAGE> 17
excused from such performance (other than the obligation to pay money) during
such prevention, restriction or interference.
11.13 Counterparts. This Agreement shall be fully executed in two (2) original
counterparts, each of which shall be deemed an original.
[Signature page follows.]
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IN WITNESS WHEREOF, authorized officers of each of EpiGenix and
Microcide have executed this Agreement as of the date first set forth above.
MICROCIDE EPIGENIX, INC.
PHARMACEUTICALS, INC.
By: [SIG] By: [SIG]
------------------------------- -------------------------------
Name: Name:
------------------- --------------------
Title: Title:
------------------- --------------------
Date: Date:
----------------------------- --------------------
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EXHIBIT A
ASSIGNED TECHNOLOGY
(TO BE COMPLETED PRIOR TO EXECUTION OF THIS AGREEMENT.)
1. INTELLECTUAL PROPERTY
1.1. PATENT APPLICATIONS
[*]
1.2. SURROGATE GENETICS TECHNOLOGY
[*]
1.3. INFORMATICS TECHNOLOGY
[*]
1.4. LABORATORY NOTEBOOKS AND OTHER WRITTEN MATERIALS
1.4.1. Microcide Notebook [ * ]
1.4.2. Microcide Notebook [ * ]
1.4.3. Microcide Notebook [ * ]
1.4.4. Microcide Notebook [ * ]
1.4.5. Microcide Notebook [ * ]
1.4.6. Microcide Notebook [ * ]
1.4.7. Microcide Notebook [ * ]
1.4.8. Microcide Notebook [ * ]
1.4.9. Microcide Notebook [ * ]
1.4.10. Microcide Notebook [ * ]
1.4.11. Microcide Notebook [ * ]
1.4.12. Microcide Notebook [ * ]
1.4.13. Microcide Notebook [ * ]
1.4.14. Microcide Notebook [ * ]
1.4.15. Microcide Notebook [ * ]
1.4.16. Other notes and written information from [ * ]
1.4.17. Business Plan and earlier drafts dated 11/18/97
1.5. CONTRACTS AND COLLABORATIVE AGREEMENTS
1.5.1. Collaborative agreement between [ * ] and Microcide
Pharmaceuticals, Inc.
1.5.2. Intranet development contract between Vivid Studios and Microcide
Pharmaceuticals, Inc.
1.5.3. Intellectual property resulting from Genetics Consulting
Board/Scientific Advisory Board Agreements with [ * ] pertaining
to the human genetics program.
[*]
- -------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 20
EXHIBIT B
LICENSED PATENTS
[ * ]
- -------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 21
EXHIBIT C
ALTERNATIVE DISPUTE RESOLUTION MECHANISM
1. Mediation
In the event of any dispute or claim arising out of or related to this
Agreement, the parties will attempt in good faith to resolve such dispute or
claim by mediation in San Jose, California, in accordance with the American
Arbitration Association Commercial Mediation Rules. The mediation shall be held
within thirty (30) days of the end of the fifteen day negotiation period.
Nothing herein, however, shall prohibit either party from initiating arbitration
proceedings if such party would be substantially prejudiced by a failure to act
during the time that such good faith efforts are being made to resolve the
dispute or claim through negotiation or mediation. The cost of mediation shall
be shared equally by the parties to the mediation. Any settlement reached by
mediation shall be reduced to writing, signed by the parties, and shall be
binding on them.
2. Arbitration
Any dispute or claim arising out of or related to this Agreement, or
the interpretation, making, performance, breach, validity or termination
thereof, which has not been resolved by negotiation or mediation as set forth
above, shall be finally settled by binding arbitration in San Jose, California,
under the Commercial Arbitration Rules and the Supplementary Procedures for
Large Complex Disputes of the American Arbitration Association (together with
"AAA Rules") by one arbitrator appointed in accordance with the AAA Rules.
This Agreement shall be governed by the law of the state of California.
The arbitrator shall apply California law to the merits of any dispute or claim,
without reference to rules of conflict of law. The arbitrator shall have the
power to decide all questions of arbitrability. The arbitration proceedings
shall be governed by federal arbitration law and by the AAA Rules, without
reference to state arbitration law. At the request of either party, the
arbitrator will enter an appropriate protective order to maintain the
confidentiality of information produced or exchanged in the course of the
arbitration proceedings. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
The parties may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this arbitration agreement
and without any abridgment of the powers of the arbitrator.
The arbitrator may award to the prevailing party, if any, as determined
by the arbitrator, all of its costs and fees, including, without limitation, AAA
administrative fees, arbitrator fees, travel expenses, out-of-pocket expenses
(including, without limitation, such expenses as copying, telephone, facsimile,
postage, and courier fees), witness fees, and reasonable attorneys' fees.
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EXHIBIT D
1998 WORK PLAN
[ * ]
- -------
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 23
EXHIBIT E
ASSIGNMENT
THIS ASSIGNMENT, is by and between MICROCIDE PHARMACEUTICALS, INC.
("Assignor"), a corporation duly organized under and pursuant to the laws of
Delaware, and having a principal place of business at 850 Maude Ave., Mt. View,
CA 94043, and ICONIX PHARMACEUTICALS, INC., a corporation duly organized under
and pursuant to the laws of Delaware, and having a principal place of business
at 850 Maude Ave., Mt. View, CA 94043 ("Assignee").
WHEREAS, Assignor is desirous of assigning all of its right, title, and
interest in and the issued patents, pending patent applications, and invention
disclosures listed in Schedule A attached hereto, including any U.S. or foreign
patents that issue thereon (the "Patents") to Assignee; and
WHEREAS, Assignee is desirous of acquiring the entire right, title and
interest in and to said Patents;
NOW THEREFORE, in consideration of good and sufficient considerations, the
receipt of which is hereby acknowledged, said Assignor has sold, assigned,
transferred and set over, and by these presents does sell, assign, transfer and
set over, to Assignee, its successors, legal representatives and assigns, the
entire right, title and interest in and to the above-referenced Patents, and any
and all Letters Patent or Patents in the United States of America and all
foreign countries which may be granted therefor and thereon, and in and to any
and all divisions, continuations, and continuations-in-part of said application,
and reissues and extensions of said Patents, and all rights under the
International Convention for the Protection of Industrial Property, the same to
be held and enjoyed by said Assignee, for its own use and behoof and the use and
behoof of its successors, legal representatives and assigns, to the full end of
the term or terms for which Patents may be granted, as fully and entirely as the
same would have been held and enjoyed by the Assignor, had this sale and
assignment not been made.
AND for the same consideration, said Assignor hereby covenants and agrees
to and with said Assignee, its successors, legal representatives and assigns,
that, at the time of execution and delivery of these presents, said Assignor is
the sole and lawful owner of the entire right, title and interest in and to the
above-referenced Patents, and that the same are encumbered and that said
Assignor has good and full right and lawful authority to sell and convey the
same in the manner herein set forth.
AND for the same consideration, said Assignor hereby covenants and agrees
to and with said Assignee, its successors, legal representatives and assigns,
that said Assignor will, whenever counsel of the said Assignee, or the counsel
of its successors, legal representatives and assigns, shall advise that any
proceeding in connection with said Patents in any country, including
interference proceedings, is lawful and desirable, or that any division,
continuation or continuation-in-part of any application for Patent, or any
reissue or extension of any Patent, to be obtained thereon, is lawful and
desirable, sign all papers and documents, take all lawful oaths, and do all acts
necessary or required to be done for the procurement, maintenance, enforcement
and defense of such Patents, without charge to said Assignee, its successors,
legal representatives and assigns, but at the cost and expense of said Assignee,
its successors, legal representatives and assigns.
AND said Assignor hereby requests the Commissioner of Patents to issue said
Patents of the United States to said Assignee as the Assignee of said inventions
and the Patents to be issued thereon for the sole use and behoof of said
Assignee, its successors, legal representatives and assigns.
Date: January 14, 1998 Assignor: /s/ James E. Rurka
-----------------------------
By: James E. Rurka
-----------------------------
(Name)
Its: President & CEO
-----------------------------
(Title)
<PAGE> 24
EXHIBIT F
DEFINITIONS
The MOLECULAR DIVERSITY CORE TECHNOLOGY AREA includes work related to
maintaining and continuing the expansion of the synthetic compound and the
natural products library and follow-up work on screening hits identified from
the libraries. [ * ]
The HIGH THROUGHPUT SCREENING CORE TECHNOLOGY AREA includes work related to
both the enabling and the actual task of high throughput screening. [ * ]
The INFORMATICS CORE TECHNOLOGY AREA includes work related to computational
support for research programs and corporate administration. [ * ]
The GENOME SCIENCES CORE TECHNOLOGY AREA includes work related to the [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 1
EXHIBIT 2.3
ANTIVIRAL AND SURROGATE GENETICS
RESEARCH AND COLLABORATION AGREEMENT
MICROCIDE PHARMACEUTICALS, INC.
AND
EPIGENIX, INC.
JANUARY 14, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1. DEFINITIONS......................................................2
1.1 Affiliate...............................................2
1.2 Agency..................................................2
1.3 Collaboration Technology................................2
1.4 Collaboration Compound..................................2
1.5 Confidential Information ...............................2
1.6 Control.................................................2
1.7 Discovery Period........................................3
1.8 Effective Date..........................................3
1.9 Field...................................................3
1.10 Initial Target..........................................3
1.11 Invention...............................................3
1.12 IND ....................................................3
1.13 Joint Research Committee or JRC.........................3
1.14 Know-How................................................3
1.15 Lead Compound...........................................3
1.16 Licensed Product........................................3
1.17 Microcide Invention.....................................3
1.18 Microcide Product.......................................3
1.19 Microcide Targets.......................................3
1.20 EpiGenix Product........................................3
1.21 Microcide Field.........................................3
1.22 Net Sales...............................................4
1.23 New Drug Application or NDA ............................4
1.24 New Target..............................................4
1.25 Party...................................................4
1.26 Patent Rights...........................................5
1.27 Phase I, Phase II and Phase III.........................5
1.28 Rejected Targets........................................5
1.29 Research Plan...........................................5
1.30 Research Program........................................5
1.31 Research Term...........................................5
1.32 Sublicensee.............................................5
1.33 Surrogate Genetics......................................5
1.34 Technology Agreement....................................5
1.35 Term of the Agreement...................................5
1.36 Territory...............................................5
1.37 Third Party.............................................5
1.38 Valid Claim.............................................5
</TABLE>
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<PAGE> 3
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1.39 Validation Criteria.....................................6
2. RESEARCH PROGRAM.................................................6
2.1 Collaborative Research Program..........................6
2.2 Records; Reports........................................8
2.3 Term and Termination of Research Program................8
2.4 Research Program Exclusivity............................8
3. JOINT RESEARCH COMMITTEE........................................9
3.1 Membership..............................................9
3.2 Responsibilities........................................9
3.3 Meetings................................................9
3.4 Decision Making; Disputes...............................9
4. LICENSE GRANTS..................................................10
4.1 Grant by EpiGenix......................................10
4.2 Cross-Licenses.........................................11
5. CONSIDERATION...................................................11
5.1 Research Program Funding...............................11
5.2 Research Program Milestones............................12
5.3 Royalties..............................................13
5.4 Withholding Taxes......................................14
6. BOOKS AND RECORDS...............................................14
6.1 Royalty Reports and Payments...........................14
6.2 Payment Method; Late Payments..........................14
6.3 Currency Conversion....................................14
6.4 Restrictions on Payments...............................15
6.5 Records; Inspection....................................15
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
7. COMMERCIALIZATION...............................................15
7.1 Product Development....................................15
7.2 Due Diligence..........................................16
8. INTELLECTUAL PROPERTY...........................................16
8.1 Ownership of Collaboration Technology..................16
8.2 Patent Rights..........................................16
8.3 Enforcement............................................17
8.4 Allegations of Infringement by Third Parties...........18
8.5 Independent Inventions.................................19
8.6 Microcide Trademarks...................................19
8.7 Use of Trademarks......................................19
9. REPRESENTATIONS AND WARRANTIES..................................20
9.1 Legal Authority........................................20
9.2 No Conflicts...........................................20
9.3 Others Bound...........................................20
9.4 Disclaimer of Warranties...............................20
10. CONFIDENTIALITY.................................................20
10.1 Confidential Information...............................20
10.2 Permitted Disclosures..................................21
10.3 Publicity..............................................21
10.4 Publication............................................21
11. INDEMNIFICATION.................................................22
11.1 Microcide..............................................22
11.2 EpiGenix...............................................22
11.3 Procedure..............................................22
</TABLE>
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<PAGE> 5
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
12. TERM AND TERMINATION............................................23
12.1 Term...................................................23
12.2 Termination for Cause..................................23
12.3 Effect of Bankruptcy...................................23
12.4 Effect of Termination..................................23
12.5 Survival...............................................24
13. DISPUTE RESOLUTION..............................................24
13.1 Mediation..............................................24
13.2 Arbitration............................................25
14. MISCELLANEOUS...................................................25
14.1 Governing Law..........................................25
14.2 Waiver.................................................25
14.3 Assignment.............................................25
14.4 Notices................................................25
14.5 Performance Warranty...................................26
14.6 Force Majeure..........................................26
14.7 Independent Contractors................................26
14.8 Advice of Counsel......................................27
14.9 Severability...........................................27
14.10 Patent Marking.........................................27
14.11 Further Assurances.....................................27
14.12 Compliance with Laws...................................27
14.13 No Implied Licenses or Warranties......................28
14.14 Entire Agreement.......................................28
14.15 Headings...............................................28
14.16 Counterparts...........................................28
</TABLE>
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<PAGE> 6
ANTIVIRAL AND SURROGATE GENETICS RESEARCH
AND COLLABORATION AGREEMENT
This ANTIVIRAL AND SURROGATE GENETICS RESEARCH AND
COLLABORATION AGREEMENT (the "Agreement"), effective as of January 14, 1998, is
made by and between EpiGenix, Inc., a Delaware corporation, having an office at
850 Maude Avenue, Mountain View, CA 94043 ("EpiGenix"), and Microcide
Pharmaceuticals, Inc., a Delaware corporation, having an office at 850 Maude
Avenue, Mountain View, CA 94043 ("Microcide").
BACKGROUND
A. Microcide has expertise in the field of gene discovery, gene
functional analysis and high-throughput screening techniques and has proprietary
information useful for discovery of viral therapeutics.
B. EpiGenix is a company established to use genomic approaches,
including surrogate genetics, to discover, develop, and commercialize products
for use in human health, animal health, agriculture, and the like.
C. Concurrent with the execution of this Agreement, Microcide and
EpiGenix will execute a Core Technology Development and License Agreement
pursuant to which Microcide will license or assign the aforementioned
proprietary information to EpiGenix and a Stock Purchase Agreement pursuant to
which Microcide shall acquire certain shares of EpiGenix stock.
D. EpiGenix and Microcide wish to enter into a collaborative research
program to: (i) discover novel leads for validated viral targets using Surrogate
Genetics, high-throughput screening and multiplexing, for development and
commercialization by Microcide of products to treat viral diseases in human,
animal and agricultural applications; (ii) to discover novel antiviral targets
for screening; and (iii) to adapt EpiGenix Surrogate Genetics technology for use
by Microcide for research in antibacterial and antifungal drug discovery. If
such efforts are successful, Microcide shall market certain Licensed Products
for use in the Field or in the Microcide Field, in the Territory.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises, contained herein, EpiGenix and Microcide agree as follows:
<PAGE> 7
1. DEFINITIONS
The following capitalized terms shall have the meanings indicated for
purposes of this Agreement:
1.1 "Affiliate" shall mean any corporation, association or other entity
which directly or indirectly controls, is controlled by or is under common
control with the party in question. As used in this definition of "Affiliate,"
the term "control" shall mean direct or indirect beneficial ownership of fifty
percent (50%) or more of the voting or equity interest in such corporation or
other business entity.
1.2 "Agency" shall mean the U.S. Food and Drug Administration or any
successor entity (the "FDA"), and agencies of other governments of other
countries having similar jurisdiction over the development, manufacturing and
marketing of pharmaceuticals.
1.3 "Collaboration Technology" shall mean all Know-How and Patent
Rights that a Party owns or Controls, which is conceived, reduced to practice or
otherwise developed by EpiGenix (or its agents) or Microcide (or its agents) or
jointly by EpiGenix and Microcide (or their respective agents) during the
Research Term arising out of the Research Program.
1.4 "Collaboration Compound" shall mean any compositions of matter to
be used in the Field that incorporate, are derived from, developed using, or
based upon the Initial Targets (i) discovered, identified, synthesized or
acquired by or on behalf of EpiGenix or Microcide [ * ] and meet the Validation
Criteria [ * ] or (ii) [ * ] provided, however, that compositions of matter that
incorporate, are derived from, developed using or based upon the New Targets
accepted into the Research Plan as Initial Targets shall be considered
Collaboration Compounds for the purposes of this Agreement, only if such
compositions are (a) discovered, identified, synthesized or acquired by or on
behalf of EpiGenix or Microcide [ * ] and meet the Validation Criteria [ * ]
1.5 "Confidential Information" shall have the meaning set forth in
Section 10.1.
1.6 "Control" shall mean possession of the ability to grant the
licenses or sublicenses as provided for herein without violating the terms of
any agreement or other arrangement with any Third Party.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 8
1.7 "Discovery Period" shall have the meaning set forth in Section
4.1.1.
1.8 "Effective Date" shall mean the date of this Agreement first
written above.
1.9 "Field" shall mean viral therapeutics for human, animal and
agricultural applications using small molecule approaches and viral disease
diagnostic tools.
1.10 "Initial Target" shall mean those targets listed on Exhibit A
attached hereto and those New Targets which are included as Initial Targets
under the Research Plan as provided in Section 2.1.1.
1.11 "Invention" shall have the meaning set forth in Section 2.2.1.
1.12 "IND" shall mean an Investigational New Drug application, as
defined in the U.S. Food, Drug and Cosmetic Act and the regulations promulgated
thereunder, or any corresponding foreign application, registration or
certification.
1.13 "Joint Research Committee" or "JRC" shall have the meaning set
forth in Article 3.
1.14 "Know-How" shall mean all ideas, nonpatentable inventions, data,
instructions, processes, formulas, expert opinions and information, including,
without limitation, biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, clinical, safety, manufacturing and
quality control data and information, in each case, which are necessary or
useful for and are specific to the research, design, development, testing, use,
manufacture or sale of Licensed Products. Know-How does not include any
inventions included in the Patent Rights.
1.15 "Lead Compound" shall mean those Collaboration Compounds
identified by EpiGenix and/or Microcide as leads for medicinal chemistry
efforts, as determined by the JRC and amended from time to time based upon the
preliminary criteria set forth in Exhibit B.
1.16 "Licensed Product" means any product based upon or derived from a
Collaboration Compound and approved for sale by the USFDA or its foreign
equivalent.
1.17 "Microcide Invention" shall have the meaning set forth in Section
8.1.
1.18 "Microcide Product" shall have the meaning set forth in Section
5.3.1.
1.19 "Microcide Target" shall have the meaning set forth in Section
2.1.1.
1.20 "EpiGenix Product" shall have the meaning set forth in Section
5.3.2.
1.21 "Microcide Field" shall mean research and development of products
for infectious diseases caused by bacteria, fungi, viruses, or other infectious
agents, for use in [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 9
1.22 "Net Sales" shall mean the gross amount invoiced by Microcide (or
EpiGenix for the purposes of Section 5.3.2), its Affiliates or Sublicensees, as
the case may be, for sales to Third Parties (other than Sublicensees) in arm's
length transactions of the applicable Licensed Products (or EpiGenix Products)
and any and all services provided in connection with sales of such Licensed
Products (or EpiGenix Products) less: (i) ordinary and customary trade discounts
actually allowed; (ii) credits, rebates and returns (including, but not limited
to, wholesaler and retailer returns) actually extended and taken; (iii) freight,
postage and duties actually paid for and separately identified on the invoice or
other documentation maintained in the ordinary course of business; and (iv)
import, export, sales, use, or excise taxes, other consumption taxes, customs
duties, tariffs and compulsory payments to governmental authorities actually
paid and separately identified on the invoice or other documentation maintained
in the ordinary course of business, all amounts to the extent allottable to such
sale in accordance with generally accepted accounting principals and only to the
extent included as a component of gross sales. A "sale" shall include any
transfer or other disposition for consideration, and Net Sales shall include the
fair market value of all other consideration received by the selling Party or
its Affiliates or permitted Sublicensees in respect of any grant of rights to
make, use, sell or otherwise distribute Licensed Products (or EpiGenix
Products), whether such consideration is in cash, payment in kind, exchange or
another form.
In the case a Licensed Product (or EpiGenix Product), is sold in combination
with another product or products (a "bundle"), Net Sales shall be calculated by
multiplying Net Sales of the combination product by the fraction A/(A+B), where
A is the invoice price of the Licensed Product (or EpiGenix Products) when sold
separately, and B is the total invoice price of any other product or products in
combination when sold separately. The selling party shall provide the other
party documentation, reasonably acceptable to the other party, establishing the
invoice price of each component sold separately. If the selling Party cannot so
establish the invoice price of each component sold separately or if a Licensed
Product (or EpiGenix Products) in a "bundle" is not sold separately and no bona
fide list price exists for such Licensed Product (or EpiGenix Products), the
Parties shall negotiate in good faith an imputed list price for such Licensed
Product (or EpiGenix Products), and Net Sales with respect thereto shall be
based on such imputed list price.
1.23 "New Drug Application" or "NDA" shall mean a New Drug Application,
as defined in the U.S. Food, Drug and Cosmetic Act and the regulations
promulgated thereunder, and any corresponding foreign application, registration
or certification.
1.24 "New Target" shall have the meaning set forth in Section 2.1.1.
1.25 "Party" shall mean Microcide or EpiGenix, and the "Parties" shall
mean Microcide and EpiGenix.
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<PAGE> 10
1.26 "Patent Rights" shall mean all United States and foreign patents
(including all reissues, extensions, substitutions, confirmations,
re-registrations, re-examinations, revalidations and patents of addition) and
patent applications (including, without limitation, all provisionals,
continuations, continuations-in-part and divisions thereof) in each case,
claiming an invention which is necessary or useful for the design, development,
testing, use, manufacture or sale of (i) Licensed Products, in the case of
Microcide or (ii) EpiGenix Products, in the case of EpiGenix.
1.27 "Phase I", "Phase II"and "Phase III" shall mean Phase I (or Phase
I/II), Phase II, and Phase III clinical trials, respectively, in each case as
prescribed by the applicable Agency.
1.28 "Rejected Targets" shall have the meaning set forth in Section
2.1.1.
1.29 "Research Plan" shall have the meaning set forth in Section 2.1.2.
1.30 "Research Program" shall mean that program of research performed
by the Parties pursuant to the terms of this Agreement.
1.31 "Research Term" shall have the meaning set forth in Section 2.3.
1.32 "Sublicensee" shall mean a Third Party to whom Microcide has
granted a license or sublicense under the Collaboration Technology to make, have
made, import, use, sell, offer for sale or otherwise exploit a Licensed Product
in the Territory. As used in this Agreement, "Sublicensee" shall also include a
Third Party to whom Microcide has granted the right to distribute Licensed
Products in the Territory.
1.33 "Surrogate Genetics" shall mean the use of genetically engineered
recipient cells, such as, but not limited to [ * ], to create [ * ] systems
useful for gene-based functional assays for any gene, in applications such as,
but not limited to [ * ].
1.34 "Technology Agreement" shall mean that Core Technology Development
and License Agreement executed by the Parties concurrent with the execution of
this Agreement.
1.35 "Term of the Agreement" shall have the meaning set forth in
Section 12.1.
1.36 "Territory" shall mean the entire world.
1.37 "Third Party" shall mean any party other than Microcide or
EpiGenix or an Affiliate of such party.
1.38 "Valid Claim" means a claim of a pending patent application within
the Patent Rights (provided such application has not been pending for more than
ten (10) years from the date it was first filed with the governmental agency
with jurisdiction over patent applications) or an issued and
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 11
unexpired patent included within the Patent Rights which has not been held
unenforceable or invalid by a court or other governmental agency of competent
jurisdiction, and which has not been disclaimed or admitted to be invalid or
unenforceable through reissue or otherwise.
1.39 "Validation Criteria" shall mean those criteria to be determined
by the JRC and amended from time to time based upon the preliminary criteria set
forth in Exhibit B..
2. RESEARCH PROGRAM
2.1 Collaborative Research Program. Subject to the terms and conditions
set forth herein, Microcide and EpiGenix will diligently conduct collaborative
research in the Field pursuant to the Research Plan (the "Research Program").
The activities conducted in connection with the Research Program will be
established, overseen and administered by the JRC. The Research Program will
consist of research in the Field to: (i) develop screening assays for Initial
Targets to identify Collaboration Compounds based on such assays to discover
Lead Compounds; (ii) discover novel antiviral targets (New Targets) for
potential inclusion in the Research Plan to discover Collaboration Compounds and
(iii) to apply EpiGenix Surrogate Genetics technology to the development of
assays for Microcide Targets for [ * ] drug discovery. EpiGenix shall primarily
be responsible for developing assays to be used for screening against specific
targets and for performing high throughput screening and evaluation of potential
Lead Compounds. EpiGenix will promptly report to Microcide any significant
assays it develops with respect to any Initial Target or Microcide Target. Lead
Compounds will be identified jointly by EpiGenix and Microcide provided that the
decision whether to pursue a particular Lead Compound for product development
shall be made by [ * ] shall be solely responsible for [ * ]
2.1.1 Identification of Additional Targets. Microcide and EpiGenix will
jointly conduct research to discover new potential targets under the Research
Plan. In the event that, during the Research Term, EpiGenix identifies a new
target within the Field (whether or not such identification was funded by
Microcide) that is not an Initial Target (a "New Target"), EpiGenix promptly
shall notify Microcide[ * ] to be chosen by Microcide within [ * ] of the offer,
and included as an Initial Target and added to Exhibit A with [ * ] sufficient
to allow screening of the New Target to be provided by Microcide pursuant to the
Research Plan. With regard to any New Targets which Microcide does not agree to
fund under the Research Plan ("Rejected Targets"), [ * ] and provided further
that Microcide shall be entitled to receive the amounts set forth in Section
5.3.2 in connection therewith.
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<PAGE> 12
In the event that Microcide, [ * ] EpiGenix shall have [ * ] (unless
otherwise mutually agreed upon) to agree to include such target into the
Research Plan, and upon such agreement the work to develop assays for such
target shall become part of the Research Plan. With regard to any [ * ]
Target which EpiGenix does not agree to include under the Research Plan,
Microcide shall be free to proceed with assay development for the [ * ]
Target at its own expense and EpiGenix shall reasonably cooperate with Microcide
in such regard, including providing Microcide with sufficient access to the
Surrogate Genetics technology to undertake the development of such assay.
In the event that EpiGenix identifies a New Target [ * ] EpiGenix shall
be free to proceed with the development of such target at its expense, provided
that EpiGenix [ * ]
2.1.2 Research Plan. Within 60 days of the Effective Date and
annually thereafter during the Research Term, the JRC will prepare and approve a
written plan (the "Research Plan"), based on the preliminary research plan set
forth in Exhibit C, that will (i) include a general overview and timetable for
each Party's research activities and appropriate resources and budgets for such
research during the next year, (ii) set specific objectives for such year, which
shall include prioritizing the evaluation of the Initial Targets, which
objectives shall be updated or amended, as appropriate, by the JRC as research
progresses, and (iii) prepare a preliminary and non-binding plan for research
activities to be conducted by the Parties in the subsequent year. The JRC shall
review the Research Plan on an ongoing basis but in no event less than quarterly
and may make changes to the Research Plan then in effect.
2.1.3 Efforts; Resources. Microcide and EpiGenix shall each
use reasonable efforts to conduct the Research Program in a professional and
diligent manner in accordance with the Research Plan within the time schedules
contemplated therein. Subject to the terms of this Agreement, each Party agrees
to commit the personnel, facilities, expertise and other resources necessary to
perform its obligations under the Research Plan; provided, however, that neither
Party warrants that the Research Program shall achieve any of the research
objectives contemplated by them. Each party shall fully cooperate with the other
Party to obtain materials and hardware
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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necessary for such Party to perform its obligations under this Agreement. The
costs of such materials and hardware shall be borne as set forth in the Research
Plan.
2.1.4 Research Program Staffing. Each Party shall contribute
personnel as set forth in the Research Plan at its own expense. Such personnel
shall have a primary assignment as set forth in the Research Plan.
2.2 Records; Reports.
2.2.1 Records. The Parties shall maintain records that will
properly reflect all work done and results achieved in the performance of the
Research Program (including all data in the form required under any applicable
governmental regulations and as directed by the JRC), including laboratory
records sufficient to establish the dates of first conception and reduction to
practice of any patentable Collaboration Technology (an "Invention").
2.2.2 Reports. The JRC shall periodically, and not less often
than semi-annually during the Term of the Research Program, request and the
Parties shall have the obligation to prepare and provide to the JRC, written
reports summarizing the progress of the research performed by or sponsored by
the Parties pursuant to the Research Plan during the preceding six months
including any and all Collaboration Technology. In addition, the Parties will
exchange at least quarterly verbal or written reports presenting a meaningful
summary of their activities performed in connection with the Research Program.
All Collaboration Technology made by either Party will be promptly disclosed to
the JRC, with significant discoveries or advances being communicated as soon as
practical after such information is obtained or its significance is appreciated.
2.2.3 Research Program Expenditures. During the Research Term,
EpiGenix shall provide Microcide with a quarterly report regarding Research
Program expenditures by EpiGenix in the preceding quarter. EpiGenix shall keep
records of all expenses incurred in connection with the Research Program. During
the Research Term and for one year thereafter, Microcide shall have the right to
have a Third Party audit such records no more than once per year during ordinary
business hours, at mutually agreed times and upon reasonable notice, to verify
EpiGenix's expenditures in connection with the Research Program. Such records
constitute Confidential Information of EpiGenix and are subject to the
provisions of Article 10 herein.
2.3 Research Term. The Research Term shall commence on the Effective
Date and, unless terminated earlier pursuant to Article 12 or extended by
Microcide as set forth below shall terminate on the third anniversary of the
Effective Date (the "Research Term"). With notice to EpiGenix at least ninety
(90) days prior to the end of the then-current Research Term, the Research Term
may, at Microcide's option, be extended for up to two additional one (1) year
periods.
2.4 Research Program Exclusivity. During the Research Term, each Party
shall conduct all of its research efforts in the Field and; pursuant to the
Research Program and the terms and conditions set forth in this Agreement; and
[ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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3. JOINT RESEARCH COMMITTEE
3.1 Membership. Promptly after the Effective Date, Microcide and
EpiGenix will each appoint an equal number of representatives; but in no event
more than three (3) representatives, to a joint research committee to oversee
the Research Program (the "JRC"). A Party may change any of its appointments to
the JRC at any time with written notice to the other Party.
3.2 Responsibilities. The JRC will review, direct and supervise all
operational and scientific aspects of the Research Program. The JRC shall be
responsible for (i) preparing and approving the Research Plan; (ii)
coordinating, monitoring and reporting research progress and ensuring open and
frequent exchange between the Parties with respect to Research Program activi
ties; (iii) determining whether to acquire licenses from Third Parties with
respect to intellectual prop erty necessary or useful for the conduct of the
Research Program; (iv) discussing patent matters relat ing to the Research
Program activities; (v) approving allocations of tasks and resources required to
carry out the goals of the Research Program; (vi) approving all plans and
budgets for the various projects and programs within the Research Program; (vii)
encouraging and facilitating ongoing cooperation between the Parties; (viii)
coordinating and monitoring the payments and reimburse ments to be made by and
between the Parties; (ix) proposing to EpiGenix and Microcide a program for
developing Surrogate Genetics technology; and (x) performing such other
functions as appropriate to further the purposes of this Agreement, as
determined by the Parties.
3.3 Meetings. The JRC will meet at least quarterly, alternating between
the corporate offices of EpiGenix and Microcide, and will otherwise communicate
regularly. The JRC may meet by telephone or video conference or in person at
such times as are agreeable to the members of the JRC, but no less frequently
than as specified above. Attendance at meetings shall be at the respective
expense of the participating Parties. The Party hosting the meeting shall assure
that agendas and minutes are prepared for each of its meetings and distributed
to the Parties. Each Party recognizes the importance of the JRC in the success
of the Research Program and will use diligent efforts to cause all of its
representatives of such committee to attend all meetings of such committee.
3.4 Decision Making; Disputes. All actions taken and decisions made by
the JRC created hereunder shall be by unanimous agreement and recorded in
writing. If the JRC is unable to resolve after thirty (30) days, a dispute
regarding any issue presented to it or arising in it, such dispute will be
referred to the Chief Executive Officers of EpiGenix and Microcide for good
faith resolution, for a period of ninety (90) days. In the event such
individuals are unable to resolve such dispute, the dispute shall be resolved in
accordance with the provisions set forth in Article 13 herein.
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4. LICENSE GRANTS
4.1 Grant by EpiGenix. Subject to the terms and conditions of this
Agreement, EpiGenix hereby grants and agrees to grant to Microcide the following
licenses:
4.1.1 Subject to the obligation of EpiGenix to perform
screening under the Research Plan, EpiGenix grants to Microcide the exclusive
right to screen Initial Targets (including New Targets accepted into the
Research Plan as Initial Targets) until the later of (i)[ * ] from the date that
such [ * ] was accepted into the Research Plan (the "Discovery Period"). Subject
to the obligation of EpiGenix to perform screening under the Research Plan,
EpiGenix also grants Microcide the exclusive right to utilize the Collaboration
Technology pursuant to the terms of this Agreement during the Discovery Period
for the sole purpose of screening [ * ]
EpiGenix grants to Microcide (a) the exclusive right to screen targets
in [ * ] of the Microcide Field using Surrogate Genetics technology and
Collaboration Technology for a period of [ * ] from the Effective Date, and
thereafter on a non-exclusive basis, [ * ] as set forth in Section 5.3.1(iii) of
this Agreement, but [ * ] and (b) the non-exclusive perpetual right to screen
targets in the [ * ] of the Microcide Field using Surrogate Genetics technology
and Collaboration Technology on a [ * ]
4.1.2 EpiGenix grants to Microcide a worldwide exclusive
license to make, use and develop Collaboration Compounds for the purpose of
developing Licensed Products for the period from the Effective Date until the
earlier of (i) [ * ] as such term is defined in Section 4.1.3 below. After such
period, Microcide's right to make, use and develop Collaboration Compounds for
the purpose of developing Licensed Products shall then become nonexclusive
except with regard to [ * ] as set forth below.
4.1.3 Provided that Microcide is in compliance with the
provisions of Section 4.1.2 above, Microcide shall have the right at [ * ]
thereafter to select and designate up to [ * ] for potential development by
Microcide. [ * ]
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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4.1.4 EpiGenix grants to Microcide a worldwide license (with a
right to sublicense) under all Know-How and Patent Rights in and to the
Collaboration Technology, (i) on an exclusive, perpetual basis to develop, have
developed, make, have made, use, sell, have sold, distribute, and have
distributed Licensed Products and (ii) on an exclusive basis for a period of
[ * ] from the Effective Date solely to develop, have developed, make, have
made, use, offer to sell, sell, have sold, distribute, and have distributed
products in the field of [ * ]
4.2 Cross-Licenses. Each Party hereby grants and agrees to grant to the
other, a non-exclusive, non-transferable (except as permitted by Section 14.3),
royalty-free license to use and practice such Party's interest in the
Collaboration Technology solely for research purposes in the Field in connection
with the Research Program during the Research Term.
5. CONSIDERATION
5.1 Research Program Funding.
5.1.1 Microcide Funding. Microcide shall be obligated to pay
EpiGenix the annual commitment levels set forth below for the periods indicated
[ * ] to EpiGenix (as determined according to generally accepted accounting
principles consistently applied) in providing such research as is mutually
agreed to in good faith based upon reasonable scientific judgment and set forth
in the annual Research Plan.
Research Payments:
<TABLE>
<CAPTION>
Period Annual Commitment
------ -----------------
<S> <C>
Effective Date $1,100,000
1/1/99 - 12/31/99: $2,500,000
1/1/00 - 12/31/00: $2,500,000
Thereafter (if Research Term extends) $2,500,000 per year
</TABLE>
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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5.1.2 Payment Schedule. The amounts to be paid to EpiGenix in
connection with the Research Program pursuant to Section 5.1.1 shall be paid
quarterly, in advance. The initial payment for the period from the Effective
Date to the end of the first calendar quarter of Year 1 of the Research Program
shall be made on the Effective Date, and subsequent payments shall be made on or
before the first day of January, April, July and October during the Research
Term. Adjustments as necessary to reflect the research and development
activities actually performed by EpiGenix shall be made within 90 days of the
end of each three (3) month quarterly period and shall be reflected in
EpiGenix's next invoice. In no event shall the annual aggregate of such
quarterly invoices for a period described in Section 5.1.1 exceed the Annual
Commitment Levels for such period. In the event that such annual aggregate
invoices total less than the Annual Commitment Level for such period, such
difference shall not carry over to any subsequent period, except by mutual
agreement of the Parties.
5.2 Research Program Milestones. The JRC shall be responsible for
determining when each of the following milestone(s) have been achieved, and
shall promptly make such determination in writing. In the event the JRC cannot
agree whether a milestone has been achieved, the decision will be subject to the
dispute resolution procedure of Section 3.4. Within thirty (30) days of the date
of determination by the JRC of the achievement of the applicable milestone,
Microcide will pay to EpiGenix the following milestone payments:
<TABLE>
<CAPTION>
Milestone Event Milestone Payment
--------------- -----------------
<S> <C>
[ * ]
</TABLE>
* Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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<TABLE>
<CAPTION>
Milestone Event Milestone Payment
--------------- -----------------
<S> <C>
[ * ]
</TABLE>
5.3 Royalties.
5.3.1 Licensed Product Royalties. In consideration of the
rights granted hereunder, Microcide shall pay to EpiGenix (i) a royalty payment
of [ * ] of aggregate Net Sales of Licensed Products sold by Microcide in the
Territory, (ii) [ * ] of the cash royalty payments actually received by
Microcide from sales of Licensed Products in the Territory by a Sublicensee of
Microcide, but not less than [ * ] nor more than [ * ] of the aggregate Net
Sales of such Licensed Products by the Third Party, and (iii) a royalty payment
of [ * ] of the aggregate Net Sales of products ("Microcide Products") developed
from a Microcide Target included into the Research Plan as set forth in Section
2.1.1.
5.3.2 [ * ] Target Royalties. Microcide shall be entitled to receive
(i) [ * ] of any initial license, technology transfer, royalty, milestone or
similar payments received by EpiGenix pursuant to an agreement with a Third
Party with regard to a [ * ] Target which is entered into prior to [ * ] after
the Effective Date, (ii) a royalty of [ * ] of Net Sales of products ("EpiGenix
Products") developed from a [ * ] Target [ * ] shall be due based on any
collaboration with respect to a [ * ] Target entered into within [ * ] of the
Effective Date as set forth above) where identification of such [ * ] Target was
funded by Microcide and (iii) a royalty of [ * ] of Net Sales of products
developed from a [ * ] Target (other than pursuant to a collaboration entered
into within [ * ] of the Effective Date as set forth above) where identification
of such target was not funded by Microcide.
5.3.3 Computation of Royalties. Except as otherwise provided in Section
5.3.2 above, all sales of Licensed Products or EpiGenix Products between
Microcide or EpiGenix, respectfully, and any of their respective Affiliates and
sublicensees shall be disregarded for purposes of computing Net Sales and
royalties under this Section 5.3, and in such instances royalties shall be
payable only
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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upon sales to unlicensed Third Parties. Nothing herein contained shall obligate
either Party to pay the other Party more than one royalty on any unit of a
Licensed Product or EpiGenix Product.
5.3.4 Royalty Term. The obligation of each Party to pay royalties under
this Article 5 shall continue for each Licensed Product or EpiGenix Product on a
product-by-product and country-by- country basis, until such time as there are
no Valid Claims in such country covering such Licensed Product or EpiGenix
Product, as applicable.
5.4 Withholding Taxes. Any income or other tax that a Party hereunder,
its Affiliates or sublicensees is required to withhold (the "Withholding Party")
and pay on behalf of the other Party hereunder (the "Withheld Party") with
respect to the royalties payable under this Agreement shall be deducted from and
offset against said royalties prior to remittance to the Withheld Party;
provided, however, that in regard to any tax so deducted, the Withholding Party
shall give or cause to be given to the Withheld Party such assistance as may
reasonably be necessary to enable the Withheld Party to claim exemption
therefrom or credit therefor, and in each case shall furnish the Withheld Party
proper evidence of the taxes paid on its behalf.
6. BOOKS AND RECORDS
6.1 Royalty Reports and Payments. The royalties due under Section 5.3
shall be paid quarterly, within sixty (60) days after the last day of each
calendar quarter, or earlier, if practical, immediately following each quarterly
period in which such royalties are earned. With each such quarterly payment, the
Party making the royalty payment (the "Royalty Payor") shall furnish the other
Party a royalty statement setting forth, on a country-by-country and Licensed
Product-by- Licensed Product basis, the total number of units of each
royalty-bearing Licensed Product sold hereunder for the quarterly period for
which the royalties are due. Simultaneously with the delivery of each such
report, the Royalty Payor shall pay to the other Party the total royalties, if
any, due to the other Party for the period of such report. In addition, at the
request of EpiGenix or Microcide, as the case may be, but no more often than
once in any twelve (12) month period, EpiGenix or Microcide, as the case may be,
shall report to the other Party on a country-by-country and product- by-product
basis the amounts of any deductions and/or adjustments to Net Sales taken by
EpiGenix or Microcide, as the case may be, pursuant to Section 1.19 with respect
to Net Sales in the preceding four (4) calendar quarters.
6.2 Late Payments. Any payments or portions thereof due hereunder which
are not paid on the date such payments are due under this Agreement shall bear
interest at a rate equal to the lesser of prime rate as reported by the Citibank
(or its successor in interest), New York, New York, plus two percent (2%), or
the maximum rate permitted by law, calculated on the number of days such payment
is delinquent, compounded monthly.
6.3 Currency Conversion. Royalties earned shall first be determined in
the currency of the country in which they are earned and then converted to its
equivalent in United States currency. The buying rates of exchange for
converting the currencies involved into the currency of the United
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States quoted by Citibank (or its successor in interest), New York, New York at
the close of business on the last business day of the quarterly period in which
the royalties were earned shall be used to determine any such conversion.
6.4 Restrictions on Payments. The obligation to pay royalties under
this Agreement shall be waived and excused to the extent that statutes, laws,
codes or government regulations in a particu lar country prevent such royalty
payments; provided, however, in such event, if legally permissible, the royalty
payor shall pay the royalties owed to the other party by depositing such amounts
in a bank account in such country that has been designated by the other party
and promptly report such payment to the other Party.
6.5 Records; Inspection. Each Party and its Affiliates shall keep (and
cause its sublicensees to keep) complete, true and accurate books of account and
records for the purpose of determining the royalty amounts payable under Article
5. Such books and records shall be kept reasonably accessible for at least three
(3) years following the end of the calendar quarter to which they pertain. Such
records will be open for inspection during such three (3) year period by a Third
Party representative or agent of the other Party reasonably acceptable to the
royalty payor, which approval shall not be unreasonably withheld for the purpose
of verifying the royalty statements. Such inspections may be made no more than
once each calendar year, at reasonable times mutually agreed by Microcide and
EpiGenix and upon reasonable prior notice. Such Third Party representative or
agent will be obliged to execute a reasonable confidentiality agreement prior to
commencing any such inspection and may only disclose to the auditing party the
amount of any variance or error. Each Party shall bear the costs and expenses of
inspections conducted under this Section 6.5, unless a variation or error
producing an underpayment in royalties payable exceeding ten percent (10%) of
the amount payable for any inspection period is established in the course of any
such inspection, whereupon all reasonable costs relating to the inspection and
any unpaid amounts that are discovered will be paid by the other Party, together
with interest on such unpaid amounts at the rate specified in Section 6.2.
7. COMMERCIALIZATION
7.1 Product Development. Microcide will solely be responsible for
developing Licensed Products derived from or based upon Collaboration Compounds
developed pursuant to this Agreement. Microcide also will solely be responsible
for obtaining any and all regulatory approvals and clearances for the marketing,
sale, and manufacture of Licensed Products. Microcide shall be responsible for
all costs of conducting development of Licensed Product(s) in the Territory to
which it holds an exclusive license under this Agreement, including, without
limitation, expenses incurred in conducting clinical trials for such Products.
In addition, Microcide shall be responsible, at its sole expense, for all
commercialization of such Product(s) in the Territory so long as Microcide
retains exclusive rights thereto under this Agreement. During the term of this
Agreement, Microcide shall keep EpiGenix fully informed of its activities
subject to this Agreement, including without limitation, the achievement of the
milestones set forth in Sections 5.2 and the commercialization of the applicable
Product(s). When a registration package requesting approval for commercial sale
of
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any Product to which Microcide holds an exclusive license under this Agreement
is first filed in any country within the Territory, and when approval is
received therefor, Microcide will immediately notify EpiGenix in writing.
7.2 Due Diligence. Microcide shall, with respect to those Licensed
Products which it has elected to develop and commercialize under this Agreement,
use all reasonable efforts to: (i) select appropriate Reserved Drug Classes
pursuant to Section 4.1.3; (ii) develop and bring (or have developed and
brought) such Licensed Products to the market as soon as reasonably practicable;
(iii) obtain regulatory approvals to market such Licensed Products; and (iv)
after obtaining regulatory approvals for any such Licensed Product, launch such
Licensed Product and promote and meet the market demand therefor (or have a
Third Party do so). In connection therewith, Microcide shall use efforts not
less than those efforts Microcide makes with respect to its own comparable
products of comparable commercial potential, stage of development and patent
protection.
8. INTELLECTUAL PROPERTY
8.1 Ownership of Collaboration Technology. [ * ] to be used in the
Field that is discovered, identified, synthesized or acquired solely by [ * ] or
its Affiliates (or Third Parties acting on their behalf) at any time based upon
Collaboration Compounds will be solely owned by [ * ] Inventions") and shall be
deemed to be Licensed Products hereunder. [ * ] in the Collaboration Technology,
including, but not limited to [ * ] and [ * ] shall be deemed owned by [ * ]
subject to the licenses granted to Microcide as set forth herein.
8.2 Patent Rights.
8.2.1 The owner (the "Owner") of any Invention shall have the
right, at its option, to prepare, file and prosecute patent applications in its
own name, in such countries as it deems appro priate, and conduct any
interferences, re-examinations, reissues, oppositions or requests for patent
term extensions relating thereto, using counsel of its choice, and to maintain
any patents issued. In connection therewith, the non-Owner Party agrees to
cooperate with the Owner, at the Owner's expense, in the preparation and
prosecution of all such patent applications and in the maintenance of any
patents issued. The Owner shall keep the other Party currently informed of all
steps to be taken in such preparation, prosecution and maintenance of all of its
patent rights which claim an Invention and shall upon request furnish the other
Party with copies of such patent rights and other related correspondence
relating to such Invention to and from patent offices and where feasible, permit
the other Party a period of at least fourteen (14) days to offer its comments
thereon before the Owner makes a submission to a patent office which could
materially affect the scope or validity of the patent coverage that may result,
and promptly provide the other Party copies of any documents relating to
Inventions which the Party conducting such activities receives from such patent
offices, including notice of all interferences, reissues, reexaminations,
oppositions or requests for patent term extensions. In the case of each
Invention solely relating to Licensed Products and each Microcide
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the Commission. Confidential treatment has been requested with respect to the
omitted portions.
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Invention, Microcide shall have the rights and responsibilities of the Owner, in
the case of any other Invention relating to the Collaboration Technology, which
is not a Microcide Invention, EpiGenix shall have the rights and
responsibilities of the Owner.
8.2.2 If the Owner fails to (i) fulfill its obligations under
Section 8.2.1, or (ii) protect against abandonment of a Patent Right which
claims an Invention, to the extent that the Owner has the right to do so, the
Owner shall permit the non-Owner Party, at its option and expense, to undertake
such obligations. The Party not undertaking such actions shall fully cooperate
with the other Party and shall provide to the other Party whatever documents
that may be needed in connection therewith. If a non-Owner undertakes the
obligations of "Owner" under this Article 8 with respect to any Patent Rights of
the other Party under this Section 8.2.2, it shall prosecute and maintain the
same at its own expense, and shall not abandon or compromise them or fail to
exercise any rights of appeal without giving the other Party the right to take
over the prosecuting Party's conduct, at such other Party's own expense.
8.2.3 Cooperation. The Parties will cooperate to file,
prosecute and maintain patent applications covering the Invention(s) within the
Collaboration Technology in the United States and the European Union (in Europe
through a European Patent Convention application) (collectively, the "Core
Countries") and other countries agreed by the Parties. Microcide will pay all
expenses and fees associated with the filing, prosecution, issuance and
maintenance of any patent application and resulting patent for a Microcide
Invention or an Invention relating to the Licensed Products. EpiGenix shall pay
all expenses and fees associated with the filing, prosecution, issuance and
maintenance of any patent application and resulting patent for any other
Invention relating to the Collaboration Technology.
8.3 Enforcement.
8.3.1 Notice. EpiGenix and Microcide shall each promptly
notify the other of any infringement or unauthorized use of an Invention which
comes to its attention, describing the facts relating thereto in reasonable
detail.
8.3.2 Infringement.
(a)In the event that any Collaboration Technology is
infringed or misappropriated by a Third Party in any country in the Territory,
or is subject to a declaratory judgment action arising from such infringement in
such country, EpiGenix shall have the initial right (but not the obligation) to
enforce such Collaboration Technology, or defend any declaratory judgment action
with respect thereto, at its expense. In the event that EpiGenix fails to
initiate a suit to enforce such Collaboration Technology against infringement in
the Field by a Third Party in any jurisdiction in the Territory within one
hundred eighty (180) days of a request by Microcide to do so, Microcide may
initiate such suit against such infringement, at Microcide's expense. The Party
involved in any such claim, suit or proceeding, shall keep the other Party
hereto reasonably informed of the progress of any such claim, suit or
proceeding.
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(b)In the event that any intellectual property rights
related to a Licensed Product or Microcide Product is infringed or
misappropriated by a Third Party in any country in the Territory, or is subject
to a declaratory judgment action arising from such infringement in such country,
Microcide shall have the initial right (but not the obligation) to enforce such
right, or defend any declaratory judgment action with respect thereto, at its
expense. In the event that Microcide fails to initiate a suit to enforce such
right against infringement in the Field by a Third Party in any jurisdiction in
the Territory within one hundred eighty (180) days of a request by EpiGenix to
do so, EpiGenix may initiate such suit against such infringement, at EpiGenix's
expense. The Party involved in any such claim, suit or proceeding, shall keep
the other Party hereto reasonably informed of the progress of any such claim,
suit or proceeding.
8.4 Allegations of Infringement by Third Parties.
8.4.1 Responsibilities.
(a)Microcide shall be responsible for any threatened
or actual claims for Third Party patent infringement or other Third Party
intellectual property rights arising out of the manufacture, use, sale or
importation of a Licensed Product to which Microcide retains an exclusive
license pursuant to Article 4.
(b)EpiGenix shall be responsible for any threatened
or actual claims for Third Party patent infringement or other Third Party
intellectual property rights arising out of the utilization of the Collaboration
Technology.
8.4.2 Procedures.
(a)Upon receiving notice of such actual or threatened
claims, Microcide or EpiGenix, as the case may be, shall promptly meet with the
other Party to discuss the course of action to be taken to resolve or defend any
such infringement litigation.
(b)With respect to claims subject to Section 8.4.1
(a), if Microcide is not named as a Party in such a claim, suit or proceeding,
Microcide may, at its own expense and through counsel of its own choice, seek
leave to intervene in such claim, suit or proceeding. EpiGenix agrees not to
oppose such intervention. If Microcide, and not EpiGenix, is named as a Party to
such claim, suit or proceeding, Microcide shall have the right to control the
defense and settlement of such claim, suit or proceeding, at its own expense,
using counsel of its own choice. If EpiGenix shall, at any time, tender its
defense to Microcide, then Microcide shall defend EpiGenix in such claim, suit
or proceeding, at Microcide's own expense and through counsel of its own choice,
and Microcide shall control the defense and settlement of any such claim, suit
or proceeding; provided, Microcide shall not enter into any agreement which
makes any admission regarding (i) wrongdoing on the part EpiGenix, (ii) any
liability or obligation on the part of EpiGenix, or (iii) the invalidity,
unenforceability or absence of infringement of any Patent Rights owned by
EpiGenix without the prior written consent of EpiGenix, which consent shall not
be unreasonably withheld.
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(c)With respect to claims subject to Section 8.4.1
(b), if EpiGenix is not named as a Party in such a claim, suit or proceeding,
EpiGenix may, at its own expense and through counsel of its own choice, seek
leave to intervene in such claim, suit or proceeding. Microcide agrees not to
oppose such intervention. If EpiGenix, and not Microcide is named as a Party to
such claim, suit or proceeding, EpiGenix shall have the right to control the
defense and settlement of such claim, suit or proceeding, at its own expense,
using counsel of its own choice. If Microcide shall, at any time, tender its
defense to EpiGenix, then EpiGenix shall defend Microcide in such claim, suit or
proceeding, at EpiGenix's own expense and through counsel of its own choice, and
EpiGenix shall control the defense and settlement of any such claim, suit or
proceeding; provided, EpiGenix shall not enter into any agreement which makes
any admission regarding (i) wrongdoing on the part Microcide, (ii) any liability
or obligation on the part of Microcide or (iii) the invalidity, unenforceability
or absence of infringement of any Patent Rights owned by Microcide without the
prior written consent of Microcide, which consent shall not be unreasonably
withheld.
8.4.3 Cooperation. The Parties shall cooperate with each other
in connection with any such claim, suit or proceeding and shall keep each other
reasonably informed of all material developments in connection with any such
claim, suit or proceeding.
8.5 Independent Inventions. Ownership rights to inventions which are
not Collaboration Technology and that are made by the employees of EpiGenix (but
not of Microcide) or by the employees of Microcide (but not of EpiGenix), as the
case may be, whether or not made during the Term of this Agreement, shall reside
solely in EpiGenix or Microcide, respectively, as the case may be. Neither Party
will claim or seek ownership rights, licenses or royalties or other compensation
with respect to such inventions of the other Party. The applicable Party shall
have the right, at its option and expense, to prepare in its own name, file and
prosecute any patent applications and to maintain any patents issued with
respect to such inventions. In connection therewith, the other Party agrees to
cooperate with the filing Party at the filing Party's expense in the preparation
and prosecution of all such patent applications covering such independent
inventions to the extent that such Party's cooperation is reasonably necessary
therefor. This obligation shall survive the expiration or termination of this
Agreement.
8.6 Microcide Trademarks. Microcide may select and own one or more
trademarks for marketing a Licensed Product in countries in the Territory (the
"Microcide Trademarks"). All expenses for (i) registration of such Microcide
Trademark and (ii) bringing, maintaining and pro secuting any action to protect
or defend such Microcide Trademark in such countries shall be borne by
Microcide.
8.7 Use of Trademarks. Except as set forth in this Article 8, nothing
contained in this Agreement shall grant to either Party any right, title, or
interest in or to any trademarks of the other Party, whether or not specifically
recognized or perfected under applicable laws. At no time during or after the
term of this Agreement shall either Party challenge or assist others to
challenge trade marks used in connection with the Licensed Products or the
registration thereof or attempt to register any trademarks, marks, or trade
names confusingly similar to such trademarks.
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9. REPRESENTATIONS AND WARRANTIES
9.1 Legal Authority. Each Party represents and warrants to the other
that it has the legal power, authority and right to enter into this Agreement
and to perform its respective obligations set forth herein.
9.2 No Conflicts. Each Party represents and warrants that as of the
date of this Agreement it is not a Party to any agreement or arrangement with
any Third Party or under any obligation or restriction, including pursuant to
its Certificate of Incorporation or Bylaws, which in any way limits or conflicts
with its ability to fulfill any of its obligations under this Agreement, and
shall not enter into any such agreement during the term of this Agreement.
9.3 Others Bound. Each Party covenants that any contract it enters into
with a Third Party performing services under this Agreement on behalf of such
Party will bind such Third Party to all of the relevant terms and conditions of
this Agreement, unless otherwise agreed by the Parties.
9.4 Disclaimer of Warranties. EpiGenix and Microcide each specifically
disclaim that the Research Program will be successful, in whole or part.
EPIGENIX AND MICROCIDE EXPRESSLY DISCLAIM ANY WARRANTIES OR CONDITIONS, EXPRESS,
IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO THE CONFIDENTIAL INFORMATION,
COLLABORATION TECHNOLOGY, PATENT RIGHTS, KNOW-HOW OR LICENSED PRODUCTS,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY, OR FITNESS FOR A
PARTICULAR PURPOSE, VALIDITY OF ANY COLLABORATION TECHNOLOGY, PATENTED OR
UNPATENTED, OR NON- INFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES.
10. CONFIDENTIALITY
10.1 "Confidential Information" shall mean any and all non-public and
proprietary information, including, without limitation, information relating to
the intellectual property rights of the other Party, the Collaboration
Technology and the business plans of the other Party, including information
provided by either Party to the other Party prior to the Effective Date, which
such Party knows or has reason to know are or contain trade secrets or other
proprietary information of the other Party, and which is specifically designated
as such and which is disclosed by either Party to the other Party in any form in
connection with this Agreement, and if orally disclosed, is reduced in writing
and provided to the other Party within (30) days of such disclosure. During the
Term of the Agreement and for ten (10) years thereafter, each Party shall
maintain in confidence all Confidential Information and materials disclosed by
the other Party and shall not use such Confidential Information for any purpose
except as permitted by this Agreement or disclose the same to anyone other than
those of its Affiliates, sublicensees, employees, consultants, agents or
subcontractors as are necessary in connection with such Party's activities as
contemplated in this Agreement. Each
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Party shall obtain a written agreement from any sublicensees, employees,
consultants, agents and subcontractors, prior to disclosure, to hold in
confidence and not make use of such Confidential Information for any purpose
other than those permitted by this Agreement.
10.2 Exceptions. Notwithstanding the above, neither Party shall have
liability to the other Party with regard to any Confidential Information that:
(i) is or becomes publicly known through no wrongful act of the receiving Party;
(ii) was already known to the receiving Party; (iii) has rightfully been
received from a third party not under confidentiality obligations with respect
to such information; (iv) has been independently developed by the receiving
Party without reference to or use of the other Party's Confidential Information;
(v) has been approved for release by written authorization of the disclosing
Party; or (vi) is required to be disclosed by the receiving Party pursuant to
the order or requirement of a court, administrative agency, or other
governmental body; provided, however, that the receiving Party shall provide
reasonable advance notice to enable the disclosing Party to seek a protective
order or otherwise prevent such disclosure. Notwithstanding any other provision
of this Agreement, each Party may disclose the terms of this Agreement to
prospective lenders, investment bankers and other financial institutions of its
choice solely for purposes of financing the business operations of such Party
either (i) upon the written consent of the other Party or (ii) if the disclosing
Party obtains a signed confidentiality agreement with such entity or financial
institution with respect to such information, upon terms substantially similar
to those contained in this Article 10.
10.3 Publicity. All publicity, press releases and other announcements
relating to this Agreement or the transaction contemplated hereby shall be
reviewed in advance by, and shall be subject to the approval of, both Parties;
provided, however, that either Party may (i) publicize the existence and general
subject matter of this Agreement without the other Party's approval, and (ii)
disclose the terms of this Agreement only to the extent required to comply with
applicable securities laws and in the case of (ii), the non-disclosing Party
shall have the right to review and comment on such disclosure prior to its
submission, where practicable. Once a particular disclosure described in (i) has
been approved for disclosure, either Party may make disclosures which do not
differ materially therefrom without any need for further consents.
10.4 Publication. The Parties shall cooperate in appropriate
publication of the results of research and development work performed pursuant
to this Agreement, but subject to the pre dominating interest to obtain patent
protection for any patentable subject matter. To this end, it is agreed that
prior to any public disclosure of such results, the Party proposing disclosure
shall send the other Party a copy of the information to be disclosed, and shall
allow the other Party twenty-one (21) days from the date of receipt in which to
determine whether the information to be disclosed contains subject matter for
which patent protection should be sought prior to disclosure, or otherwise
contains Confidential Information of the reviewing Party which such Party
desires to maintain as a trade secret. If notification is not received during
the twenty-one (21) day period, the Party propos ing disclosure shall be free to
proceed with the disclosure. If due to a valid business reason or a reasonable
belief by the non-disclosing Party that the disclosure contains subject matter
for which a patentable invention should be sought, then prior to the expiration
of the twenty-one (21) day period,
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the non-disclosing Party shall so notify the disclosing Party, who shall then
delay public disclosure of the information for an additional period of up to
sixty (60) days to permit the preparation and filing of a patent application on
the subject matter to be disclosed or other action to be taken. The Party
proposing disclosure shall thereafter be free to publish or disclose the
information. The determination of authorship for any abstract or publication
shall be in accordance with accepted scientific practices.
11. INDEMNIFICATION
11.1 Microcide. Subject to EpiGenix's obligation under Section 11.3,
Microcide agrees to indemnify and hold harmless EpiGenix and its Affiliates and
sublicensees and their respective employees, agents, officers, directors,
stockholders and permitted assigns (each a "EpiGenix Indemnitee") from and
against any claims by a Third Party resulting in any liabilities, damages,
settlements, claims, actions, suits, penalties, fines, costs or expenses
incurred (including, without limitation, reasonable attorneys' fees and other
expenses of litigation) (any of the foregoing, a "Claim") arising out of or
resulting from (i) negligence or willful misconduct by Microcide in the conduct
of the Research Program, (ii) a breach of any of the representations or
warranties of Microcide hereunder, or (iii) manufacture, use, promotion,
marketing, sale or other distribution of any Licensed Product by Microcide or
its Affiliates or sublicensees (including infringement of Third Party
intellectual property rights, except such infringement caused by utilization of
the Collaboration Technology), except, in each case, to the extent that such
Claim arises out of or results from the negligence or willful misconduct of a
EpiGenix Indemnitee.
11.2 EpiGenix. Subject to Microcide's obligation under Section 11.3,
EpiGenix agrees to indemnify and hold harmless Microcide and its Affiliates and
sublicensees and their respective employees, agents, officers, directors,
stockholders and permitted assigns (each a "Microcide Indemnitee") from and
against any claims by a Third Party resulting in any claims arising out of or
resulting from (i) the negligence or willful misconduct of EpiGenix in the
conduct of the Research Program, (ii) a breach of any of the representations or
warranties by EpiGenix hereunder, or (iii) infringement of any Third Party
intellectual property rights by the utilization of the Collaboration Technology,
except in each case, to the extent that such Claim arises out of or results from
the negligence or willful misconduct of a Microcide Indemnitee.
11.3 Procedure. A Party or person (the "Indemnitee") that intends to
claim indemnification under this Article 11 shall promptly notify the other
Party (the "Indemnitor") in writing of any loss, claim, damage, liability or
action in respect of which the Indemnitee or any of its Affiliates, sublicensees
or their directors, officers, employees, agents or counsel intend to claim such
indemnification, and the Indemnitor shall have the right to participate in, and,
to the extent the Indemnitor so desires, to assume the defense thereof with
counsel chosen by Indemnitor, with consent of Indemnitee, which consent shall
not be unreasonably withheld. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 11. At the
Indemnitor's request, the Indemnitee under this
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Article 11, and its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation and defense of any
action, claim or liability covered by this indemnification and provide full
information with respect thereto.
12. TERM AND TERMINATION
12.1 Term. This Agreement shall be effective as of the Effective Date
and, unless otherwise terminated earlier pursuant to the other provisions of
this Article 12, shall continue in full force and effect on a product-by-product
and country-by-country basis until the date that neither Party nor its
Affiliates and sublicensees has any remaining royalty obligations to the other
Party in such country. Following the expiration of royalty obligations in any
country within the Territory with respect to a particular Licensed Product or
EpiGenix Product subject to a license granted herein, each Party shall have a
non-exclusive, non-transferable, fully paid license under the other Party's
interest in the Know-How, solely to commercialize such Licensed Product or
EpiGenix Product.
12.2 Termination for Cause. Either Party may terminate this Agreement
in the event the other Party has materially breached or defaulted in the
performance of any of its obligations here under, and such default has continued
for sixty (60) days after written notice thereof was provided to the breaching
Party by the nonbreaching Party, or if a cure of such default cannot reasonably
be effected within such sixty (60) day period, the defaulting Party has failed
to deliver within such period a plan for curing such breach or default which is
reasonably sufficient to effect a cure. Any termination shall become effective
at the end of such sixty (60) day period unless the breaching Party has cured
any such breach or default prior to the expiration of the sixty (60) day period,
or has delivered to the other Party a plan for curing such breach which is
reasonably acceptable to the other Party. Notwithstanding the above, in the case
of a failure to pay any amount due hereunder, the period for cure of any such
default following notice thereof shall be ten (10) days and, unless pay ment is
made within such ten day period, the termination shall become effective at the
end of such period.
12.3 Effect of Bankruptcy. If, during the Research Term, either Party
files a voluntary petition in bankruptcy, is adjudicated a bankrupt, makes a
general assignment for the benefit of creditors, admits in writing that it is
insolvent or fails to discharge within sixty (60) days after an involuntary
petition in bankruptcy filed against it, then the Research Term and this
Agreement may be immediately terminated by the other Party, with notice.
12.4 Effect of Termination.
12.4.1 Accrued Rights and Obligations. Termination of this
Agreement for any reason shall not release any Party hereto from any liability
which, at the time of such termination, has already accrued to the other Party
or which is attributable to a period prior to such termination, nor preclude
either Party from pursuing any rights and remedies it may have hereunder or at
law or in equity which accrued or are based upon any event occurring prior to
such termination.
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12.4.2 Return of Confidential Information. Upon any
termination of this Agreement, Microcide and EpiGenix shall promptly return to
the other Party all Confidential Information received from the other Party
(except one copy of which may be retained by legal counsel solely for purposes
of monitoring compliance with the provisions of Article 10 and archival
purposes).
12.4.3 Stock on Hand. In the event this Agreement is
terminated for any reason, Microcide and its Affiliates and sublicensees shall
have the right in the Territory to sell the stock of any Licensed Products then
on hand, subject to Articles 5 and 6 and the other applicable terms of this
Agreement.
12.4.4 Multiple Licensed Products. If more than one Licensed
Product, is being commercially developed or exploited by Microcide or its
Affiliates and sublicensees hereunder, and EpiGenix terminates this Agreement
pursuant to Section 12.2 due to a breach relating only to a single Licensed
Product, then EpiGenix shall be entitled to terminate this Agreement only with
respect to the applicable Licensed Product.
12.5 Survival. Sections 2.2.1, 5.4, 6.5, 7.4, and Article 6 (until all
royalty and reporting obligations relating to the (as stated) period prior to
the date of expiration or termination have been satisfied) and Articles 1, 8, 9,
10, 11, 12, 13 and 14 shall survive the expiration or termination of this
Agreement for any reason.
13. DISPUTE RESOLUTION
13.1 Mediation. In the event of any dispute or claim arising out of or
related to this Agreement, the Parties will attempt in good faith to resolve
such dispute or claim by mediation in San Jose, California, in accordance with
the American Arbitration Association Commercial Mediation Rules. The mediation
shall be held within thirty (30) days of the end of a fifteen day negotiation
period. Nothing herein, however, shall prohibit either Party from initiating
arbitration proceedings if such Party would be substantially prejudiced by a
failure to act during the time that such good faith efforts are being made to
resolve the dispute or claim through negotiation or mediation. The cost of
mediation shall be shared equally by the Parties to the mediation. Any
settlement reached by mediation shall be reduced to writing, signed by the
Parties, and shall be binding on them.
13.2 Arbitration. Any dispute or claim arising out of or related to
this Agreement, or the interpretation, making, performance, breach, validity or
termination thereof, which has not been resolved by negotiation or mediation as
set forth above, shall be finally settled by binding arbitration in San Jose,
California, under the Commercial Arbitration Rules and the Supplementary
Procedures for Large Complex Disputes of the American Arbitration Association
(together with "AAA Rules") by one arbitrator appointed in accordance with the
AAA Rules.
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The arbitrator shall apply California law to the merits of any dispute
or claim, without reference to rules of conflict of law. The arbitrator shall
have the power to decide all questions or arbitrability. The arbitration
proceedings shall be governed by federal arbitration law and by the AAA Rules,
without reference to state arbitration law. At the request of either Party, the
arbitrator will enter an appropriate protective order to maintain the
confidentiality of information produced or exchanged in the course of the
arbitration proceedings. Judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof.
The Parties may apply to any court of competent jurisdiction for a
temporary restraining order, preliminary injunction, or other interim or
conservatory relief, as necessary, without breach of this arbitration agreement
and without any abridgment of the powers of the arbitrator.
The arbitrator may award to the prevailing Party, if any, as determined
by the arbitrator, all of its costs and fees, including, without limitation, AAA
administrative fees, arbitrator fees, travel expenses, out-of-pocket expenses
(including, without limitation, such expenses as copying, telephone, facsimile,
postage, and courier fees), witness fees, and reasonable attorneys' fees.
14. MISCELLANEOUS
14.1 Governing Law. This Agreement and any dispute arising from the
performance or any breach hereof shall be governed by and construed in
accordance with the laws of the State of California, without reference to
conflicts of laws principles.
14.2 Waiver. No failure on the part of EpiGenix or Microcide to
exercise and no delay in exercising any right under this Agreement, or provided
by statute or at law or in equity or otherwise, shall impair, prejudice or
constitute a waiver of any such right, nor shall any partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right.
14.3 Assignment. This Agreement shall not be assignable by either Party
to any Third Party hereto without the written consent of the other Party hereto;
except either Party may assign this Agreement, without such consent, to (i) an
Affiliate of such Party; or (ii) an entity that acquires all or substantially
all of the business or assets of such Party to which this Agreement pertains,
whether by merger, reorganization, acquisition, sale, or otherwise. The terms
and conditions of this Agreement shall be binding on and inure to the benefit of
the permitted successors and assigns of the Parties.
14.4 Notices. All notices, requests and other communications hereunder
shall be in writing and shall be personally delivered or sent by nationally
recognized overnight express delivery service, registered or certified mail,
return receipt requested, postage prepaid, in each case to the respective
address specified below, or such other address as may be specified in writing to
the other Parties hereto:
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Microcide: Microcide Pharmaceuticals, Inc.
850 Maude Avenue
Mountain View, CA 94043
Attn: Chief Executive Officer
with a copy to:
Michael O'Donnell
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
EpiGenix: EpiGenix, Inc.
850 Maude Avenue
Mountain View, CA 94043
Attn: Chief Executive Officer
with a copy to:
Joshua Green, Esq.
Venture Law Group
2800 Sand Hill Road
Menlo Park, CA 94025
14.5 Performance Warranty. Each Party hereby warrants and guarantees
the performance of any and all rights and obligations of this Agreement by its
Affiliate(s) and sublicensees as if it were performed by a Party.
14.6 Force Majeure. Neither Party shall be liable to the other for
failure or delay in the performance of any of its obligations under this
Agreement for the time and to the extent such failure or delay is caused by
earthquake, riot, civil commotion, war, hostilities between nations, govern
mental law, order or regulation, embargo, action by the government or any agency
thereof, act of God, storm, fire, accident, labor dispute or strike, sabotage,
explosion or other similar or different contingencies, in each case, beyond the
reasonable control of the respective Party. The Party affected by force majeure
shall provide the other Party with full particulars thereof as soon as it
becomes aware of the same (including its best estimate of the likely extent and
duration of the interference with its activities), and will use its best
endeavors to overcome the difficulties created thereby and to resume performance
of its obligations as soon as practicable. If the performance of any obligation
under this Agreement is delayed owing to a force majeure for any continuous
period of more than three (3) months, the Parties hereto shall consult with
respect to an equitable solution, including the possible termination of this
Agreement.
14.7 Independent Contractors. It is understood that both Parties hereto
are independent contractors and are engaged in the operation of their own
respective businesses, and neither Party
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hereto is to be considered the agent or partner of the other Party for any
purpose whatsoever. Neither Party has any authority to enter into any contracts
or assume any obligations for the other Party or make any warranties or
representations on behalf of the other Party. EpiGenix acknowledges that neither
it nor any of its employees are employees of Microcide or members of any of its
benefit plans and that neither it nor any of its employees are eligible to
participate in any such benefit plans even if it is later determined that its or
any of its employees' status during the period of this Agreement was that of an
employee of Microcide. In addition, EpiGenix waives any claim that it may have
under the terms of any such benefit plans or under any law for participation in
or benefits under any of Microcide's benefit plans.
14.8 Advice of Counsel. EpiGenix and Microcide have each consulted
counsel of their choice regarding this Agreement, and each acknowledges and
agrees that this Agreement shall not be deemed to have been drafted by one Party
or another and will be construed accordingly.
14.9 Severability. In the event that any provisions of this Agreement
are determined to be invalid or unenforceable by a court of competent
jurisdiction, the remainder of the Agreement shall remain in full force and
effect without said provision. The Parties shall in good faith negotiate a
substitute clause for any provision declared invalid or unenforceable, which
shall most nearly approximate the intent of the Parties in entering this
Agreement; provided, if the Parties are unable to agree on such a substitute
clause and the deletion of the provision held invalid or unenforceable would
produce material adverse financial consequences for one Party, such Party shall
have the right to terminate the Agreement upon ninety (90) days notice.
14.10 Patent Marking. Each Party agrees to mark and have its Affiliates
and sublicensees mark all Products they sell or distribute pursuant to this
Agreement in accordance with the applicable statute or regulations in the
country or countries of manufacture and sale thereof.
14.11 Further Assurances. At any time or from time to time on and after
the date of this Agreement, either Party shall at the request of the other Party
(i) deliver to the requesting Party such records, data or other documents
consistent with the provisions of this Agreement, (ii) execute, and deliver or
cause to be delivered, all such consents, documents or further instruments of
assignment, transfer or license, and (iii) take or cause to be taken all such
actions, as the requesting Party may reasonably deem necessary or desirable in
order for the requesting Party to obtain the full benefits of this Agreement and
the transactions contemplated hereby.
14.12 Compliance with Laws. Each party shall furnish to the other Party
any information requested or required by that Party during the term of this
Agreement or any extensions hereof to enable that Party to comply with the
requirements of any U.S. or foreign federal, state and/or govern ment agency.
Each Party shall comply with all applicable U.S., foreign, state, regional and
local laws, rules and regulations relating to its activities to be performed
pursuant to this Agreement, including without limitation, the United States
Foreign Corrupt Practices Act, United States export regulations and such other
United States and foreign laws and regulations as may be applicable, and
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shall obtain all necessary approvals, consents and permits required by the
applicable agencies of the government of the United States and foreign
jurisdictions.
14.13 No Implied Licenses or Warranties. No right or license under any
patent application, issued patent, know-how or other proprietary information is
granted or shall be granted by implica tion. All such rights or licenses are or
shall be granted only as expressly provided in the terms of this Agreement.
14.14 Entire Agreement. This Agreement together with the attached
Exhibits entered by the Parties of even date herewith, constitute the entire
agreement, both written or oral, with respect to the subject matter hereof, and
supersede all prior or contemporaneous understandings or agreements, whether
written or oral, between Microcide and EpiGenix with respect to such subject
matter.
14.15 Headings. The captions to the several Sections and Articles
hereof are not a part of this Agreement, but are included merely for convenience
of reference only and shall not affect its meaning or interpretation.
14.16 Counterparts. This Agreement may be executed in two counterparts,
each of which shall be deemed an original and which together shall constitute
one instrument.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed by their authorized representatives as of the Effective Date.
MICROCIDE PHARMACEUTICALS, INC. EPIGENIX, INC.
By: [SIG] By: [SIG]
------------------------------- -------------------------------
Name: Name:
------------------------------- -------------------------------
Title: Title:
------------------------------- -------------------------------
Exhibit A: Initial Targets
Exhibit B: Preliminary Initial Targets
Exhibit C: Preliminary Research Plan
<PAGE> 35
EXHIBIT A
"PRELIMINARY INITIAL TARGETS"
[*]
- -------
Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
A-1
<PAGE> 36
EXHIBIT B
"PRELIMINARY VALIDATION CRITERIA"
[*]
- -------
Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 37
EXHIBIT C
"PRELIMINARY RESEARCH PLAN"
[*]
- -------
Certain information on this page has been omitted and filed separately with the
Commission. Confidential treatment has been requested with respect to the
omitted portions.
<PAGE> 1
EXHIBIT 99.1
MICROCIDE PHARMACEUTICALS ANNOUNCES THE FORMATION OF ICONIX
PHARMACEUTICALS, INC. AND A PRIVATE PLACEMENT OF $12.5 MILLION BY
ICONIX
Mountain View, CA, January 14, 1998 /PRNewswire/ -- Microcide Pharmaceuticals,
Inc. (Nasdaq: MCDE) announced today the formation of a chemical genetics
company, Iconix Pharmaceuticals, Inc., which will seek to extend Microcide's
microbial genomics research into a technology platform with broad applicability
to human diseases. Through a private placement, Iconix has arranged a $12.5
million equity investment from the venture investors Abingworth Management,
Institutional Venture Partners and Kleiner Perkins Caufield & Byers at a
post-money valuation of approximately $25 million. Including the effects of an
options pool, Microcide will hold approximately 35% of the pro forma fully
diluted outstanding equity of Iconix. In connection with this transaction,
Microcide and Iconix have entered into a series of agreements covering the
transfer of certain technologies from Microcide to Iconix, joint technology
development in core drug discovery areas, and provision of support services by
Microcide to Iconix for the next three years. Finally, Microcide and Iconix have
entered into a research agreement whereby Iconix will apply its chemical
genomics technology to an antiviral drug discovery and development program in
collaboration with Microcide.
Microcide was founded in December 1992 to discover, develop and commercialize
novel antibiotics for the treatment of serious bacterial infections. For over
three years, Microcide has been applying its proprietary Targeted Genomics
technology whereby it creates and uses bacterial and fungal genetic mutants to
quickly and directly identify genes required either for in vitro viability or
for pathogenicity in man. Creating genetic potentiation assays rather than
biochemical assays, Microcide utilizes many targets simultaneously in high
throughput screening to create multi-dimensional biological profiles of each
compound tested. The advantages of such an approach are its focus only on the
pharmaceutically relevant portion of an organism's genome, and its utilization
of many targets simultaneously, thereby generating a wealth of biological
information not only on the compounds tested, but also on the interrelated
functioning of the genes themselves.
During 1997, Microcide explored ways to extend this methodology to mammalian
systems and has developed an approach using Surrogate Genetics. Iconix plans to
engineer human genes in surrogate hosts to create high throughput assays
(Activity Reporter Cells) to screen for small molecule agonists or antagonists.
By rapidly identifying chemical modulators of human genes in parallel for
targets of known and unknown function, Surrogate Genetics is expected to allow
Iconix to generate powerful databases of metabolic pathways, gene functions and
compound sensitivities -- and, specific inhibitors identified in the assays are
expected to represent useful leads for drug development.
After a thorough analysis of various alternatives, Microcide determined that the
Surrogate Genetics technology would best be pursued through Iconix for a number
of reasons. First, Microcide's core mission is the discovery and development of
antimicrobials, and the Company is determined to maintain focus on that mission.
Second, establishment of Iconix should enhance the ability to recruit and incent
key personnel as well as to create focus on its core mission of extending
Surrogate
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<PAGE> 2
Genetics to as many therapeutic categories as possible. Finally, the
establishment of Iconix and the equity financing of $12.5 million provides
Iconix with the financial resources to aggressively advance its research
approach, allows Iconix to independently seek financing in the future, and
retains for Microcide a significant equity stake in the future performance of
Iconix.
Microcide and Iconix plan to have a close working relationship over the next
several years through a Core Technology Development and License Agreement, a
Support Services Agreement and an Antiviral and Surrogate Genetics Research
Collaboration. Through the Technology Agreement, Microcide and Iconix will work
together over the next three years to jointly develop and utilize new technology
in the areas of molecular diversity, high throughput screening, biological and
chemical informatics, and genome sciences, leveraging these capabilities across
both companies. Pursuant to the Support Services Agreement, Microcide will
provide Iconix with a number of services including accounting and finance,
facilities, and various scientific support services.
In addition, Microcide becomes Iconix's first corporate partner through a
three-year Antiviral Research Collaboration. During this term, extendible at
Microcide's option for two additional one-year periods, Iconix will apply
Surrogate Genetics to a number of viral disease targets in the search for novel
inhibitors. Microcide will provide Iconix with research support of $6.1 million
over the three years of the collaboration. Microcide will have worldwide
development, manufacturing and marketing rights to antiviral products which
emerge from the collaboration and Iconix will receive milestone payments of $11
million for the first product and $10.5 million for subsequent products, in
addition to royalties on worldwide sales.
Dr. Keith Bostian, formerly Chief Operating Officer of Microcide, will become
President and Chief Executive Officer of Iconix, and Dr. Hugh Rienhoff of
Abingworth Management will serve as Chairman of the Board of Directors. Dr.
Bostian will continue to serve as an active member of the Microcide Board of
Directors and has become a consultant to Microcide for a two-year period. During
the first year of the consulting arrangement, Dr. Bostian will devote a
significant amount of his time providing scientific and strategic consulting to
Microcide, working closely with Microcide's recently appointed Senior Vice
President of Research and Development, Dr. George H. Miller, to give priority
attention to program activities with Microcide's corporate partners (Daiichi,
Johnson & Johnson and Pfizer).
Microcide is a biopharmaceutical company dedicated to the discovery, development
and commer cialization of novel antimicrobials for the treatment of serious
bacterial and fungal infections. The Company's research programs address the
growing problem of bacterial drug resistance through two principal themes: (i)
Targeted Antibiotics, which focuses on developing novel antibiotics and
antibiotic potentiators to overcome bacterial resistance mechanisms, and (ii)
Targeted Genomics, which utilizes bacterial genetics to discover new classes of
antibiotics and other novel treatments for bacterial diseases. Microcide has
also extended its functional genomics technology platform into an antifungal
program designed to discover broad spectrum fungicidal agents. Through its
collabo ration with Iconix, Microcide plans to further extend its genomics
technology into the search for novel antiviral therapeutics.
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<PAGE> 3
Iconix is a chemical genetics drug company founded to advance the application of
genomics to the discovery and development of drugs for the improved treatment of
human diseases through the use of chemistry to define gene function and disease
relevance, and the use of surrogate genetics to rapidly identify chemical
modulators and drug leads for genes of known and unknown function. The Company's
research programs integrate and use information from its chemical genetics
technology platform with parallel informatics systems, linking gene targets,
drug reactivities and disease pathologies over a wide range of human diseases.
In its first major collaborative partnership with Microcide, Iconix has begun
drug screening for viral disease targets for a number of clinically relevant
human viral pathogens, including Hepatitis B and C, Herpesviruses, and
Influenza. Additional programs are being established to focus on specific human
gene families, biochemical pathways, novel genes and therapeutic areas.
The statements in this press release that are related to the future research of
Iconix, the anticipated collaboration and joint research efforts of Microcide
and Iconix, the payment of research support and milestone payments, the
potential development of commercial products, and the future funding of Iconix
are forward-looking statements based upon current expectations. Such
forward-looking statements involve risks and uncertainties including without
limitation, the risk that the research of Iconix will not progress as
anticipated, that the collaboration and joint research efforts of Microcide and
Iconix will be terminated or otherwise prove to be unsuccessful, that Iconix
will not obtain sufficient future funding, and that Microcide's ownership in
Iconix may be diluted. For a discussion of other risks and uncertainties
affecting Microcide's business, see the Company's annual report on Form 10-K for
the year ended December 31, 1996. Actual results and timing of certain events
could differ materially from those indicated in the forward-looking statements
as a result of these or other factors.
Investor Contact: Matthew J. Hogan, Chief Financial Officer, 650-428-3557
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